EXHIBIT 10.10
EXECUTION COPY
ASSET PURCHASE AGREEMENT
MESQUITE MINE
Imperial County, California
dated November 7, 2003
among
Newmont USA Limited dba
Newmont Mining Corporation,
Hospah Coal Company,
Western Goldfields, Inc.,
And
Western Mesquite Mines, Inc.
Table of Contents
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ARTICLE 1 -- Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 -- Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . 6
2.1 Covenant of Purchase and Sale . . . . . . . . . . . . . . . . . . 6
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2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . 7
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2.4 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.5 Prorations and Adjustments. . . . . . . . . . . . . . . . . . . . 7
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2.6 Determination and Payment of Cash Adjustment Amount . . . . . . . 8
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ARTICLE 3 -- Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Treatment of Gold-Loaded Carbon . . . . . . . . . . . . . . . . . 8
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3.2 Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.3 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 9
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ARTICLE 4 -- Sellers' Representations, Warranties and Disclaimers of
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Organization of Sellers . . . . . . . . . . . . . . . . . . . . . 9
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4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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4.3 No Conflict; Required Consents. . . . . . . . . . . . . . . . . . 9
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4.4 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
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4.5 Acquired Contracts and Acquired Governmental Permits. . . . . . .10
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4.6. Environmental Information . . . . . . . . . . . . . . . . . . . .10
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4.7 Title to Acquired Properties. . . . . . . . . . . . . . . . . . .10
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4.8 Disclaimer of Representations and Warranties. . . . . . . . . . .10
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ARTICLE 5 -- Buyer's and WGI's Representations and Warranties. . . . . . . . .11
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5.1 Organization and Qualification of Buyer and WGI . . . . . . . . .11
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5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
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5.3 No Conflict; Required Consents. . . . . . . . . . . . . . . . . .11
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5.4 Buyer Insurance Policies. . . . . . . . . . . . . . . . . . . . .12
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5.5 Buyer Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . .12
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5.6 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . .12
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ARTICLE 6 -- Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
6.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . .12
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6.2 Buyer Insurance Policies and Buyer Bonds. . . . . . . . . . . . .13
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6.3 Excluded Equipment. . . . . . . . . . . . . . . . . . . . . . . .13
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6.4 Retention of Records. . . . . . . . . . . . . . . . . . . . . . .14
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6.5 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
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6.6 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . . . .14
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6.7 Post-Closing Security Services. . . . . . . . . . . . . . . . . .14
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6.8 Data Transfer . . . . . . . . . . . . . . . . . . . . . . . . . .15
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6.9 Post-Closing Delivery of Common Stock and Warrants. . . . . . . .16
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6.10 License . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
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ARTICLE 7 -- Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . .17
7.1 Conditions to Buyer's and WGI's Obligations . . . . . . . . . . .17
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7.2 Conditions to Sellers' Obligations. . . . . . . . . . . . . . . .17
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ARTICLE 8 -- Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
8.1 Closing; Time and Place . . . . . . . . . . . . . . . . . . . . .17
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8.2 Sellers' Obligations. . . . . . . . . . . . . . . . . . . . . . .17
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8.3 Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . .18
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ARTICLE 9 - Indemnification; Release . . . . . . . . . . . . . . . . . . . . .19
9.1 Indemnification by Hospah . . . . . . . . . . . . . . . . . . . .19
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9.2 Indemnification by Buyer. . . . . . . . . . . . . . . . . . . . .19
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9.3 Procedure for Indemnified Third Party Claim . . . . . . . . . . .20
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9.4 Payment of Indemnification Amounts and Related Matters. . . . . .20
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9.5 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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9.6 Other Indemnification . . . . . . . . . . . . . . . . . . . . . .20
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9.7 Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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9.8 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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ARTICLE 10 -- Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . .21
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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10.2 Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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10.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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10.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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10.5 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . .22
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10.6 Binding Effect; Benefits . . . . . . . . . . . . . . . . . . . .22
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10.7 Headings, Schedules, and Exhibits. . . . . . . . . . . . . . . .22
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10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .22
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10.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .22
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10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .23
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10.11 Third Parties; Joint Ventures. . . . . . . . . . . . . . . . . .23
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10.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . .23
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10.13 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .23
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Schedules
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Schedule 2.1(a) - Acquired Properties
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Schedule 2.1(c) - Acquired Equipment
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Schedule 2.1(e) - Acquired Governmental Permits
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Schedule 2.1(f) - Acquired Contracts
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Schedule 2.2 - Excluded Assets
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Schedule 2.6 - Cash Adjustment Amount Calculation
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Schedule 4.3 - Sellers' Conflicts and Consents
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Schedule 5.4 - Buyer Insurance Policies
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Schedule 5.5 - Buyer Bonds
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Schedule 5.6 -- WGI Capitalization
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Schedule 6.2 -- Insurance Requirements
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Exhibits
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Exhibit 2.4(a) - Form of NOCF Royalty Agreement
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Exhibit 2.4(b) - Form of NSR Royalty Agreement
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Exhibit 2.4(d) - Form of Warrant
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Exhibit 8.2(a) - Form of Special Warranty Deed and Assignment
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Exhibit 8.2(b) - Form of ▇▇▇▇ of Sale and General Assignment
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Exhibit 8.2(d) - Form of Registration Rights Agreement
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Exhibit 8.2(e) - Form of Carbon Processing Agreement
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Exhibit 8.3(b) - Form of Assumption Agreement
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Exhibit 8.3(i) -- Form of Guaranty
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ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement") is made and entered into
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as of November 7, 2003, by and among Newmont USA Limited, a Delaware corporation
dba Newmont Mining Corporation ("Newmont"), Hospah Coal Company, a Delaware
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corporation ("Hospah," and collectively with Newmont, "Sellers"), Western
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Goldfields, Inc., an Idaho corporation ("WGI"), and Western Mesquite Mines,
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Inc., a Nevada corporation ("Buyer").
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Recitals
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A. Sellers own certain patented and unpatented mining claims, and hold
leasehold interests in certain other patented and unpatented mining claims and
fee property, in Imperial County, California, on which they have developed and
operated a mine and related assets known as the "Mesquite Mine."
