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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CHIEF CONSOLIDATED MINING COMPANY
AND
DIMELING, ▇▇▇▇▇▇▇▇▇ & PARK
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TABLE OF CONTENTS
SECTION PAGE(S)
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1. DEFINITIONS.....................................................................................3
2. TRANSACTIONS AND CLOSING........................................................................7
2.1 SALE AND PURCHASE OF THE CONVERTIBLE COMMON STOCK......................................7
2.2 DESCRIPTION OF TRANCHES................................................................7
2.3 ASSIGNMENT OF RIGHT TO PURCHASE SHARES.................................................8
2.4 REGISTRATION RIGHTS....................................................................8
2.5 WARRANT................................................................................8
2.6 CERTIFICATES...........................................................................9
2.7 CONDITIONS OF CLOSING..................................................................9
(a) Tranche A Closing Conditions..................................................9
(b) Tranche B Closing Conditions.................................................10
2.8 FAILURE TO MEET OR WAIVER OF CLOSING CONDITIONS.......................................11
(a) Tranche B Closing Conditions.................................................11
(b) Redemption of Tranche A Stock................................................11
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................12
3.1 CAPITALIZATION........................................................................12
3.2 CONSENTS, AUTHORIZATIONS AND BINDING EFFECT...........................................12
3.3 ORGANIZATION AND STANDING.............................................................13
3.4 EQUITY INVESTMENTS; SUBSIDIARIES......................................................13
3.5 FINANCIAL STATEMENTS..................................................................13
3.6 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE..............................................14
3.7 ASSETS................................................................................15
3.8 PATENTS, TRADEMARKS AND COPYRIGHTS, ETC...............................................15
3.9 LITIGATION............................................................................15
3.10 TAXES.................................................................................16
3.11 CONTRACTS AND COMMITMENTS.............................................................17
3.12 COMPLIANCE WITH LAW; PERMITS AND AUTHORIZATIONS; ENVIRONMENTAL AND SAFETY MATTERS.....18
3.13 USE OF PROCEEDS.......................................................................20
3.14 NO CONSENT OR APPROVAL REQUIRED.......................................................20
3.15 BROKERS...............................................................................20
3.16 EMPLOYEE BENEFIT PLANS................................................................20
3.17 DISCLOSURE............................................................................22
3.18 BOOKS AND RECORDS.....................................................................23
3.19 INVESTMENT COMPANY....................................................................23
3.20 REGISTRATION RIGHTS...................................................................23
3.21 INSURANCE.............................................................................23
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3.22 EMPLOYEES.............................................................................23
3.23 REAL ESTATE...........................................................................23
4. COVENANTS OF THE COMPANY.......................................................................25
4.1 SHAREHOLDER APPROVAL..................................................................25
4.2 DIVIDENDS AND DIRECTORS...............................................................25
4.3 CONDUCT OF THE BUSINESS...............................................................26
4.4 FULL ACCESS...........................................................................26
4.5 PREEMPTIVE RIGHTS.....................................................................26
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................................................27
5.1 ORGANIZATION, STANDING, ETC...........................................................27
5.2 ACTS AND PROCEEDINGS; ENFORCEABILITY OF AGREEMENTS....................................27
5.3 NO BROKERS OR FINDERS.................................................................27
5.4 RESTRICTED SECURITIES.................................................................27
5.5 INVESTMENT INTENT.....................................................................28
5.6 SOPHISTICATED INVESTOR................................................................28
6. INDEMNIFICATION................................................................................28
6.1 INDEMNIFICATION.......................................................................28
6.2 CERTAIN PROCEDURES....................................................................29
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................29
6.4 LIMITATIONS TO ASSERTION OF INDEMNITY CLAIMS FOR BREACH OF REPRESENTATIONS AND
WARRANTIES............................................................................30
7. MISCELLANEOUS..................................................................................30
7.1 EXPENSES..............................................................................30
7.2 PUBLIC ANNOUNCEMENTS..................................................................30
7.3 DESCRIPTIVE HEADINGS..................................................................30
7.4 NOTICES...............................................................................30
7.5 COUNTERPARTS..........................................................................31
7.6 GOVERNING LAW.........................................................................31
7.7 WAIVERS AND AMENDMENTS................................................................32
7.8 ENTIRE AGREEMENT......................................................................32
7.9 SPECIFIC PERFORMANCE, REMEDIES........................................................32
7.10 SEVERABILITY..........................................................................32
7.11 INTERPRETATION........................................................................32
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of November 19, 1999 (this
"AGREEMENT"), is by and between CHIEF CONSOLIDATED MINING COMPANY, an Arizona
corporation, the common stock of which is publicly traded (the "Company"), and
DIMELING, ▇▇▇▇▇▇▇▇▇ & PARK, a Pennsylvania general partnership (the "INVESTOR").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of owning, developing
and managing precious metal mining properties;
WHEREAS, the Company desires to raise capital for use in the funding of
operations of the Company's Trixie Property and the initial exploration and
development of the Homansville Property, and the Investor desires to provide
such funding subject to the conditions set forth herein;
WHEREAS, the Company desires to offer and sell to the Investor up to a
total of 8,500,000 shares ("SHARES") of the Company's Convertible Common Stock,
par value $0.50 per share ("CONVERTIBLE COMMON STOCK"), and the Investor wishes
to acquire all or part of such Shares in accordance with the terms and subject
to the conditions set forth in this Agreement; provided, however, that the
Investor's purchase of such Shares of the Convertible Common Stock shall be made
in two (2) installments, with the first installment of 3,500,000 shares (the
"TRANCHE A STOCK") being purchased for Seven Million Dollars ($7,000,000), and
the second installment of 5,000,000 shares (the "TRANCHE B STOCK") being
purchased for a total of Ten Million Dollars ($10,000,000);
WHEREAS, the Tranche A Stock will be purchased and sold at the Tranche
A Closing upon the satisfaction of the Tranche A Closing Conditions, and the
Tranche B Stock will be purchased and sold at the Tranche B Closing upon the
satisfaction of the Tranche B Closing Conditions;
WHEREAS, the Company desires to issue and the Investor desires to
accept the Warrant to purchase additional Convertible Common Stock upon the
terms and conditions set forth herein; and
WHEREAS, certain capitalized terms used herein have the meanings set
forth in Section 1 hereof.
NOW, THEREFORE, in consideration of the mutual promises and subject to
the terms and conditions set forth herein, the Company and the Investor,
intending to be legally bound, hereby agree as follows:
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DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"AFFILIATE" of any particular Person means any other Person
which directly or indirectly controls, is controlled by, or is under common
control with such other Person, where "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, and except as otherwise
provided by the Securities act or other applicable law, in no event shall the
Company or any of its Affiliates be deemed an Affiliate of the Investor or any
of the Investor's Affiliates, nor shall the Investor or any of its Affiliates be
deemed an Affiliate of the Company or any of its Affiliates.
"AMENDMENT" - as defined in Section 2.7
"ASSIGNEES" - as defined in Section 2.3.
"BENEFIT PLANS" - as defined in Section 3.16.
"BUSINESS DAY" - any day other than a Saturday, Sunday, public
holiday under the laws of Arizona.
"CONVERTIBLE COMMON STOCK" - as defined in the Recitals.
"CLOSING" - as defined in Section 6.3.
"CLOSING DATE" - the date and time of which the Closing
actually takes place.
"COMMON STOCK" - as defined in Section 3.1.
"COMPANY" - as defined in the Recitals of this Agreement.
"DEFINED BENEFIT PLAN - as defined in Section 3.16.
"DESIGNATIONS" - as defined in Section 2.7.
"ENVIRONMENTAL LIEN" - any lien, whether recorded or
unrecorded, in favor of any governmental entity, relating to the
liability of the Company arising under any Environmental Law.
"ENVIRONMENTAL LAW" - any legal requirement, whether now
existing or subsequently enacted or amended, relating to (a)
pollution or protection of the environment, including natural
resources, (b) exposure of Persons, including but not limited to
employees, to Hazardous Materials, (c) protection of the public
health or welfare from the effects of products, by-products, wastes,
emissions, discharges, migration, or releases of Hazardous Materials
or (d) regulation of the manufacture,
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formulation, packaging, labeling, distribution, generation,
transportation, handling, treatment, storage or disposal. Without
limitation, "Environmental Law" shall also include (a) any Governmental
Authorization issued pursuant to any Environmental Law and the terms
and conditions thereof and (b) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq., the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. Sections 6901 et seq., the Clean
Water Act, 33 U.S.C. 1251 et seq., Clean Air Act, as amended, 42 U.S.C.
Sections 7401 et seq., Toxic Substances Control Act, 15 U.S.C.
Sections 2601 et seq., Hazardous Materials Transportation Act, 49
U.S.C. Section 5101, et seq., Occupational Safety and Health Act of
1970, as amended, 29 U.S.C. Sections 651 et seq., Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections
11001 et seq., Safe Drinking Water Act, as amended, 42 U.S.C.
Sections 300(f) et seq., and any similar or implementing state
law, and all amendments, rules, regulations and guidance documents
promulgated thereunder.