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▇. ▇▇▇▇▇▇▇ desire to sell to Buyer, and Buyer desires to purchase from
Sellers, the rights, titles and interests of Sellers in the Mesquite Mine and
certain tangible and intangible assets of Sellers relating to the operation of
the Mesquite Mine, on the terms and subject to the conditions stated in this
Agreement.
C. Buyer is a wholly-owned subsidiary of WGI.
Agreements
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In consideration of the mutual covenants in this Agreement, Sellers, WGI
and Buyer agree as follows:
ARTICLE 1
Certain Definitions
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As used in this Agreement, the following terms, whether in singular or
plural forms, shall have the following meanings:
"Acquired Contracts" has the meaning given in Section 2.1.
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"Acquired Equipment" has the meaning given in Section 2.1.
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"Acquired Governmental Permits" has the meaning given in Section 2.1.
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"Acquired Properties" has the meaning given in Section 2.1.
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"Affiliate" means, with respect to any Person, any other Person
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controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management
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and policies of a Person, whether through the ownership of voting securities or
voting interests, by contract or otherwise.
"Assets" has the meaning given in Section 2.1.
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"Assumed Liabilities" has the meaning given in Section 2.3.
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"Bonds" means and includes any bond, surety, collateral, cash or
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certificates of deposits, letter of credit, and any other form of financial
assurance provided to any Governmental Authority for purposes of securing
compliance with closure, reclamation, remediation or any other environmental
Legal Requirements.
"Business Day" means any day other than Saturday, Sunday or a day on which
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banking institutions in Denver, Colorado or New York, New York are required or
authorized to be closed.
"Buyer's Bonds" has the meaning given in Section 5.5.
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"California State Lease" means the Mineral Extraction Lease dated effective
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October 1, 2002, between the California State Lands Commission and Newmont.
"Closing" has the meaning given in Section 8.1.
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"Closing Date" means the date on which Closing occurs.
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"Closing Shares" has the meaning given in Section 2.4.
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"Consumables Inventory" means Sellers' inventory at the Mesquite Mine on
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the Closing Date of (i) motor fuels and lubricants, (ii) process reagents, and
(iii) consumable and general supplies that are usable in the ordinary course of
the operation of the Mesquite Mine.
"Contract" means any written contract, mortgage, deed of trust, bond,
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indenture, lease, license, note, franchise, certificate, option, warrant, right,
or other instrument, document, obligation, or agreement, and any oral
obligation, right, or agreement.
"Encumbrance" means any security agreement, financing statement filed with
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any Governmental Authority, lien, mortgage, indenture, pledge, option, or
encumbrance.
"Environmental Liabilities" means any and all claims, actions, causes of
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action, damages, losses, liabilities, obligations, penalties, judgments,
settlements, costs, disbursements, or expenses (including without limitation,
attorneys' fees and experts' fees) of any kind or of any nature whatsoever for
liability (including without limitation, liability for study, testing or
investigatory costs, cleanup costs, response actions or costs, removal actions
or costs, remediation costs, containment costs, restoration costs, reclamation
costs, corrective action costs, closure costs, natural resources damages,
nuisance, property damages, business losses, penalties or fines) arising out of,
based upon or resulting from: (i) the presence, release, threatened release,
discharge or emission into the environment of any Regulated Substance; (ii) the
violation or alleged violation of any Environmental Law; or (iii) Reclamation
obligations.
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"Environmental Law" means any Legal Requirement relating to pollution or
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protection of public health, safety or welfare or the environment, including
those relating to emissions, discharges, releases or threatened releases of
Regulated Substances into the environment (including ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Regulated Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"Excluded Assets" has the meaning given in Section 2.2.
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"Governmental Authority" means the United States of America or any other
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country or sovereign entity, any state, commonwealth, territory, or possession
thereof, and any political subdivision or quasi-governmental authority of any of
the same, including but not limited to courts, tribunals, departments,
commissions, boards, bureaus, agencies, counties, municipalities, provinces,
parishes, and other instrumentalities.
"Governmental Permits" means franchises, approvals, authorizations,
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permits, licenses, easements, registrations, qualifications, leases, variances
and similar rights obtained from any Governmental Authority.
"Judgment" means any judgment, writ, order, injunction, award, or decree of
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any court, judge, justice, magistrate or arbitrator, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
"Knowledge" of any Person of or with respect to any matter means that such
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Person (if a natural person) or any of the officers, directors, and senior
managers of such Person (if not a natural Person) has actual knowledge of such
matter.
"Leases" means the Mineral Lease and Landfill Facilities Lease Agreement,
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Mineral Lease and Purchase Option Agreement, and California State Lease.
"Legal Requirements" means applicable common law and any statute,
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ordinance, code or other law, rule, regulation, order, requirement, or procedure
enacted, adopted, promulgated, applied, or followed by any Governmental
Authority, including any Judgment.
"Litigation" means any claim, action, suit, proceeding, arbitration,
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investigation, hearing, or other activity or procedure that could result in a
Judgment.
"Losses" means any claims, losses, liabilities, damages, Encumbrances,
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penalties, costs, and expenses, including but not limited to interest which may
be imposed in connection therewith, expenses of investigation, reasonable fees
and disbursements of counsel and other experts, and the cost to any Person
making a claim or seeking indemnification under this Agreement with respect to
funds expended by such Person by reason of the occurrence of any event with
respect to which indemnification is sought.
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"Mineral Lease and Landfill Facilities Lease Agreement" means the Mineral
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Lease and Landfill Facilities Lease Agreement dated as of June 25, 1993, among
Hospah, Newmont (as successor to Santa Fe Pacific Gold Corporation) and County
Sanitation District No. 2 of Los Angeles County (as successor to ▇▇▇▇▇▇ Natural
Resources Corporation), as amended by First Amendment dated April 24, 1995 and
Second Amendment dated August 24, 1998, and a memorandum of which was recorded
in Book 1736, Page 1505 in the Official Records of Imperial County, California.
"Mineral Lease and Purchase Option Agreement" means the Mineral Lease and
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Purchase Option Agreement dated as of October 20, 1982, by and between ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ and Hospah (as successor to Gold Fields Mining
Corporation), a Memorandum of which is recorded in Book 1506, Pages 1494 - 1498
in the Official Records of Imperial County, California.
"NOCF Royalty Agreement" has the meaning given in Section 2.4.
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"NSR Royalty Agreement" has the meaning given in Section 2.4.
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"Patented Claims" has the meaning given in Section 2.1.
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"Permitted Encumbrances" means the following Encumbrances: (i) liens for
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Taxes not yet due and payable; (ii) zoning laws and ordinances and similar Legal
Requirements; (iii) rights reserved to any Governmental Authority to regulate
the affected Assets; (iv) obligations arising under and pursuant to the Acquired
Contracts; (v) Encumbrances disclosed in any Exhibits to this Agreement; (vi)
the NSR Royalty Agreement and the rights of the grantee thereunder; (vii) the
NOCF Royalty Agreement and the rights of the grantee thereunder; (viii) in the
case of the Unpatented Claims, the paramount title of the United States of
America; (ix) any matter that is of record, that would be apparent from a visual
inspection of the subject property, or that would be revealed by a boundary and
improvement survey of the subject property; (x) any existing royalties or
similar rights affecting the Acquired Properties; and (xi) in the case of any
leased Asset, the rights, titles and interests of the lessor thereof.
"Person" means any natural person, Governmental Authority, corporation,
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general or limited partnership, joint venture, limited liability company, trust,
association, or unincorporated entity of any kind.
"Prime Rate" means the rate announced from time to time by JPMorgan Chase
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Bank at its New York office, as its prime rate for demand loans to commercial
customers (which may not be the lowest rate at which it loans funds).
"Process Inventory At Closing" has the meaning given in Section 3.
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"Refinery Inventory" means, as of any date, gold that has been recovered
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from carbon and allocated to the Mesquite Mine but not sold.
"Reclamation" means the reclamation, restoration or closure of any facility
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or land utilized in any exploration, mining or processing operation required by
any Legal Requirement or under any Governmental Permit.
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"Regulated Substances" means any pollutants, contaminants, chemicals,
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industrial, toxic, hazardous or noxious substances or wastes which are regulated
by any Governmental Authority or Legal Requirements, including but not limited
to: (i) any petroleum or petroleum compound (refined or crude), flammable
substance, explosive, radioactive material or any other material or pollutant
which pose a hazard or potential hazard to real property or Persons; (ii)
asbestos or any asbestos-containing material of any kind or character; (iii)
polychlorinated biphenyls, as regulated by the Toxic Substances Control Act, 15
U.S.C. Sec. 2601 et seq.; (iv) any materials or substances designated as
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"hazardous substances" pursuant to the Clean Water Act, 33 U.S.C. Sec. 1251 et
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seq.; (v) "economic poison," as defined in the Federal Insecticide, Fungicide
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and Rodenticide Act, 7 U.S.C. Sec. 135 et seq.; (vi) "chemical substance," "new
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chemical substance" or "hazardous chemical substance or mixture" pursuant to the
Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; (vii) "hazardous
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substances" pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Sec. 9601 et seq.; and (viii) "hazardous waste"
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pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et
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seq.
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"Required Consents" means all franchises, licenses, authorizations,
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approvals and consents required under Governmental Permits, Contracts or
otherwise for (i) Sellers to transfer any of the Assets to Buyer; (ii) Buyer to
own, lease, use and operate the Assets; and (iii) Buyer to assume and perform
the Acquired Governmental Permits and the Acquired Contracts as provided in this
Agreement.
"Registration Agreement" has the meaning given in Section 8.2.
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"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder.
"Sellers' Bonds" has the meaning given in Section 7.2.
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"Taxes" means all levies, charges and assessments of any kind or nature
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imposed by any Governmental Authority, including but not limited to all income,
sales, use, ad valorem, value added, franchise, severance, net or gross
proceeds, withholding, payroll, employment, excise, or property taxes, together
with any interest thereon and any penalties, additions to tax, or additional
amounts applicable thereto.
"Transaction Document" means any instrument or document executed and
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delivered by Buyer, WGI or Sellers or any officer, director or Affiliate of any
of them in connection with this Agreement or the transactions contemplated
hereby.
"Term Sheet" means the Term Sheet between Newmont and Buyer dated July 3,
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2003.
"Term Sheet Shares" means the 111,859 shares of WGI Common Stock issued by
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WGI to Hospah pursuant to the Term Sheet upon execution thereof.
"Unpatented Claims" has the meaning given in Section 2.1.
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"Warrant" has the meaning given in Section 2.4.
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"WGI Common Stock" means WGI's $0.01 par value per share voting common
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stock.
ARTICLE 2
Purchase and Sale of Assets
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2.1 Covenant of Purchase and Sale. Subject to the terms and conditions
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in this Agreement, at Closing Sellers shall convey, assign, and transfer to
Buyer, and Buyer shall acquire from Sellers, for the consideration and on the
terms set forth in this Agreement, free and clear of all Encumbrances other than
Permitted Encumbrances, all rights, titles and interests of Sellers in the
following tangible and intangible assets, excluding the Excluded Assets
(collectively, the "Assets"):
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(a) (i) patented mining claims and mill sites (the "Patented
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Claims"); (ii) unpatented mining claims and mill sites (the "Unpatented
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Claims"); (iii) leasehold interests in fee property, Patented Claims and
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Unpatented Claims; and (iv) easements, rights-of-way and other interests in real
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property relating to the Mesquite Mine, all as described in Schedule 2.1(a), and
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all mill facilities, buildings, structures and other improvements thereon
(collectively, the "Acquired Properties");
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(b) the Leases, provided, however, that the California State Lease
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shall not be assigned to Buyer until the California State Land Commission has
approved such assignment and provided, further, that upon receipt of such
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consent to assignment, Buyer and Sellers shall take all necessary action to
assign the California State Lease to Buyer;
(c) all equipment and other tangible personal property that is
owned, leased, used or held for use by Sellers in the ownership, operation,
closure, remediation or Reclamation of, and is located at, the Mesquite Mine,
including the Consumables Inventory (the "Acquired Equipment"), the principal
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items of which are described in Schedule 2.1(c);
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(d) all ore in stockpiles or on leaching pads, and all metals in
solution, located at the Mesquite Mine as of the Closing Date;
(e) all Governmental Permits pertaining to the ownership,
operation, closure, remediation or Reclamation of the Mesquite Mine, if and to
the extent transferable (the "Acquired Governmental Permits"), as described in
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Schedule 2.1(e); and
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(f) all Contracts pertaining to the lease, ownership, operation,
closure, remediation or Reclamation of the Mesquite Mine other than the Leases
(the "Acquired Contracts"), as described in Schedule 2.1(f).