"ERISA" - the Employee Retirement Income Security Act of 1974
or any successor law, as amended, and regulations and rules issued
pursuant to that Act or any successor law.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling,
importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or
use (including any withdrawal or other use of groundwater) of
Hazardous Materials in, on, under, about, or from the Properties or
any part thereof into the environment, and any other act, business,
operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off
the Properties, or that may affect the value of the Properties.
"HAZARDOUS MATERIALS" - any waste or other substance that is
listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant or
a contaminant under or pursuant to any Environmental Law, including
any admixture or solution thereof, and specifically including
petroleum and all derivatives thereof or synthetic substitutes
therefor, asbestos or asbestos-containing materials, radon and
urea-formaldehyde.
"HOMANSVILLE PROPERTY" - 2,800 acres in East Tintic Mining
District of Utah: 2,500 of such acres are owned by Tintic Utah Metals
LLC, in which the Company holds 75% limited liability company
interest. 300 of such acres are owned by Central Standard
Consolidated Mining Company, in which the Company owns 23% of the
outstanding shares.
"INDEMNIFIED PERSONS"--as defined in Section 10.2.
"IRC"--the Internal Revenue Code of 1986 or any successor law,
as amended, and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.
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"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States
Department of the Treasury.
"KNOWLEDGE" - A Person shall be deemed to have "KNOWLEDGE" of
a particular fact or other matter if such Person or, if such Person is
not an individual, any individual who is serving, or who has at any
time served, as a director, officer, partner, executor, or trustee of
such Person or an employee with primary responsibility in connection
with a particular subject matter (or in any similar capacity) (I) has,
or at any time had, knowledge of such fact or other matter or (II)
could be expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter.
"LATEST BALANCE SHEET" - The Balance Sheet set forth in the
Company's Form 10-QSB as filed for the period ended September 30, 1999.
"LIENS" - mortgages, liens, security interests, pledges,
charges or other encumbrances of any kind.
"MATERIAL ADVERSE EFFECT" - the occurrence or existence of a
material adverse effect on the business, results of operations,
financial condition, assets, liabilities or prospects of the Company
taken as a whole.
"MULTI-EMPLOYER PLAN" - has the meaning given in Section 3.16.
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any legal requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by
industry associations and insurance companies), designed to provide
safe and healthful working conditions.
"OTHER AGREEMENTS" - has the meaning given in Section 3.2.
"PBGC" -the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERSON" - any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.
"PERMITTED LIENS" - tax materialmen's or like liens for
obligations not yet due and payable or which are being contested by the
Company in good faith.
"PLAN" - has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" - has the meaning given in ERISA Section
3(16)(B).
"PREFERRED STOCK" - as defined in Section 3.1.
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"PROPERTY" - the Trixie Mine Property and the Homansville
Property and any other property in which the Company has an interest as
disclosed in its SEC filings.
"PURCHASE PRICE" - $2.00 per share of Convertible Common
Stock.
"REGISTRATION RIGHTS AGREEMENT" - as defined in Section 2.4.
"RELEASE" - any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
environment, whether intentional or unintentional.
"REPRESENTATIVE" - with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"SECURITIES ACT" - the Securities Act of 1933 or any successor
law, as amended, and regulations and rules issued pursuant to that Act
or any successor law.
"SECURITIES EXCHANGE ACT" - the Securities Exchange Act of
1934 or any successor law, as amended, and regulations and rules issued
pursuant to that Act or any successor law.
"SEC" - Securities and Exchange Commission.
"TAX" or "TAXES" - federal, state, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or
use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including, without limitation,
deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"TAX RETURN" - returns, declarations, reports, claims for
refund, information returns or other documents (including any related
or supporting schedules, statements or information) filed or required
to be filed in connection with the determination, assessment or
collection of Taxes of any party or the administration of any laws,
regulations or administrative requirements related to any Taxes.
"THREATENED" - a claim, proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been
given (orally or in writing), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude
that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the
future.
"TRANCHE A STOCK" - as defined in the Recitals.
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"TRANCHE B STOCK" - as defined in Recitals.
"TRANCHE A CLOSING CONDITIONS" - as defined in Section 2.7.
"TRANCHE B CLOSING CONDITIONS" - as defined in Section 2.7.
"TRANCHE A CLOSING " - as defined in Section 2.2.
"TRANCHE B CLOSING " - as defined in Section 2.2.
"TRANCHE A PURCHASE PRICE" - as defined in Section 2.2.
"TRANCHE B PURCHASE PRICE" - as defined in Section 2.2.
"TRIXIE PROPERTY" - the gold and silver mine located in the
East Tintic Mining District of Utah. The Property is owned by Chief
Gold Mines, Inc., a wholly owned subsidiary of the Company.
"WARRANT" - as defined in Section 2.5.
2. TRANSACTIONS AND CLOSING.
2.1. SALE AND PURCHASE OF THE CONVERTIBLE COMMON STOCK.
(a) Subject to the terms hereof and the satisfaction of the
Tranche A Closing Conditions, the Company shall sell to the
Investor, and the Investor shall purchase from the Company, at
the Tranche A Closing, the Tranche A Stock.
(b) Subject to the terms hereof and the satisfaction of the
Tranche B Closing Conditions, the Company shall sell to the
Investor, and the Investor shall purchase from the Company, at
the Tranche B Closing, the Tranche B Stock.
2.2. DESCRIPTION OF TRANCHES.
(a) Subject to satisfaction of the Tranche A Closing Conditions,
the closing of the purchase and sale of the Tranche A Stock
(the "TRANCHE A CLOSING") will take place at the offices of
the Investor's counsel, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 A.M. (local
time), on December 30, 1999. At the Tranche A Closing, the
Company will sell, issue and deliver to the Investor, and the
Investor will purchase and accept from the Company, the
Tranche A Stock at a purchase price of $2.00 per share for a
total Purchase Price of Seven Million Dollars ($7,000,000)
(the "TRANCHE A PURCHASE PRICE").
(b) Subject to satisfaction of the Tranche B Closing Conditions,
the closing of the purchase and sale of the Tranche B Stock
(the "TRANCHE B CLOSING") will take place at the offices of
the Investor's counsel, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 A.M. (local
time), on a
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date designated by the Investor as otherwise mutually agreed
upon by the parties. At the Tranche B Closing, the Company
will sell, issue and deliver to the Investor, and the Investor
will purchase and accept from the Company, the Tranche B Stock
at a purchase price of $2.00 per share for a total Purchase
Price of Ten Million Dollars ($10,000,000) (the "TRANCHE B
PURCHASE PRICE").
All funds paid hereunder shall be paid by wire transfer of immediately
available funds to a bank account to be specified by the Company.
2.3. ASSIGNMENT OF RIGHT TO PURCHASE SHARES. The Investor may assign its
rights to purchase Shares hereunder, in whole or in part, to one or
more other Persons designated by the Investor ("ASSIGNEES"); provided
that if such Assignee is not an Affiliate of Investor or any partner of
Investor or its Affiliates, no such assignment shall be made without
the consent of the Company, which consent shall not be unreasonably
withheld and which shall be deemed granted if the Company has not
refused in writing to consent within fifteen (15) days of receipt of
Investor's notice to Company of a proposed assignment; and provided
further that (I) no such assignment shall affect the obligations of the
Investor to the Company under this Agreement, and (II) each Assignee
shall have executed and delivered to the Company a certificate making
the representations and warranties made by the Investor in Sections 4.3
through 4.6 of this Agreement, and representations and warranties
comparable to those set forth in Sections 4.1 and 4.2 of this Agreement
(as appropriate for each Assignee's form of organization or individual
status). In the event that the Investor makes any such assignment to an
Assignee, all references contained herein to the "Investor" shall
include such Assignees (subject to clause (i) of the foregoing
proviso), the Investor shall be entitled to act on behalf of such
Assignees for all purposes of this Agreement, and any notice given by
the Company to the Investor shall be deemed given to such Assignees.
2.4. REGISTRATION RIGHTS. The Company shall grant to the Investor
registration rights appurtenant to the Convertible Common Stock upon
conversion thereof. Such rights shall be exercisable by the Investor
three (3) times upon demand and an unlimited number of times as
piggyback rights upon the public offering of other securities of the
Company. Such rights are more fully described in and are subject to the
provisions of the Registration Rights Agreement in the form of EXHIBIT
A hereto ("REGISTRATION RIGHTS AGREEMENT").
2.5. WARRANT. Simultaneously with the Tranche A Closing and as additional
consideration for the purchase of Shares hereunder, the Company shall
issue to the Investor a warrant, in the form of EXHIBIT B hereto, to
purchase that number of shares of Convertible Common Stock, which would
cause, after taking into account the conversion of such purchased
shares plus the conversion of the Convertible Common Stock held by the
Investor immediately prior to the exercise of such Warrant, the
Investor to hold 68% of the then issued and outstanding common stock of
the Company ("WARRANT"). Such Warrant shall be exercisable after the
Tranche B Closing at a price of $2.25 per share by the Investor upon
the sale, merger,
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consolidation, or other business combination of the Company, or upon
the effective date of a registration statement of the Company's Common
Stock in a public offering under the Securities Act.