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2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1,
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the Assets shall not include any of the following (the "Excluded Assets"), all
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rights, titles and interests in which shall be retained by Sellers: (i)
insurance policies and rights and claims thereunder; (ii) accounts receivable;
(iii) Sellers' Bonds; (iv) cash and cash equivalents; (v) gold-loaded carbon
that is in
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process at the Mesquite Mine as of Closing and is removed prior to Closing; (vi)
Refinery Inventory as of Closing; and (vi) the other assets, if any, described
on Schedule 2.2.
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2.3 Assumed Liabilities. After Closing, Buyer shall assume, pay,
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discharge, and perform the following (the "Assumed Liabilities"): (i) all
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Environmental Liabilities, whether accruing at any time before or after Closing,
arising out of, resulting from or relating to the ownership or operation of the
Acquired Properties or the Mesquite Mine; (ii) all liabilities and obligations
of Sellers under the Leases; (iii) all obligations and liabilities of Sellers
under the Acquired Contracts and Acquired Governmental Permits; (iv) all
liabilities and obligations under Permitted Encumbrances; and (v) all
obligations and liabilities arising out of Buyer's ownership of the Assets or
operation, closure or Reclamation of the Mesquite Mine after Closing.
2.4 Consideration. As consideration for the Assets other than Process
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Inventory at Closing (the consideration for which is described in Section 3.1)
at Closing:
(a) Buyer shall execute and deliver to Hospah a Net Operating Cash
Flow Agreement in the form attached as Exhibit 2.4(a) (the "NOCF Royalty
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Agreement");
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(b) Buyer shall execute and deliver to Hospah a Royalty Agreement
in the form attached as Exhibit 2.4(b) (the "NSR Royalty Agreement");
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(c) WGI shall issue to Hospah 2,217,609 shares of WGI Common Stock
(representing eight percent of all issued and outstanding WGI Common Stock on a
fully diluted basis as of October 31, 2003), free and clear of all Encumbrances
(the "Closing Shares"); and
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(d) WGI shall issue to Hospah warrants for the purchase of
2,494,810 shares of WGI Common Stock at a price of $1.00 per share (representing
nine percent of all issued and outstanding WGI Common Stock on a fully diluted
basis as of October 31, 2003), by execution and delivery of a Warrant in the
form attached as Exhibit 2.4(d) (the "Warrant").
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After the Closing WGI shall issue to Hospah additional shares of WGI Common
Stock and warrants in accordance with Section 6.9 below.
2.5 Prorations and Adjustments. Within forty-five days after the
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Closing, Buyer shall pay to Sellers, or Sellers shall pay to Buyer, as may be
the case, cash in the net amount of the following adjustments and prorations
relating to the Assets and/or the operation of the Mesquite Mine (the "Cash
----
Adjustment Amount"):
-----------------
(a) There shall be prorated as of the Closing Date all prepaid
expenses (including but not limited to prepaid rent, fees and other amounts
under the Leases, Acquired Contracts and Acquired Governmental Permits, or with
respect to the Acquired Properties, and real and personal property Taxes paid in
advance) and accrued expenses (including but not limited to real and personal
property Taxes, rent, fees and other amounts payable in respect of the Acquired
Properties, and utility charges payable in arrears), all as determined in
accordance with generally accepted accounting principles consistently applied,
in such a manner as to reflect the principle that all expenses relating to the
ownership and operation of the Assets and the Mesquite Mine for the period prior
to the Closing Date are for the account of Sellers, and all
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expenses relating to the ownership and operation of the Assets and the Mesquite
Mine for the period on and after the Closing Date are for the account of Buyer.
(b) There shall be credited to the account of Sellers and become
the property of Buyer all deposits relating to the operation of the Mesquite
Mine that are held by third parties as of the Closing Date for the account of
Sellers or as security for Sellers' performance of their obligations (other than
with respect to Excluded Assets and any other deposits the full benefit of which
will not be available to Buyer following the Closing Date), including deposits
on leases and deposits for utilities but excluding Sellers' Bonds.
(c) There shall be credited to Sellers an amount equal to Sellers'
actual cost of the Consumables Inventory on hand at the Mesquite Mine on the
Closing Date.
(d) There shall be credited to Sellers U.S Department of Interior
Bureau of Land Management maintenance fees with respect to the Unpatented Claims
paid by Seller in August of 2003, in the amount of $25,750, and Imperial County,
California recording costs in the amount of $1,921, for such maintenance
filings.
(e) There shall be credited to Sellers the amount determined in
accordance with Section 3.1.
2.6 Determination and Payment of Cash Adjustment Amount. The Cash
---------------------------------------------------
Adjustment Amount shall be calculated substantially as shown on Schedule 2.6,
------------
with actual figures inserted instead of estimates. Whichever party is obligated
to pay the Cash Adjustment Amount shall pay such Cash Adjustment Amount to the
other party within forty-five days after Closing by wire transfer or immediately
available funds to an account designated by the receiving party.
ARTICLE 3
Related Matters.
---------------
3.1 Treatment of Gold-Loaded Carbon.
-------------------------------
(a) The parties acknowledge that, prior to Closing, Newmont has
removed as much of the gold-loaded carbon from the Mesquite Mine process circuit
as it deemed to be practicable and transferred such removed carbon for
processing off-site.
(b) On the date of Closing, Newmont personnel shall measure all
carbon in the carbon process circuits at the Mesquite Mine that remains as of
Closing and obtain duplicate samples from individual columns to determine gold
content. Newmont shall send one set of carbon samples to a Newmont assay
laboratory for gold assay and specific gravity analysis and retain the second
set at the Mesquite Mine site for re-assay, if necessary. In measuring and
sampling such carbon, Newmont shall employ methods routinely used by Newmont at
the Mesquite Mine to determine the month-end gold inventory. WGI may witness
all sampling and measuring procedures.