2.6. CERTIFICATES. At each of the Tranche A and Tranche B closings, the
Company shall deliver one or more certificates evidencing the
appropriate number of shares of Convertible Common Stock being
purchased at such Closing and bearing the following legend:
The shares evidenced by this certificate are not registered
under the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder ("Securities
Act"), and these shares may not be transferred, sold, assigned
or otherwise conveyed unless they are registered under the
Securities Act or, in the opinion of counsel for the Company,
an exemption from such registration is available.
Upon the request of the Investor and upon delivery to the Company of
the legended certificates accompanied by an opinion of counsel to the
Company that such legend is no longer required, the Company will issue
to the Investor unlegended share certificates in exchange for those
delivered by the Investor.
2.7. CONDITIONS OF CLOSING.
(a) Tranche A Closing Conditions. The obligations of the Investor
to consummate the Tranche A Closing shall be subject to the
satisfaction (or waiver by the Investor) of each of the
following conditions (the "TRANCHE A CLOSING CONDITIONS"):
(i) Articles of Amendment and Restatement of Articles of
Incorporation. The Company shall have caused the
amendment and restatement of its Articles of
Incorporation, including, among other things,
provision for the authorization and issuance of the
Convertible Common Stock ("Designations") in the form
set forth as EXHIBIT C hereto (the "AMENDMENT"), to
have been duly authorized, adopted, executed,
acknowledged by all necessary corporate action,
including, without limitation, the requisite vote of
its stockholders at a meeting duly called for such
purpose, and such amendment shall have been filed
with the Arizona Corporation Commission.
(ii) Registration Rights Agreement. The Company and the
Investor shall have executed and delivered the
Registration Rights Agreement.
(iii) Representations, Warranties and Covenants. All
representations and warranties of the Company and the
Investor contained in this Agreement, the
Registration Rights Agreement, the Warrant and all
other agreements between the Company and the Investor
and any certificates, schedules and exhibits
delivered in connection therewith shall be true in
all material
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respects as of the Tranche A Closing and the Company
and the Investor shall have performed in all material
respects each its covenants contained herein or
therein to be performed prior to such date.
(iv) Opinion of Counsel. The Company shall have delivered
to the Investor the opinions of Mariscal, Weeks,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.A., Arizona counsel to the
Company, and ▇▇▇▇▇▇ ▇▇▇▇▇, P.C. to the Company, each
dated as of the Tranche A Closing, in the form to be
reasonably agreed upon by the parties.
(v) Secretary's Certificate. The Company shall have
delivered to the Investor a certificate of the
Secretary or an Assistant Secretary of the Company
substantially in the form of EXHIBIT D.
(vi) No Legal Prohibitions. Neither the Company nor the
Investor shall be subject, as of the Tranche A
Closing, to any injunction or other legal prohibition
against consummation of the transactions contemplated
by this Agreement.
(vii) No Pending Litigation. There shall be no suit,
action, proceeding or investigation pending by or
before any court or governmental authority which
either (1) seeks to prohibit or restrain, or seeks
material damages or penalties in respect of, the
transactions contemplated herein, or (2) is
reasonably likely, if determined adversely to the
Company or the Investor, to impose or result in
liabilities, costs, damages or losses to the Company
or the Investor of more than $25,000.
(b) Tranche B Closing Conditions. The obligations of the Investor
to consummate the Tranche B Closing shall be subject to the
satisfaction (or waiver by the Investor) of each of the
following conditions (the "TRANCHE B CLOSING CONDITIONS"):
(i) Satisfaction of Tranche A Closing Conditions. Each of
Tranche A's Closing Conditions shall have been
satisfied, and the Tranche A Closing shall have been
consummated.
(ii) Determination Regarding Homansville Property. The
Investor shall have determined, in its sole
discretion, based upon documentation provided by the
Company, that the Homansville Property is a
commercially viable mining project.
(iii) Representations, Warranties and Covenants. All
representations and warranties of the Company and the
Investor contained in this Agreement, the
Registration Rights Agreement, the Warrant and all
other agreements between the Company and the Investor
and any certificates, schedules and exhibits
delivered in connection therewith shall be true in
all material respects as of the Tranche B Closing
(except for changes therein (x) in the
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ordinary course of business which do not have a
Material Adverse Effect or (y) as approved by the
Investor and the Board of Directors of the Company
after the date of the Tranche A Closing), and the
Company and the Investor shall have performed in all
material respects each of its covenants contained
herein or therein to be performed prior to such date.
(iv) Closing Certificate. The Company shall have delivered
to the Investor a certificate, executed by the
President of the Company, certifying that all
representations and warranties of the Company
contained in this Agreement, the Registration Rights
Agreement, the Warrants and all other agreements
between the Company and the Investor and any
certificates, schedules and exhibits delivered in
connection are true in all material respects as of
the Tranche B Closing (except for changes therein (x)
permitted or contemplated by this Agreement, or (y)
as approved by the Investor and the Board of
Directors of the Company after the date of the
Tranche B Closing) and that the Company has performed
in all material respects each of its covenants
contained herein or therein to be performed prior to
such date.
(v) No Legal Prohibitions. Neither the Company nor the
Investor shall be subject, as of the Tranche B
Closing, to any injunction or other legal prohibition
against consummation of the transactions contemplated
by this Agreement.
(vi) No Pending Litigation. There shall be no suit,
action, proceeding or investigation pending by or
before any court or governmental authority which
either (1) seeks to prohibit or restrain, or seeks
material damages or penalties in respect of, the
transactions contemplated herein, or (2) is
reasonably likely, if determined adversely to the
Company or the Investor, to impose or result in
liabilities, costs, damages or losses to the Company
or the Investor of more than $25,000.
2.8. FAILURE TO MEET OR WAIVER OF CLOSING CONDITIONS.
(a) Tranche B Closing Conditions. If the closing conditions for
the Tranche B Closing are not satisfied by the Company or the
Investor prior to December 31, 2002, the Investor's right to
purchase the Tranche B Stock shall terminate.
(b) Redemption of Tranche A Stock. In the event the Tranche B
Closing has not occurred on or before December 31, 2002 and
the Investor's right to purchase the Tranche B Stock has
terminated, the Investor shall have the right to sell all or
part of the Tranche A Stock to the Company, and the Company
shall be required to purchase such shares at a purchase price
equal to $2.00 per share. Such Shares shall be purchased by
the Company in an amount not to exceed (except at the option
of the Company) the lesser of 50% of Excess Cash Flow or 20%
of the originally issued Tranche A Stock per year commencing
December 1, 2003 and continuing until all such Shares have
been repurchased at the earliest possible
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date; provided, however, the Company shall not be obligated to
purchase any Convertible Common Stock issued to the Investor
in the form of distributions or dividends on the originally
issued Tranche A Stock or any share of Common Stock into which
the Tranche A Stock was converted. For purposes of this
Section 2.8, "Excess Cash Flow" of the Company means earnings
before interest, taxes, depreciation, depletion, and
amortization, less capital expenditures, less principal
payments on outstanding indebtedness.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Investor as follows:
3.1. CAPITALIZATION. The authorized capital stock of the Company as
of the date hereof prior to the filing of the Amendment
authorizing the creation of the Convertible Common Stock to be
sold hereunder, consists of (a) 1,500,000 shares of preferred
stock, par value $.50 per share (the "PREFERRED STOCK"), and
(b) 20,000,000 shares of common stock, par value $.50 per
share (the "COMMON STOCK"). As of the date hereof (and prior
to the consummation of the transactions contemplated hereby),
there are 5,168 shares of Preferred Stock and 7,954,601 shares
of Common Stock outstanding. All outstanding shares of
Preferred Stock and Common Stock have been duly authorized and
are validly issued, fully paid and nonassessable, and no
liability attaches to the ownership thereof. As of the date
hereof, 16,441 shares of the Company's Common Stock are held
in Treasury. The Company has outstanding an offer to holders
of all shares of the Preferred Stock to exchange their shares
for Common Stock on a share for share basis. Other than as set
forth on SCHEDULE 3.1 hereto and as otherwise provided herein,
there are no subscription, warrant, option, convertible
security or other rights (contingent or otherwise) to purchase
or otherwise acquire any of the shares of the capital stock of
the Company, and there are no commitments by the Company to
issue shares, subscriptions, warrants, options, convertible
securities or other such rights. Except as set forth on
SCHEDULE 3.1 hereto and as otherwise provided herein, the
Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its capital stock
or any interest therein or to pay any dividend or make any
other distribution in respect thereof. Except as set forth in
such Schedule or the Amendment, there are no voting trusts or
agreements, preemptive rights or, to the knowledge of the
Company, any proxies relating to any securities of the Company
(whether or not the Company is a party thereto). All of the
outstanding shares of the capital stock of the Company were
issued in compliance with all applicable federal and state
securities laws.
3.2. CONSENTS, AUTHORIZATIONS AND BINDING EFFECT. Except as
required for the Amendment and as otherwise specifically set
forth herein, no consent, approval, authorization or waiver
of, and no notice to, any Person whatsoever is necessary or
required for the Company's execution, delivery and performance
of this Agreement, the Warrant, the Registration Rights
Agreement, and any other instrument delivered in connection
herewith or therewith ("OTHER AGREEMENTS"). This Agreement and
Other Agreements have been or will be duly executed and
delivered by the Company and,
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subject to the approval of its shareholders, will constitute
the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their
respective terms. The execution, delivery and performance of
this Agreement and Other Agreements will not (a) conflict
with, result in the breach of or constitute a default under
any agreement, restriction or other instrument to which the
Company is a party or by which the Company may be bound or
affected, or (b) constitute a violation of any statute,
ordinance, judgment, order, decree, regulation or rule of any
court, governmental authority or arbitrator relating to the
Company. The Shares and the Convertible Common Stock
underlying the Warrant, upon approval by the Company's
shareholders and the filing of the Amendment, will be duly
authorized and, when issued in accordance with this Agreement
or the Warrant, will be (1) validly issued, fully paid and
nonassessable, and (2) free and clear of all liens, charges,
restrictions, claims and encumbrances. Prior to the Tranche A
Closing, the shares of Common Stock issuable upon conversion
of the Convertible Common Stock will be duly and validly
reserved for issuance upon conversion of the Convertible
Common Stock purchased by the Investor, and the shares of
Convertible Common Stock to be issued upon exercise of the
Warrant will be duly and validly reserved for issuance upon
exercise of the Warrant, and such shares, when so issued, will
be duly authorized, validly issued, fully paid and
nonassessable and will be free and clear of all liens,
charges, restrictions, claims and encumbrances. The issuance,
sale and delivery of the Shares and the Convertible Common
Stock to be issued pursuant to the Warrant are not subject to
any preemptive right, right of first refusal or other right in
favor of any Person.
3.3. ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Company is duly
qualified and in good standing as a foreign corporation in all
states in which the nature of its business requires it to be
so qualified, except where the failure to be so qualified
would not result in a Material Adverse Effect. The Company has
heretofore delivered to the Investor complete and correct
copies of the Company's Articles of Incorporation, as amended,
and the By-Laws, as amended and in effect on the date hereof.
3.4. EQUITY INVESTMENTS; SUBSIDIARIES. Except as set forth on
SCHEDULE 3.4, the Company does not own, directly or
indirectly, any capital stock or other equity interest, in any
corporation, association, trust, partnership, joint venture or
other business entity. True, correct and complete copies of
all documents reflecting investments or ownership by the
Company in any subsidiaries have been made available to
Investor for inspection at the Company's offices in New York,
New York.
3.5. FINANCIAL STATEMENTS. True and complete copies of (i) the
Company's Annual Report on Form 10-K for the fiscal years
ended December 31, 1997 and December 31, 1998, (ii) Company's
Proxy Statements dated November 16, 1998 and, (iii) Company's
Quarterly Reports on Form 10-QSB for the fiscal quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999, (items
(i) through (iii) collectively referred to herein as the
"Exchange Act Filings") have been delivered to Investor. The
Exchange
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Act Filings, as of their respective filing dates, did not
contain any untrue statements of a material fact or omit to
state any material fact necessary in order to make the
statements made therein, in the light of the circumstances
under which they were made, not misleading. Except as
disclosed to the Investor in writing, in materials filed by
the Company pursuant to the Securities Act or the Securities
Exchange Act, or set forth in press releases that have been
made public by the Company (including, but not limited to,
those from time to time posted at or available through
Nasdaq's website at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇.▇▇▇), there has been no
Material Adverse Effect since September 30, 1999. Except as
set forth on SCHEDULE 3.5, since the date of the Latest
Balance Sheet, the Company has conducted its business only in
the ordinary course of business consistent with past custom
and practice, and has incurred no liabilities or obligations
whatsoever other than in the ordinary course of business
consistent with past custom and practice. Without limitation
of the foregoing and except as set forth on SCHEDULE 3.5 since
the Latest Balance Sheet Date, the Company has not:
(a) voluntarily or involuntarily sold, transferred,
abandoned, surrendered, subjected to a Lien or
otherwise disposed of any assets or property rights
except in the ordinary course of business consistent
with past custom or practice;
(b) changed any accounting principles, methods or
practices utilized by it or changed any of its
depreciation rates or amortization policies or rates;
(c) made any capital expenditure in excess of $100,000
except in the ordinary course of business.
(d) made any loan or advance to any party other than a
wholly-owned subsidiary other than loans in the
aggregate amount of $482,500 to Tintic Utah Metals,
LLC, in which the Company owns a 75% interest;
(e) issued, redeemed or purchased any stock, bond or
corporate security or declared or made any payment or
distribution on or with respect to its capital stock;
(f) incurred debt, liabilities, or obligations of any
nature whether accrued, absolute, contingent, direct,
indirect, perfected or otherwise and whether due or
to become due except current liabilities incurred and
liabilities under contracts entered into in the
ordinary course of business consistent with past
custom and practice;
(g) increased the compensation payable to any of its
officers, employees or agents except in the ordinary
course consistent with past practice; or
(h) entered into any other material transaction, or
committed to any of the foregoing, not otherwise
disclosed herein.
3.6. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The accounts
payable, accrued expenses and accounts receivable of the
Company reflected on the Latest Balance Sheet, and all
accounts payable, accrued expenses and accounts receivable of
the Company arising since the date thereof, arose from bona
fide transactions in the
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ordinary course of business and are, to the best
knowledge of the Company, collectible in full, subject to the
allowance for uncollectible accounts set forth on the Latest
Balance Sheet.
3.7. ASSETS Except as set forth in SCHEDULE 3.7 hereto, the Company
has good and marketable title to, or a valid leasehold
interest in, the properties and assets used by it, located on
its Properties, free and clear of all Liens, except for
Permitted Liens, and except for properties and assets disposed
of in the ordinary course of business since the date of the
Latest Balance Sheet. The Company owns, or has a valid
leasehold interest in, all assets necessary for the conduct of
its business as presently conducted, including, without
limitation, the Trixie Property and the Homansville Property.
3.8. PATENTS, TRADEMARKS AND COPYRIGHTS, ETC. Except as set forth
on SCHEDULE 3.8 attached hereto, the Company owns, or is
licensed or otherwise authorized to use, all patents,
trademarks, trade names, copyrights, technology, know-how,
processes and other intellectual property used by the Company
in the conduct of its business as presently and as proposed to
be conducted. SCHEDULE 3.8 attached hereto contains a complete
list of (a) all patents owned and all trademarks, trade names,
service marks and copyrights owned or used by the Company, all
applications therefor and all licenses and other agreements
relating thereto, and (b) all agreements relating to
technology, know-how, processes and other intellectual
property which the Company is licensed or authorized to use by
others. To the best knowledge of the Company, no claims have
been asserted by any person (i) to the effect that any
activities of the Company infringe on any patents or (ii) that
oppose the use of any such trademarks, trade names,
copyrights, technology, know-how, processes or other
intellectual property or (iii) that challenge or question the
validity or effectiveness of any such license or agreement. To
the best knowledge of the Company, the Company's activities
and the Company's use of such patents, trademarks, trade
names, copyrights, technology, know-how, processes or other
intellectual property do not infringe on the rights of any
Person. All filings with governmental entities for the
maintenance of and enforcement of the Company's patents,
trademarks, trade names, service marks and copyrights have
been made on a timely basis, except as set forth in Schedule
3.8.
3.9. LITIGATION. Except as set forth on SCHEDULE 3.9 attached
hereto, there is no action, suit, claim, proceeding or
governmental investigation now pending or, to the Knowledge of
the Company, Threatened against or affecting the Company, nor,
to the Knowledge of the Company, does there exist any valid
basis therefor. None of the matters disclosed on SCHEDULE 3.9
is expected to have a Material Adverse Effect. Except as set
forth on SCHEDULE 3.9, neither the Company nor its business is
bound or materially affected by any judgment, order, writ,
injunction or decree of any court or governmental authority.
The Company is not in violation or default of any judgment,
order, writ, injunction or decree of any court or governmental
authority.
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3.10. TAXES.
(a) Except as set forth on SCHEDULE 3.10, the Company has
filed all Tax Returns which it is required to file
under applicable laws and regulations; all such filed
Tax Returns are complete and correct in all material
respects and have been prepared in compliance with
all applicable laws and regulations in all material
respects, and all Taxes shown thereon as being due
and owing have been paid; the Company has paid all
Taxes due and owing by it for which no Tax Return is
required, and has withheld and paid over to the
appropriate taxing authority all Taxes which it is
required to withhold from amounts paid or owing to
any employee, stockholder, creditor or other third
party; the Company has not waived any statute of
limitations with respect to any Taxes or agreed to
any extension of time with respect to any Tax
assessment or deficiency; the accrual for Taxes on
the Latest Balance Sheet is adequate to pay all
outstanding Tax liabilities of the Company for all
periods ending prior to and including such Latest
Balance Sheet date and the assessment of any
additional Taxes for periods for which Tax Returns
have been filed by the Company and does not exceed
the recorded liability therefor on the Latest Balance
Sheet (excluding any amount recorded which is
attributable solely to timing differences between
book and Tax income); since the date of the Latest
Balance Sheet, the Company has not incurred any
liability for Taxes other than in the ordinary course
of business; no foreign, Federal, state or local Tax
audits or administrative or judicial proceedings are
pending or being conducted with respect to the
Company; and no information related to Tax matters
has been requested by any foreign, Federal, state or
local taxing authority and no written notice
indicating an intent to open an audit or other review
has been received by the Company from any foreign,
Federal, state or local taxing authority; and there
are no material unresolved questions or claims
concerning the Company's Tax liability.