(c) On the basis of Newmont's carbon measurements and assay
results, Newmont shall determine the weight of carbon and the ounces of gold
contained in the carbon
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(the "Process Inventory At Closing"). The parties estimate that Process
----------------------------
Inventory At Closing will consist of approximately 15-20 tons of dry carbon
containing approximately 350-600 ounces of gold.
(d) Buyer shall purchase from Newmont the Process Inventory at
Closing for a purchase price (the "Process Inventory Purchase Price") equal to
--------------------------------
the product of (i) the number of ounces of gold in the Process Inventory At
Closing multiplied by (ii) the gold price on the date of Closing, as quoted for
the London Bullion Market, afternoon fix.
(e) Buyer shall pay Newmont the Process Inventory Purchase Price
within thirty days following Closing, by wire transfer or immediately available
funds to an account designated by Newmont.
3.2 Bulk Sales. Buyer, WGI and Sellers each waive compliance by the
----------
others with bulk sales Legal Requirements applicable to the transactions
contemplated this Agreement.
3.3 Transfer Taxes. All sales, use, transfer, and similar Taxes (but
--------------
not including any state or federal income taxes owed by Sellers) arising from or
payable by reason of the transactions contemplated by this Agreement shall be
paid by Buyer.
ARTICLE 4
Sellers' Representations, Warranties and Disclaimers of Warranties.
------------------------------------------------------------------
Sellers represent and warrant to Buyer and WGI as of Closing as follows:
4.1 Organization of Sellers. Each of Sellers is a corporation duly
-----------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware, and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to conduct its activities
as such activities are currently conducted. Each of Sellers is duly qualified
to do business as a foreign corporation and is in good standing in California.
4.2 Authority. Each of Sellers has all requisite power and authority
---------
to execute, deliver, and perform this Agreement and consummate the transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby by each of Sellers
have been duly and validly authorized by all necessary action on its part. This
Agreement has been duly and validly executed and delivered by Sellers, and is
the valid and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms.
4.3 No Conflict; Required Consents. Except as described on Schedule
------------------------------ --------
4.3, the execution, delivery, and performance by Sellers of this Agreement do
---
not and will not: (i) conflict with or violate any provision of the charters or
bylaws of Sellers; (ii) violate any provision of any Legal Requirements; (iii)
conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
Persons, or any combination thereof), accelerate, or permit the acceleration of
the performance required by, any Contract or Encumbrance to which either of
Sellers is a party or by which either of Sellers or the assets or properties
owned or leased by either of Sellers are bound or affected;
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(iv) result in the creation or imposition of any Encumbrance against or upon any
of the Assets other than Permitted Encumbrances; or (v) require any consent,
approval, or authorization of, or filing of any certificate, notice,
application, report, or other document with, any Governmental Authority or other
Person.
4.4 Investment. The Closing Shares and the Warrant are being acquired
----------
by Hospah in good faith solely for its own account, for investment purposes
only, and are not being purchased with a view to, or for, the resale,
distribution, subdivision or fractionalization thereof pending registration
thereof pursuant to the Registration Rights Agreement. Sellers understand that,
until such time as registration thereof has become effective pursuant to the
Registration Agreement, the sale and distribution of the Closing Shares and the
Warrant have not been registered under the Securities Act or any state
securities laws, and that the Closing Shares and Warrant may not be sold,
offered for sale, transferred, pledged, hypothecated or otherwise disposed of
except in compliance with the Securities Act or any state securities Legal
Requirements.
4.5 Acquired Contracts and Acquired Governmental Permits. Sellers have
----------------------------------------------------
made available to Buyer true and correct copies of the Leases, Acquired
Contracts and Acquired Governmental Permits. To Seller's knowledge, each of the
Leases and Acquired Contracts is in full force and effect, and no party is in
material breach of its obligations thereunder.
4.6. Environmental Information. Sellers have made available to Buyer
-------------------------
copies of all studies, reports, surveys or other materials in Sellers'
possession relating to the presence or alleged presence of Regulated Substances
on the Acquired Properties or Environmental Liabilities arising out of the
operation of the Mesquite Mine.
4.7 Title to Acquired Properties. Sellers have made available to Buyer
----------------------------
copies of all documents and instruments in Sellers' possession relating to title
to the Acquired Properties or the status of the Leases.
4.8 Disclaimer of Representations and Warranties. Except only as
--------------------------------------------
expressly stated in this Article 4, Sellers make no representations or
warranties as to the Assets or the Mesquite Mine, including but not limited to:
(i) the status of title to, or the transferability of, any of the
Acquired Properties or other Assets;
(ii) the physical condition of the Acquired Properties or other
Assets;
(iii) the compliance of the Acquired Properties or other Assets,
or Seller's operations or activities, with any Legal Requirements;
(iv) the status of the Leases or any of the Acquired Governmental
Permits or Acquired Contracts; or
(v) any Environmental Liabilities in any way relating to or
arising out of the ownership or operation of the Mesquite Mine, the Acquired
Properties or other Assets.
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WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLERS SPECIFICALLY DISCLAIM
ANY AND ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR
NON-INFRINGEMENT, AND, EXCEPT AS EXPRESSLY STATED IN THIS ARTICLE 4, THE ASSETS
ARE CONVEYED BY SELLERS TO BUYER AT CLOSING AS-IS, WITH ALL FAULTS. BUYER
ACKNOWLEDGES THAT SELLERS HAVE AFFORDED BUYER FULL ACCESS TO THE ACQUIRED
PROPERTIES, THE ASSETS AND THE MESQUITE MINE, AND HAVE MADE AVAILABLE TO BUYER
SUCH INFORMATION AND COPIES OF SUCH DOCUMENTS AS BUYER HAS REQUESTED WITH
RESPECT THERETO.
ARTICLE 5
Buyer's and WGI's Representations and Warranties.