(b) The Company has not made an election under IRC
Section 341(f). The Company is not liable for any
Taxes of another Person (i) under Treas. Reg. Section
1.1502-6 (or comparable provisions of state, local or
foreign law), (ii) as a transferee or successor,
(iii) by contract or indemnity or (iv) otherwise. The
Company is not a party to any Tax sharing agreement.
The Company has disclosed on its Federal income Tax
Returns any position taken for which substantial
authority (within the meaning of IRC Section
6662(d)(2)(B)(i)) did not exist at the time the
return was filed. The Company has not made any
payments, is not obligated to make payments, and is
not party to any agreement that could obligate it to
make any payments, that would not be deductible under
IRC Section 280G.
(c) Except as set forth on SCHEDULE 3.10, the Company is
not, and has never been, a member of any Affiliated
Group as defined in IRC Section 1504 (or any similar
group under state, local or foreign law) that has
filed a consolidated return for Federal, state, local
or foreign income Tax purposes.
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3.11. CONTRACTS AND COMMITMENTS.
(a) Except as expressly contemplated by this Agreement or as set
forth in SCHEDULE 3.11 hereto, the Company is not a party to
or bound by any written or oral:
(i) management agreement or other contract relating to
the Company's management or operation of any
property, other than agreements involving the payment
of less than $50,000 per year which are not otherwise
material to the Company's business;
(ii) contract for the employment of any officer,
individual employee or other Person on a full-time,
part-time, consulting or other basis or contract
relating to loans to officers, directors or
Affiliates of the Company;
(iii) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for
deferred or other compensation to employees or any
other employee benefit plan or arrangement, or any
collective bargaining agreement or any other contract
with any labor union, or severance agreements,
programs, policies or arrangements;
(iv) contract under which the Company has advanced or
loaned to any other Person amounts in the aggregate
exceeding $50,000;
(v) agreement or indenture relating to borrowed money or
other indebtedness or the mortgaging, pledging or
otherwise placing a Lien on any material asset or
material group of assets of the Company;
(vi) guarantee of any obligation, or power of attorney
granted to any Person;
(vii) lease or agreement under which the Company is lessee
of or holds or operates any property, real or
personal, owned by any other party, except for any
lease of personal property under which the aggregate
annual rental payments do not exceed $50,000;
(viii) lease or agreement under which the Company is lessor
of or permits any third party to hold or operate any
property, real or personal, owned or controlled by
the Company;
(ix) contract or group of related contracts with the same
party or group of affiliated parties the performance
of which involves consideration in excess of $50,000
during any 12-month period;
(x) assignment, license, indemnification or agreement
with respect to any intangible property;
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(xi) agreement under which it has granted any person any
registration rights (including, without limitation,
demand and piggyback registration rights);
(xii) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the
world; or
(xiii) any other agreement which is material to its
operations and business as presently proposed to be
conducted.
(b) All the contracts, agreements and instruments set forth in
SCHEDULE 3.11 hereto are valid, binding and enforceable in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and to
general principles of equity (whether considered in a
proceeding in equity or at law). The Company is not in default
under any such contract, agreement or instrument, nor has the
Company received any claim of default under any such contract,
agreement or instrument, in each case which defaults could, in
the aggregate, reasonably be expected to result in a Material
Adverse Effect. No event has occurred which with the passage
of time or the giving of notice or both would result in a
default, breach or event of noncompliance by the Company under
any such contract, agreement or instrument which defaults,
breaches or events of noncompliance could, in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
The Company has no present expectation or intention of not
fully performing in all material respects all such
obligations, and the Company does not have knowledge of any
breach or anticipated breach by the other parties to any such
contract, agreement, instrument or commitment which breaches
could, in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(c) The Company has delivered to the Investor's counsel a true and
correct copy of each of the written instruments, plans,
contracts and agreements and an accurate description of each
of the oral arrangements, contracts and agreements which are
referred to in SCHEDULE 3.11 hereto, together with all
amendments, waivers or other changes thereto.
3.12. COMPLIANCE WITH LAW; PERMITS AND AUTHORIZATIONS; ENVIRONMENTAL AND
SAFETY MATTERS.
(a) The Company has complied in all material respects with all
applicable federal, state, local or foreign laws, regulations,
ordinances and rulings (including common law), including,
without limitation, all applicable requirements under the
Securities Act and the Securities Exchange Act and
Occupational Safety and Health Law. Set forth in SCHEDULE 3.12
attached hereto is a complete and accurate list of all
material licenses, permits and authorizations issued by
governmental authorities which are held, or applied for, by
the Company or by any Person which it manages, including all
governmental authorizations necessary to operate the
properties which the Company currently operates. Such
licenses, permits and authorizations are all the licenses,
permits and authorizations required
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for the conduct of the Company's business as presently
conducted and as proposed to be conducted, and such licenses,
permits and authorizations are in full force and effect and no
violations are or have been recorded in respect thereof, nor
is there any proceeding pending or, to the best knowledge of
the Company, threatened, to limit or revoke the same.
(b) Except as set forth in SCHEDULE 3.12 hereto:
(i) The Company has complied in all material respects
with and is currently in compliance in all material
respects with all Environmental Laws, and the Company
has not received any oral or written notice, report,
order, or information regarding any material
liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) for any contribution
toward the performance of corrective, investigatory
or remedial obligations or any assessment of damages
to or restoration of natural resources, arising under
Environmental Law which relate to the Company, any of
its properties or facilities, or any property to
which any waste generated, or any substance used, by
the Company or any predecessor to the Company has
been transported for treatment, storage, or disposal.
(ii) Without limiting the generality of the foregoing, the
Company has obtained and complied in all material
respects with, and is currently in compliance in all
material respects with, all permits, licenses and
other authorizations that are required pursuant to
any Environmental Law for the occupancy of its
Properties or facilities or the operation of its
business. A list of the permits, licenses and other
authorizations issued to the Company pursuant to
Environmental Law (if any) is set forth on SCHEDULE
3.12 hereto.
(iii) Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall
impose any obligations on the Company for site
investigation or cleanup, or notification to or
consent of any governmental agencies or third parties
under any Environmental Law (including, without
limitation, any so-called "transaction-triggered" or
"responsible property transfer" laws and
regulations).
(iv) The Company has not engaged in any Hazardous Activity
or treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or
Released any substance (including, without
limitation, any Hazardous Materials or waste) or
owned, occupied or operated any facility or property,
so as to give rise to material liabilities of the
Company for response costs, natural resource damages
or attorneys fees pursuant to CERCLA or any other
Environmental Law.
(v) To the Knowledge of the Company, none of the
following exists at any property or facility owned,
occupied or operated by the Company:
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(1) underground storage tanks or surface
impoundments;
(2) any friable or damaged asbestos-containing
materials; or
(3) materials or equipment containing
polychlorinated biphenyls.
(vi) The Company has not expressly assumed, undertaken or
indemnified any Person for, or to its Knowledge by
operation of law assumed or undertaken, any liability
or corrective, investigatory or remedial obligation
of any other Person relating to any Environmental
Law.
(vii) No Environmental Lien has attached to any property
owned, leased or operated by the Company which could
reasonably be expected to result in a Material
Adverse Effect.
3.13. USE OF PROCEEDS. The net proceeds received by the Company from
the sale of the Convertible Common Stock shall be used by the
Company to fund the operations of the Trixie Property,
including the rehabilitation of the concentrating mill to
process Trixie and Homansville ore, and to fund the initial
exploration and development of the Homansville Property to the
extent necessary in the opinion of Investor the Company's
Board of Directors determine the viability of such property;
provided, however, that to the extent the Company has expended
general working capital for the purposes set forth in the
preceding clause during the 24-month period immediately
preceding the date of the Tranche A Closing, the Company may
apply a portion of the proceeds equal to such expenditures to
general working capital purposes; and provided further, that
the Company shall place the proceeds in investments approved
by Investor during any period between receipt and application
to such uses.
3.14. NO CONSENT OR APPROVAL REQUIRED. Neither (a) the registration
of the Convertible Common Stock under the Securities Act
(assuming the accuracy of the Investor's representations and
warranties set forth in Section s 4.4 through 4.6), (b) the
consent of any Person, nor (c) except for the filing of the
Amendment and approvals required under state securities or
blue sky laws, if any (all of which, if applicable, have been
or will be obtained prior to the Tranche A Closing or Tranche
B Closing as appropriate), the authorization, consent,
approval or other order of any governmental agency or body, is
required for the valid authorization, execution and delivery
by the Company of this Agreement, or for the valid
authorization, issuance, sale and delivery of the Convertible
Common Stock to Investor.
3.15. BROKERS. No person or firm has, or will have, any right,
interest or valid claim against the Company or the Investor,
for any commission, fee or other compensation as a finder or
broker or in any similar capacity as a result of any act or
omission by the Company or anyone acting on behalf of the
Company in connection with any transaction contemplated by
this Agreement other than ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇.
3.16. EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 3.16
attached hereto, the Company does not maintain or sponsor, nor
is it required to make contributions to, any
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pension, profit-sharing, savings, bonus, incentive or deferred
compensation, severance pay, medical, life insurance, welfare or other
employee benefit plan. Except as set forth in SCHEDULE 3.16 attached
hereto, all pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare
or other employee benefit plans within the meaning of Section 3(3) of
ERISA, in which the Company's employees participate (such plans and
related trusts, insurance and annuity contracts, funding media and
related agreements and arrangements, other than any "multiemployer
plan" (within the meaning of Section 3(37) of ERISA), being hereinafter
referred to as the "BENEFIT PLANS" and any such multiemployer plans
being hereinafter referred to as the "MULTIEMPLOYER PLANS") comply with
all applicable requirements of the Department of Labor and the IRS, and
with all other applicable law, except where the violation of or
non-compliance with such requirements or laws, singly or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect, and the Company has not taken or failed to take any action with
respect to the Benefit Plans or Multiemployer Plans which might create
any liability on the part of the Company, except where any such action
or failure to act, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Each "fiduciary" (within
the meaning of Section 3(21)(A) of ERISA) as to each Benefit Plan and
as to each Multiemployer Plan has complied with the requirements of
ERISA and all other applicable laws in respect of each such Plan,
except where the violation of or non-compliance with such requirements
or laws, singly or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. The Company has furnished to the
Investor copies of all existing Benefit Plans and Multiemployer Plans
and all financial statements, actuarial reports and annual reports and
returns filed with the IRS with respect to such Benefit Plans and
Multiemployer Plans, if any. Such financial statements and actuarial
reports and annual reports and returns are true and correct in all
material respects, and none of the actuarial assumptions underlying
such documents have changed since the respective dates thereof. In
addition:
(a) Each Benefit Plan intended to be qualified under IRC Section
401(a) has received a favorable determination letter from the
IRS as to its qualification thereunder;
(b) No Benefit Plan which is a "defined benefit plan" (within the
meaning of Section 3(35) of ERISA) (hereinafter referred to as
the "DEFINED BENEFIT PLANS") or Multiemployer Plan has
incurred an "accumulated funding deficiency" (within the
meaning of IRC Section 412(a)), whether or not waived;
(c) No "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Defined Benefit Plan
or any Multiemployer Plan;
(d) The Company has not withdrawn (partially or totally within the
meaning of ERISA) from any Benefit Plan or any Multiemployer
Plan and neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein
will result in the withdrawal (partially or totally within the
meaning of ERISA) from any Benefit Plan or any Multiemployer
Plan,
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or in any withdrawal or other liability of any nature to the
Company under any Benefit Plan or any Multiemployer Plan;
(e) No "prohibited transaction" (within the meaning of Section 406
of ERISA or IRC Section 4975(c)) has occurred with respect to
any Benefit Plan or any Multiemployer Plan;
(f) No provision of any Benefit Plan or of any agreement, and no
act or omission of the Company, in any way limits, impairs,
modifies or otherwise affects the right of the Company
unilaterally to amend or terminate any Benefit Plan subject to
the requirements of applicable law;
(g) Except as set forth on SCHEDULE 3.16 attached hereto, there
are no contributions which are or hereafter will be required
to have been made to trusts in connection with any Benefit
Plan that would constitute a "defined contribution plan"
(within the meaning of Section 3(34) of ERISA), with respect
to services rendered by the Company's employees prior to the
date of the Tranche A Closing;
(h) Other than claims in the ordinary course for benefits with
respect to the Benefit Plans or Multiemployer Plans, there are
no actions, suits or claims (including claims for income
Taxes, interest, penalties, fines or excise Taxes with respect
thereto) pending with respect to any Benefit Plan or any
Multiemployer Plan, or, to the knowledge of the Company, any
circumstances which might give rise to any such action, suit
or claim (including claims for income Taxes, interest,
penalties, fines or excise Taxes with respect thereto);
(i) All material reports, returns and similar documents with
respect to the Benefit Plans required to be filed with any
governmental agency have so been filed in a timely fashion;
(j) The Company has not incurred any liability to the PBGC (except
for required premium payments). No notice of termination has
been filed by the plan administrator (pursuant to Section 4041
of ERISA) or issued by the PBGC (pursuant to Section 4042 of
ERISA) with respect to any Benefit Plan subject to ERISA.
There has been no termination of any Defined Benefit Plan or
any related trust by the Company; and
(k) The Company does not have any obligation to provide health or
other welfare benefits to former, retired or terminated
employees of the Company, except as specifically required
under IRC Section 4980B. The Company has substantially
complied with the notice and continuation requirements of IRC
Section 4980B and the regulations thereunder.
3.17. DISCLOSURE. Neither this Agreement nor any other document, certificate
or written statement furnished to the Investor by or on behalf of the
Company in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
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herein and therein not misleading. There is no fact known to the
Company which materially adversely affects or could reasonably be
expected to have a Material Adverse Effect which has not been set forth
in this Agreement or in the other documents, certificates or statements
furnished to the Investor by or on behalf of the Company pursuant
hereto.
3.18. BOOKS AND RECORDS. The books and records of the Company are in all
material respects complete and correct, have been maintained in
accordance with good business practices and accurately reflect the
basis for the financial position and results of operations of the
Company set forth in the financial statements. All of such books and
records have been made available for inspection by the Investor and its
representatives.
3.19. INVESTMENT COMPANY. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and will
not, as a result of the transactions contemplated hereby, become an
"investment company."
3.20. REGISTRATION RIGHTS. Except as set forth in the Registration Rights
Agreement, the Company is not under any contractual obligation to
register any of its currently outstanding securities or any of its
securities that may hereafter be issued.
3.21. INSURANCE. SCHEDULE 3.21 contains a description of each insurance
policy maintained by the Company with respect to its properties, assets
and businesses, and each such policy is in full force and effect as of
the Tranche A Closing. The Company is not in default in any material
respect with respect to its obligations under any insurance policy
maintained by it, and the Company has not been denied insurance
coverage. Except as set forth on SCHEDULE 3.21 hereto, the Company does
not have any self-insurance or co-insurance programs, and the reserves
set forth on the Latest Balance Sheet are adequate to cover all
anticipated liabilities with respect to any such self-insurance or
co-insurance programs.
3.22. EMPLOYEES. The Company has no knowledge that any executive or key
employee of the Company or any group of employees of the Company has
any plans to terminate employment with the Company. The Company has
complied in all material respects with all laws relating to the
employment of labor (including, without limitation, provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and
the payment of social security and other Taxes), and the Company has no
knowledge that it has any material labor relations problems (including,
without limitation, any union organization activities, threatened or
actual strikes or work stoppages or material grievances). Neither the
Company nor any of its employees are subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or
currently proposed business activities of the Company, except for any
employment agreements and with the Company.
3.23. REAL ESTATE. SCHEDULE 3.23 lists and describes briefly all real
property owned, leased or subleased to the Company and all other real
property which is used in the business
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of the Company and not owned by the Company (the "REAL PROPERTY"). The
Company has made available to the Investor or its representatives
correct and complete copies of the deeds, leases and subleases relating
to the property listed on SCHEDULE 3.23.
(a) With respect to each of the Leases, and except as set forth on
the attached SCHEDULE 3.23,
(i) each such Lease is valid, binding and enforceable in
accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights of creditors
generally and to general principles of equity
(whether considered in a proceeding in equity or at
law), and each such Lease will continue to be valid,
binding and enforceable (subject to the foregoing
exceptions) and in full force and effect on identical
terms immediately following the Tranche A Closing;
(ii) the Company is not in default under or in breach of
such Leases, nor has the Company received any claim
of default or breach under such Leases, in each case
which defaults and breaches could, in the aggregate,
reasonably be expected to result in a Material
Adverse Effect;
(iii) no event has occurred which with the passage of time
or the giving of notice or both would result in a
default, breach or event of noncompliance by the
Company under any such Lease which defaults, breaches
or events of noncompliance could, in the aggregate,
reasonably be expected to result in a Material
Adverse Effect;
(iv) the Company does not have a present expectation or
intention of not fully performing in all material
respects all of its obligations pursuant to the
Leases, and the Company has no Knowledge of any
breach or anticipated breach by the other parties to
any such Lease which breaches could in the aggregate
reasonably be expected to result in a Material
Adverse Effect;
(v) there are no material disputes, oral agreements, or
forbearance programs in effect as to such Lease;
(vi) such Lease has not been modified in any respect,
except to the extent that such modifications are
disclosed by the documents delivered to the Investor;
and
(vii) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest
in such Lease.
(b) The Company has good and marketable title to all the real
property reflected as owned in the books and records of the
Company. Except as set forth in SCHEDULE 3.23, all real
property owned by the Company is free and clear of all Liens
and is
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not subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitation of any
nature except, with respect to all such Property,
(i) Mortgages or security interests securing specified
liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time
or both, would constitute a default) exists,
(ii) Liens for current Taxes not yet due, and
(iii) Minor imperfections of title, if any, none of which
is substantial in amount, materially detracts from
the value or impairs the use of the property subject
thereto, or impairs the operations of the Company,
and zoning laws and other land use restrictions that
do not impair the present or anticipated use of the
Property subject thereto. All buildings, plants, and
structures owned by the Company lie wholly within the
boundaries of real property owned by the Company and
do not encroach upon the property of, or otherwise
conflict with the property rights of, any other
Person.