------------------------------------------------
WGI and Buyer represent and warrant to Sellers as of Closing as follows:
5.1 Organization and Qualification of Buyer and WGI.
-----------------------------------------------
(a) Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada, and has all requisite
power and authority to own and lease the properties and assets it currently owns
and leases and to conduct its activities as such activities are currently
conducted. Buyer is duly qualified to do business as a foreign corporation and
is in good standing in California.
(b) WGI is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Idaho, and has all requisite power
and authority to own and lease the properties and assets it currently owns and
leases and to conduct its activities as such activities are currently conducted.
WGI is duly qualified to do business as a foreign corporation and is in good
standing in California.
5.2 Authority. Each of WGI and Buyer has all requisite power and
---------
authority to execute, deliver, and perform this Agreement and consummate the
transactions contemplated by this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement on the part of WGI and Buyer have been duly and
validly authorized by all necessary action on the part of WGI and Buyer,
respectively. This Agreement has been duly and validly executed and delivered
by WGI and Buyer, and is the valid and binding obligation of WGI and Buyer,
enforceable against WGI and Buyer in accordance with its terms.
5.3 No Conflict; Required Consents. The execution, delivery, and
------------------------------
performance by WGI and Buyer of this Agreement do not and will not: (i)
conflict with or violate any provision of the charter or bylaws of WGI or Buyer;
(ii) violate any provision of any Legal Requirements; (iii) conflict with,
violate, result in a breach of, constitute a default under (without regard to
requirements of notice, lapse of time, or elections of other Persons, or any
combination thereof), accelerate, or permit the acceleration of the performance
required by, any Contract or Encumbrance to which WGI or Buyer is a party or by
which WGI or Buyer or the assets or properties owned or leased by WGI or Buyer
are bound or affected; or (iv) require any consent,
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approval or authorization of, or filing of any certificate, notice, application,
report, or other document with, any Governmental Authority or other Person.
5.4 Buyer Insurance Policies. Schedule 5.4 describes all environmental
------------------------ ------------
response cost insurance policies that Buyer has obtained with respect to the
Assets, the Mesquite Mine and its operations and activities (the "Buyer
-----
Insurance Policies"), as well as the coverage and policy limits of each Buyer
------------------
Insurance Policy. Each of the Buyer Insurance Policies is in full force and
effect, and Buyer has delivered to Sellers true and correct copies thereof.
There exist no disputes between Buyer and any underwriters of the Buyer
Insurance Policies, and all premiums due and payable with respect thereto have
been paid. WGI and Buyer and their activities as currently conducted are in
compliance with all conditions of the Buyer Insurance Policies.
5.5 Buyer Bonds. Buyer has obtained the bonds and other surety
-----------
instruments described on Schedule 5.5 (the "Buyer Bonds"), and has duly
------------ -----------
delivered the Buyer Bonds to the beneficiaries thereof named on Schedule 5.5 and
------------
true and correct copies of each of the Buyer Bonds to Sellers. Each of the
Buyer Bonds is in full force and effect.
5.6 Capitalization. As of October 31, 2003, the authorized capital
--------------
stock of WGI consists of (i) 100,000,000 shares of WGI Common Stock, of which
16,796,219 shares (including the Term Sheet Shares) are issued and outstanding,
fully paid and non-assessable, and (ii) 25,000,000 shares of preferred stock,
par value $0.01, none of which are issued and outstanding. Except only for the
Warrants and as described on Schedule 5.6, there are not outstanding any
------------
warrants, options, preemptive rights, or other rights to acquire or cause WGI to
issue any shares of capital stock. The Term Sheet Shares are, and when issued
the Closing Shares and all shares of WGI Common Stock issuable upon exercise of
the Warrant will be, validly issued and outstanding, fully paid and
non-assessable. WGI has duly reserved that number of shares of WGI Common Stock
as are issuable upon exercise of the Warrants.
ARTICLE 6
Covenants.
---------
6.1 Confidentiality.
---------------
(a) Any non-public information that Buyer or WGI may obtain from
Sellers in connection with this Agreement with respect to Sellers shall be
deemed confidential, and neither WGI nor Buyer shall disclose any such
information to any third party or use such information for any commercial
purpose; provided, however, that (i) Buyer or WGI may use and disclose any such
-------- -------
information once it has been publicly disclosed (other than by Buyer or WGI in
breach of its obligations under this Section) or which rightfully has come into
the possession of Buyer or WGI (other than from Sellers); (ii) Buyer or WGI may
disclose such information to its officers, directors, agents, employees,
advisors, potential investors and lenders as necessary in connection with the
transactions contemplated in this Agreement, provided that such persons agree to
treat such information confidentially in accordance with this Section 6.1(a);
(iii) Buyer or WGI may disclose any such information to the extent it is
required by law or the rules of any stock exchange to do so; and (iv) to the
extent that Buyer or WGI may become compelled by Legal Requirements to disclose
any of such information, it may disclose such information if it shall
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have used all reasonable efforts, and shall have afforded Sellers the
opportunity, to obtain an appropriate protective order, or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed.
(b) Any non-public information that Sellers shall obtain from
Buyer or WGI in connection with this Agreement with respect to Buyer or WGI
shall be deemed confidential, and Sellers shall not disclose such information to
any third party or use such information for any commercial purpose; provided,
however, that (i) Sellers may use and disclose any such information once it has
been publicly disclosed (other than by Sellers in breach of its obligations
under this Section) or which rightfully has come into the possession of Sellers
(other than from Buyer or WGI); (ii) Sellers may disclose such information to
their officers, directors, agents, employees, representatives, advisors and
lenders as necessary in connection with the transactions contemplated in this
Agreement, provided that such persons agree to treat such information
confidentially in accordance with this Section 6.1(b); (iii) Sellers may
disclose any such information to the extent they are required by law or the
rules of any stock exchange to do so; and (iv) to the extent that Sellers may
become compelled by Legal Requirements to disclose any of such information,
Sellers may disclose such information if they shall have used all reasonable
efforts, and shall have afforded Buyer and WGI the opportunity, to obtain an
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information compelled to be disclosed.
(c) Except as required by applicable Legal Requirements, none of
Sellers, Buyer or WGI shall make any press release or public announcement or
statement without the prior written consent and approval of the other. Sellers,
WGI and Buyer shall consult with and cooperate with the others with respect to
the content and timing of all press releases and other public announcements or
statements, and any oral or written statements to Sellers' employees concerning
this Agreement and the transactions contemplated hereby.