4. COVENANTS OF THE COMPANY
4.1. SHAREHOLDER APPROVAL. The Company shall use its best efforts
to obtain the requisite vote of shareholders for the approval
of the Amendment.
4.2. DIVIDENDS AND DIRECTORS. The Company hereby covenants to the
Investor as follows:
(a) So long as any Convertible Common Stock is
outstanding:
(i) an 8% dividend is payable thereon;
(ii) until the earlier of the Tranche B Closing
or December 31, 2002, the Company will not
declare any dividends other than the 8%
dividend on the Convertible Common Stock;
(iii) the Company shall issue no Convertible
Common Stock other than pursuant to this
Agreement, the Warrant and as dividends on
the Convertible Common Stock issued pursuant
to this Agreement and the Warrant without
the consent of Investor;
(iv) the 8% dividend is payable to the Investor
in Convertible Common Stock for the periods
ending December 31, 2000 and 2001 as a
simple dividend and for all periods after
the earlier of December 31, 2002 or the
Tranche B Closing as a cumulative dividend,
provided, however, that such cumulative
dividends shall accrue on a daily basis,
based on actual days elapsed since payment
of the most recent dividend and provided
further that no dividends are payable if the
Investor owns 68% or more of the equity of
the Company.
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(b) The Board of Directors shall consist of seven persons
and the Investor shall have the right to appoint four
directors; provided, however, that such right shall
terminate upon redemption of all of the Tranche A
Stock required to be redeemed under Section 2.8, if
applicable, or when the Investor ceases to own more
than 10% of the outstanding Common Stock on a fully
diluted basis.
4.3. CONDUCT OF THE BUSINESS. Between the date hereof and the
Tranche A Closing the Company shall conduct its business only
in the ordinary course of business consistent with past custom
and practice, and shall incur no liabilities or obligations
whatsoever other than in the ordinary course of business
consistent with past custom and practice. The Company will use
its best efforts to preserve its business and shall maintain
insurance disclosed on Schedule 3.21 in full force and effect.
4.4. FULL ACCESS. The Investor and its Representatives shall have
full access during normal business hours to the books,
records, assets and personnel of the Company to conduct such
examination and investigation of the Company and its business
as the Investor reasonably deems necessary. The Company will
provide promptly to Investor copies of all documents provided
to the Securities and Exchange Commission and its other
shareholders.
4.5. PREEMPTIVE RIGHTS. For so long as Investor or any of its
Affiliates owns not less than 10% of the Common Stock of the
Company, assuming conversion of the Convertible Common Stock,
that it acquires pursuant to this Agreement, Investors and its
Affiliates shall have the right to purchase any New Securities
that the Company may hereafter from time to time propose to
sell and issue (whether or not presently authorized) for cash,
including, shares from the treasury of the Company, in the
ratio that the number of Shares Investor or its Affiliates
holds on a fully diluted basis at the time of issue bears to
the total number of shares then outstanding on a fully diluted
basis. The purchase price for such New Securities shall be the
price at which such New Securities are proposed to be issued.
The Company shall give Investor written notice of a proposed
issuance of New Securities (a "Proposed Issuance") at least 30
days prior to the date of the Proposed Issuance. Such notice
shall set forth the terms and conditions of the Proposed
Issuance. The rights granted pursuant to this Section shall be
deemed waived by Investor if it or its Affiliates do not
exercise such right in whole or in part by written notice to
the Company and pay for the New Securities as to which
Investor or its Affiliates exercised such rights within 30
days of receipt of notice of the Proposed Issuance. "New
Securities" shall mean any shares of common stock or other
equity securities of the Company, whether now authorized or
not, and any rights, options or warrants to purchase such
shares or other equity securities of any type whatsoever that
are or may become convertible into said shares of common stock
or other equity securities; provided, however, that "New
Securities" does not include (i) any securities to be issued
in connection with an underwritten public offering pursuant to
a registration statement filed with the Securities and
Exchange Commission, (ii) any securities to be issued in
connection with a merger, an acquisition of stock or assets,
consolidation or other type of business combination so long as
such transaction is an arms-length transaction, (iii) any
securities issuable upon
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conversion or exercise of convertible securities, options or
warrants currently outstanding or issued in connection
herewith or shall be issued in compliance with the terms of
this Section 4.4, (iv) securities to be issued to employees
pursuant to a plan approved by the Board of Directors, (v)
securities issued in connection with any pro rata stock split
or stock dividend of the Company, and (vi) any bona fide
equity kicker which may be issued to any person principally
providing debt financing to the Company in an arms-length
transaction and any securities which may be issued upon
exercise or conversion of the same.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor hereby represents and warrants to the Company as follows:
5.1. ORGANIZATION, STANDING, ETC. The Investor will hold the
Convertible Common Stock as the general partner of Dimeling,
▇▇▇▇▇▇▇▇▇ & Park Reorganization Fund II, L.P. ("FUND"), a
limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware, and the
Fund has all requisite partnership power and authority to own
its properties and to carry on its business as now conducted.
5.2. ACTS AND PROCEEDINGS; ENFORCEABILITY OF AGREEMENTS. The
Investor has all requisite power and authority to enter into
this Agreement and to perform its obligations hereunder and
thereunder. All action on the part of the Investor necessary
for the authorization, execution and delivery of this
Agreement and the Registration Rights Agreement by the
Investor, and the performance of all obligations of the
Investor hereunder and thereunder, has been taken. This
Agreement has been duly executed and delivered by authorized
officers of the Investor and constitutes a valid and binding
obligation of the Investor, enforceable against the Investor
in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and to
general principles of equity (whether considered in a
proceeding in equity or at law). When the Registration Rights
Agreement shall have been executed and delivered by the
Investor and the other parties thereto, the Registration
Rights Agreement shall be duly authorized, executed and
delivered by the Investor, and shall constitute a valid and
binding obligation of the Investor, enforceable against the
Investor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and to
general principles of equity (whether considered in a
proceeding in equity or at law).
5.3. NO BROKERS OR FINDERS. No person, firm or entity has or will
have, as a result of any act or omission of the Investor, any
right, interest or valid claim against the Company or the
Investor for any commission, fee or other compensation as a
finder or broker in connection with the transactions
contemplated by this Agreement other than ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇.
5.4. RESTRICTED SECURITIES. The Investor understands that none of
the Shares have been registered under the Securities Act, or
registered or qualified under any state securities
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30
laws, and that the Investor may not transfer the Shares in a
manner inconsistent with their status as restricted
securities, subject to registration pursuant to the
Registration Rights Agreement.
5.5. INVESTMENT INTENT. The Shares are being purchased for the
Fund's own account and not with a view to, or for resale in
connection with, any distribution or public offering thereof
within the meaning of the Securities Act. The Investor
understands that the Shares have not been registered under the
Securities Act by reason of their contemplated issuance in
transactions exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to
Section 4(2) thereof, that certificates representing the
Shares shall bear a restrictive legend (which legend shall be
removed by the Company at the request of the Investor when
appropriate) and that the reliance of the Company and others
upon this exemption is predicated in part upon this
representation and warranty by the Investor. The Investor was
not formed for the specific purpose of purchasing the Shares.
5.6. SOPHISTICATED INVESTOR. The Investor has such knowledge and
experience in financial and business matters and in
investments of this type that it is capable of evaluating the
merits and risks of its investment in the Shares and of making
an informed investment decision. The Investor is capable of
bearing the economic risk inherent in ownership of the Shares
and retaining the Shares for an indefinite period. The
Investor has been given the opportunity to ask questions of,
and receive and evaluate answers and information from, the
Company concerning the Company and the terms and conditions of
its investment in the Shares, and has been provided with, or
had access to, such documents and other information as it
deems necessary or useful in its evaluation of the merits and
risks of an investment in the Shares.
6. INDEMNIFICATION.
6.1. INDEMNIFICATION.
(a) From and after the date hereof, but subject to the
conditions and limitations hereinafter set forth, the
Company shall indemnify and save harmless the
Investor from and against any and all loss, cost,
damage or expense (including court costs and
reasonable attorneys' fees) whatsoever (i) asserted
against or incurred by Investor resulting from or
arising out of any breach of any representation,
warranty, certification or covenant of the Company
contained in this Agreement or made in any
certificate or agreement of the Company delivered
pursuant hereto, or (ii) incurred by the Company as a
result of any of the Shares not having been issued in
compliance with all applicable state and federal
securities laws (so long as the Investor's
representations and warranties contained in Section s
5.4 through 5.6 have not been breached).
(b) From and after the date hereof, but subject to the
conditions and limitations hereinafter set forth, the
Investor shall indemnify and save harmless the
Company from and against any and all loss, cost,
damage or expense (including court costs and
reasonable attorneys' fees) whatsoever asserted
against or incurred by the
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Company resulting from or arising out of any breach
of any representation, warranty, certification or
covenant of the Investor contained in this Agreement
or made in any certificate or agreement of the
Investor delivered pursuant hereto.