6.2 Buyer Insurance Policies and Buyer Bonds. Until such time
----------------------------------------
following Closing as Reclamation of the Acquired Properties and the Mesquite
Mine has been completed in accordance with all applicable Legal Requirements and
all of Buyer Bonds have been released by the applicable Governmental
Authorities, Buyer shall maintain in full force and effect Buyer Bonds in
amounts required by applicable Governmental Authorities and Buyer Insurance
Policies in the amounts stated on Schedule 6.2. Buyer shall cause all Buyer
------------
Insurance Policies to name Sellers and their affiliates as additional named
insureds and to be subject to cancellation or termination only upon sixty days'
advance notice to Sellers; provided, however, that Seller need not be an
additional named insured on Buyer Insurance Policies that are related solely to
Reclamation. From time to time as requested by either of Sellers, Buyer shall
deliver to Sellers certificates for or copies of Buyer Insurance Policies and
Buyer Bonds.
6.3 Excluded Equipment. For a period of one year following closing,
------------------
Sellers shall be entitled to store on the Acquired Properties equipment and
other tangible property that is included in the Excluded Assets. Sellers shall
be solely responsible for insuring such equipment against casualty loss. During
that period, Sellers and the owners (and any actual or prospective purchasers)
of such personal property shall be entitled to have access to the Acquired
Properties in order to inspect, maintain, repair and remove such personal
property, provided that such right of access is exercised in a manner that does
not unreasonably interfere with Buyer's activities.
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6.4 Retention of Records. At all times following Closing, Buyer shall
---------------------
advise Sellers of the location of all documents, data and records relating to
the Mesquite Mine that Buyer or WGI has obtained from Sellers or copied from
Sellers' files, and provide Sellers with access to all such documents, records
and data as either of Sellers request from time to time. Neither Buyer nor WGI
shall destroy or dispose of any such documents, data or records without first
affording Sellers a reasonable opportunity (but in no event less than sixty
days) to take possession of them at their cost.
6.5 Employees. Buyer or its agent ("Agent") may, but shall have no
--------- -----
obligation to, offer employment to any or all of Sellers' employees at the
Mesquite Mine at salaries or wages, and with plans and other benefits, as are
determined by Buyer. Buyer acknowledges that Sellers also may, but shall have
no obligation to, offer such employees alternative employment. Buyer shall (and
shall cause Agent to) give any such employees that accept Buyer's offer of
employment full credit for their years of service with Sellers (or any
affiliates or predecessor entities of Sellers) for purposes of vesting and
participation in Buyer's employee benefit plans. Buyer will not immediately
implement its own health insurance plans but hereby agrees to reimburse any
employees that it hires for their COBRA premiums prior to implementation of its
own health insurance plans. Once implemented, Buyer shall use its best efforts
to permit any such employees to participate in Buyer's health insurance plans
without restrictions relating to preexisting conditions, and not impose any
waiting or eligibility periods with respect to their participation in any of
Buyer's plans, regardless of whether such employees are hired by Buyer or Agent,
or initially are hired by one of them and subsequently hired by the other. In
addition, within ten days following Closing Buyer shall (and, if Agent employs
any such employees, cause Agent to) establish a 401(k) plan that permits loans
to employees on the same terms and conditions as Seller's 401(k) plan in which
such employees participate, and accept a plan-to-plan transfer of the individual
account balance (including all outstanding loans) of each employee employed by
Buyer or Agent (as the case may be) at no cost to such employee and without any
lapse in service, if and when such employee becomes an employee of Agent and/or
an employee of Buyer, regardless of whether such employee is hired by Buyer or
Agent, or initially is hired by one of them and subsequently hired by the other.
6.6 Use of Name. Buyer and WGI shall not, and shall cause each of their
-----------
Affiliates not to, directly or indirectly include or otherwise make use of the
name or identity of either Seller or any of their respective Affiliates, or
their relationship with WGI or Buyer, in any public announcement, press release,
filing or otherwise, except only as (i) approved in advance by Newmont, in
writing, or (ii) in announcements or regulatory filings required by applicable
Legal Requirements, provided that Buyer and WGI have given Newmont a reasonable
opportunity to review and approve, and Newmont has approved in writing, the form
and content of each such filing or announcement.
6.7 Post-Closing Security Services. For a period of thirty days
-------------------------------
following Closing, Newmont shall provide to Buyer without charge (except as
provided below) certain limited security monitoring services with respect to the
Mesquite Mine that generally are equivalent in scope to those it provides for
its own account at the time of Closing (the "Security Services"). The Security
-----------------
Services shall consist of:
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(a) remote monitoring of video feeds from cameras located at the
Mesquite Mine;
(b) electronic monitoring of personnel entry and exit from the
Mesquite Mine site through the Mesquite Mine proximity gate card system;
(c) programming proximity cards as requested by Buyer;
(d) maintaining the Newmont internet "firewall" at the Mesquite
Mine to accommodate the transmission of the video feed from the Mesquite Mine;
and
(e) on-site maintenance of security equipment at the Mesquite
Mine, as and when requested by Buyer. (This service shall be performed on a
time and material basis at rates determined by Newmont, on a schedule convenient
to Newmont.)
However, the Security Services shall not include the following:
---
(i) maintaining the ADT card key system currently in use in
certain locations at the Mesquite Mine;
(ii) video taping of security camera video feeds;
(iii) any on-the-ground security functions at the Mesquite Mine;
or
(iv) maintaining the microwave telecommunications system and
internet connection required for security monitoring.
The Security Services are being performed by Newmont solely as an accommodation
to Buyer. Newmont shall not have any liability whatsoever to Buyer or WGI, and
each of Buyer and WGI hereby waives and releases Newmont from any and all
liability, for or in any way arising out of its provision of Security Services.
WGI and Buyer jointly and severally shall defend, indemnify and hold harmless
Newmont, Hospah and their respective officers, directors and affiliates from and
against any and all Losses arising out of or in any way relating to Security
Services (including, but not limited to, any claim that they were not performed,
or where performed negligently or inadequately).