(c) For purposes of this Section 6.1, any qualification
of representation or warranty by reference to the
materiality of matters stated therein and any
limitation of such representations and warranties to
the extent of the "Knowledge of" or as "known to" the
maker thereof (or like qualifications) shall be
disregarded in determining any breach thereof.
6.2. CERTAIN PROCEDURES. In the event that the Investor or the
Company (as applicable, the "CLAIMANT") desires to make a
claim against the other party to this Agreement (the
"INDEMNITOR") under this Section 6, the Claimant shall give
prompt written notice to the Indemnitor of any actions, suits,
proceedings, and demands at any time instituted or made
against Claimant (or, with respect to clause (ii) of Section
6.1(a), against the Company), and of any loss, cost, damage or
expenses incurred by Claimant (or the Company) and for which
the Claimant claims a right to indemnification hereunder;
provided, however, that the Claimant's failure to promptly
give such notice shall not affect the obligations of an
Indemnitor under this Section 6 except to the extent that any
defense or counterclaim otherwise available to Indemnitor
shall have been prejudiced or the Indemnitor's obligations
shall otherwise have been increased as a consequence of such
failure. The Claimant shall, at the time of giving such
notice, if the Indemnitor shall agree in writing that it would
have responsibility to indemnify under this Section 6, give
the Indemnitor full authority to defend, adjust, compromise or
settle the action, suit, proceeding or demand on which such
notice is based, in the name of the Claimant or otherwise as
the Indemnitor shall elect unless, (a) there is a conflict or
potential conflict of interest between the Claimant and the
Indemnitor in such action, suit or proceeding, as advised by
Claimant's counsel, or (b) in the reasonable judgment of
Claimant, an adverse determination of such action, suit or
proceeding could be materially detrimental to the Claimant's
reputation or future business prospects. In the event of any
claims under Section 6 hereof for indemnification, the
Claimant shall advise the Indemnitor in writing of the amount
and circumstances surrounding said claim. Notwithstanding the
foregoing, the Company shall promptly notify the Investor of
any claim made against the Company alleging that any Shares
were not issued in compliance with all applicable federal or
state securities laws.
6.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties and covenants made by the
parties in this Agreement or in any certificate delivered
pursuant hereto shall survive the Tranche A Closing and/or the
Tranche B Closing (each a "CLOSING" and, collectively, the
"CLOSINGS") (i) with respect to those representations and
warranties set forth in paragraphs 3.1, 3.3, 3.13 and 3.20,
without limit as to time, (ii) with respect to the
representations, warranties set forth in paragraphs 3.10 and
3.12(b), until the expiration of the applicable statute of
limitations, (iii) with respect to all other representations
and warranties for a period of three years after the
applicable Closing, and (iv) with respect to the covenants set
forth
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in Section 4 shall survive so long as any Convertible Common
Stock or Warrants are outstanding. Any claim made on the basis
of any alleged breach of such representations and warranties
must be identified to the party against whom such claim is
asserted before the expiration of the survival period (if any)
applicable thereto, as set forth in the preceding sentence.
6.4. LIMITATIONS TO ASSERTION OF INDEMNITY CLAIMS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES. Notwithstanding anything in
paragraph 6.1 to the contrary, no Claimant shall be entitled
to indemnification hereunder with respect to any claim
pursuant to subparagraphs 6.1(a)(i) or 6.1(b) for breach of
any representation or warranty made as of a Closing contained
in this Agreement or in any certificate delivered at such
Closing pursuant to this Agreement unless notice of such claim
shall have been given pursuant to paragraph 6.2 before the
expiration of the survival period applicable to such
representation and warranty (if any) set forth in paragraph
6.3.
7. MISCELLANEOUS.
7.1. EXPENSES. Upon each of the Tranche A and Tranche B Closings,
the Company shall pay the expenses incurred by it and the
Investor, including, without limitation, the cost of Arizona
counsel, any costs of filing under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act,
and any broker's fees, in connection with the negotiation,
execution, delivery and performance of this Agreement and the
other Agreements incurred, as to the Tranche A Closing, prior
to and including the date thereof, and as to the Tranche B
Closing, during the period between the Tranche A Closing
through the date of the Tranche B Closing. If the Tranche A
Closing does not occur, Investor will bear its own costs, and
the Company will be responsible for its own costs including,
without limitation, the costs of Arizona counsel and any ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Act fees; provided however, if the Tranche A
Closing does not occur because the Company has breached its
obligations hereunder, the Company will reimburse Investor for
all fees, costs and expenses incurred by the Investor in
connection with the negotiations, execution, delivery and
performance of this Agreement and the Other Agreements.
7.2. PUBLIC ANNOUNCEMENTS. Unless required by law, any public
announcement or similar publicity with respect to this
Agreement or the transaction contemplated herein will be
issued, if at all, at such time and in such manner as the
Company and Investor mutually shall determine.
7.3. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision of this
Agreement.
7.4. NOTICES. All notices and other communications hereunder or in
connection herewith shall be deemed to have been duly given if
they are in writing and: (a) sent by telecopy, with receipt
confirmed, provided that a copy is mailed by certified mail,
return receipt requested; (b) delivered personally or by a
nationally recognized
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overnight courier service; or (c) sent by registered or
certified mail, return receipt requested and first-class
postage prepaid, to the following:
if to the Company: Chief Consolidated Mining Company
Executive Offices
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Investor: Dimeling, ▇▇▇▇▇▇▇▇▇ & Park.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed given: (a) when sent, if by telecopy;
(b) when received, if delivered personally or by overnight
courier service; and (c) three (3) Business Days after deposit
with the United States Postal Service, if sent by registered
or certified mail as specified herein. Any party desiring to
change the address or telecopy number to which notices are to
be sent shall send such a notice to the other party in
accordance with this Section.
7.5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other party.
7.6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard for principles of conflicts of
laws. Each party hereby irrevocably submits to the exclusive
jurisdiction and venue of the Courts of the Commonwealth of
Pennsylvania and the County of Philadelphia and/or the United
States District Court for the Eastern District of
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Pennsylvania, and appellate courts from any thereof, in
connection with any action, suit or other proceeding arising
out of or relating to this Agreement and, with respect to any
such action, suit or other proceeding, waives any objection
which such party may have at any time to the laying of venue
of any such action, suit or proceeding and any objection which
such party may have that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum, and each such party further waives personal service of
any summons, complaint or other process and agrees that
service thereof may be made by certified or registered mail
directed to such party at its respective address set forth
herein, or by such other means as may be appropriate pursuant
to applicable law.
7.7. WAIVERS AND AMENDMENTS. Any term or provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits thereof, and any term or provision of
this Agreement may be amended or supplemented at any time by
the mutual consent of the parties, except that any waiver of
any term or condition, or any amendment or supplementation of
this Agreement, must be in writing. A waiver of any breach or
failure to enforce any of the terms or conditions of this
Agreement shall not in any way affect, limit or waive a
party's rights thereunder at any time to enforce strict
compliance thereafter with every term or condition of this
Agreement.
7.8. ENTIRE AGREEMENT. This Agreement (including documents and
instruments referred to herein) constitutes the entire
agreement, and supersedes all other prior agreements and
understandings, both written and oral, among the parties or
any of them, with respect to the subject matter hereof.
7.9. SPECIFIC PERFORMANCE, REMEDIES. The parties hereto agree that,
in the event that any of the provisions of this Agreement
required to be performed after the Closing or the termination
of this Agreement, as the case may be, are not performed in
accordance with their specific terms or are otherwise
breached, the non-breaching party would be irreparably damaged
thereby and that monetary damages would not provide an
adequate remedy in such event. Accordingly, in addition to any
other remedy to which the non-breaching party may be entitled
at law or in equity, such party shall be entitled to specific
performance and injunctive relief to prevent breaches of the
provisions of this Agreement, and specifically to enforce such
terms and provisions in any action instituted in any court of
the United States or any state thereof having subject matter
jurisdiction thereof.
7.10. SEVERABILITY In the event that any one or more of the
provisions contained in this Agreement shall be declared
invalid, void or unenforceable, the remainder of the
provisions of this Agreement shall remain in full force and
effect.
7.11. INTERPRETATION. The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and that
consequently any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party is
not applicable in the interpretation of this Agreement or any
exhibits hereto.
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IN WITNESS WHEREOF, the Investor and the Company have executed and
delivered this Agreement by the duly authorized officers all as of the
date first written above.
CHIEF CONSOLIDATED MINING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
DIMELING, ▇▇▇▇▇▇▇▇▇ & PARK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Partner
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EXHIBITS
A Registration Rights Agreement
B Form of Warrant
C Articles of Incorporation as Amended and Restated
D Forms of Opinion
E Secretary's Certificate
iii
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SCHEDULES
3.1 Capitalization
3.4 Equity Investment; Subsidiaries
3.5 Financial Statements
3.7 Assets
3.8 Patents, Trademarks, Copyrights, etc.
3.9 Litigation
3.10 Taxes
3.11 Contracts and Commitments
3.12 Compliance with law. Permits and authorizations; Environmental and
Safety Matters
3.16 Employee Benefit Plans
3.21 Insurance
3.23 Real Estate
iv