6.8 Data Transfer.
-------------
(a) Newmont shall transfer to Buyer at Closing all files
maintained at the Mesquite Mine site, with the exception of personnel files and
loss control files.
(b) Within thirty days following Closing, Newmont shall transfer
the following files to Buyer:
(i) electronic files of the Mesquite Mine drill hole data
base in Medsystem(C) format;
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(ii) electronic files of the Mesquite Mine Expansion geologic
model and block model in Medsystem(C) format;
(iii) electronic files of the Mesquite Mine Expansion pit
designs in Medsystem(C) format; and
(iv) any other files relating to the Mesquite Mine Expansion
mine plan prepared by Newmont.
(c) Within ninety days following Closing, Newmont shall transfer
to Buyer its archived historic files and records pertaining to Mesquite Mine
operations, processing operations, geologic programs, environmental matters and
land status. Newmont further agrees to transfer any files related to the
foregoing that it discovers in the future to Buyer. Newmont shall make all land
files currently in its office available for transfer by Buyer to Iron Mountain
for off-site storage in Denver, at Buyer's expense; each of Buyer and Newmont
shall be entitled to full access to such land files. Nothing contained herein
shall require Newmont to maintain files and records except in accordance with
its standard record retention policies.
(d) Newmont makes no representations or warranties concerning any
data or files delivered to Buyer, and shall have no liability or responsibility
to Buyer or WGI for the accuracy or completeness of any such data or materials.
All such data and files are provided to Buyer as is, with all faults.
6.9 Post-Closing Delivery of Common Stock and Warrants. Within ten
--------------------------------------------------
days (but in no event later than December 31, 2003) after closing the financing
round begun by WGI on or about September 15, 2003 and currently ongoing,
pursuant to which WGI is selling "Units", each consisting of 1 share of WGI
Common Stock and 1 warrant to purchase a share of WGI Common Stock for $1.00,
for $.80, WGI shall issue to Hospah:
(a) a number of shares of WGI Common Stock equal to (i) the number
of shares of WGI Common Stock representing eight percent of all issued and
outstanding WGI Common Stock on a fully diluted basis as of such date, minus
(ii) the number of Closing Shares received pursuant to this Agreement; and
(b) warrants for the purchase of that number of shares of WGI
Common Stock equal to (i) the number of shares of WGI Common Stock representing
nine percent of all issued and outstanding WGI Common Stock on a fully diluted
basis as of such date, minus (ii) the number of shares into which the Warrant is
exercisable.
6.10 License. From the date of this Agreement until such time as the
-------
California State Land Commission has approved assignment of the California State
Lease to Buyer, Sellers hereby grant to Buyer an exclusive license to use the
leased property under the California State Lease, provided that such license
shall be revocable at any time upon written notice from Sellers. Buyer agrees
to comply with all terms and conditions of the California State Lease as if it
were the lessee thereunder.
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ARTICLE 7
Conditions Precedent.
--------------------
7.1 Conditions to Buyer's and WGI's Obligations. The obligations of
-------------------------------------------
Buyer and WGI to consummate the transactions contemplated by this Agreement
shall be subject to the condition, which may be waived by Buyer and WGI, that
there have been obtained all Required Consents, the failure of which to be
obtained could have a material adverse effect on the operations of the Mesquite
Mine.
7.2 Conditions to Sellers' Obligations. The obligations of Sellers to
----------------------------------
consummate the transactions contemplated by this Agreement shall be subject to
the following conditions, which may be waived by Sellers:
(a) Required Consents. Sellers shall have obtained evidence, in
-----------------
form and substance satisfactory to them, that all Required Consents have been
obtained without any condition or requirement that is not acceptable to Sellers
in their sole discretion.
(b) Sellers' Bonds. All Bonds that had been provided by Sellers
--------------
with respect to the Mesquite Mine ("Sellers' Bonds") shall have been completely
--------------
and unconditionally released and, where appropriate, returned to Sellers. All
Governmental Authorities that have been designated as beneficiaries or secured
parties under Sellers' Bonds shall have given full and unconditional releases of
Sellers with respect to Reclamation, remediation, Mesquite Mine closure, and any
other performance obligations.
(c) Releases. Sellers shall have obtained the written releases,
--------
in form and substance satisfactory to them, of the lessors under each of the
Leases and the parties (other than Sellers) to the Acquired Contracts indicated
with an asterisk on Schedule 2.1(f).
---------------
(d) Buyer's Counsel Opinion. Sellers shall have received the
-----------------------
opinion of counsel to Buyer and WGI, dated as of the Closing Date, in form and
substance satisfactory to Sellers, with respect to the matters in Sections 5.1,
5.2, 5.3 and 5.6.
7.3 Satisfaction or Waiver of Conditions. If the Closing occurs, the
------------------------------------
conditions set forth in this Article 7 shall be deemed to have been satisfied or
waived.
ARTICLE 8
Closing.
-------
8.1 Closing; Time and Place. The closing of the transactions
-----------------------
contemplated by this Agreement ("Closing") shall take place simultaneously with
-------
the execution of this Agreement by Sellers and Buyer, at a location mutually
determined by Sellers, Buyer and WGI.
8.2 Sellers' Obligations. At Closing, Sellers shall deliver or cause
--------------------
to be delivered to Buyer the following:
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(a) Deed and Assignment. A Special Warranty Deed, Assignment and
-------------------
Assumption Agreement in the form of Exhibit 8.2(a), executed by Sellers (the
--------------
"Deed and Assignment");
-------------------
(b) ▇▇▇▇ of Sale and General Assignment. A ▇▇▇▇ of Sale and
-----------------------------------
General Assignment in the form of Exhibit 8.2(b), executed by Sellers.
--------------
(c) Vehicle Titles. Title certificates to all vehicles included
--------------
among the Assets, endorsed for transfer of title to Buyer, and separate bills of
sale therefor, if required by the laws of the State of California, executed for
transfer by the applicable Seller.
(d) Registration Rights Agreement. Counterparts of a Registration
-----------------------------
Agreement in the form attached as Exhibit 8.2(d) (the "Registration Rights
-------------- -------------------
Agreement"), executed by Hospah.
---------
(e) Carbon Processing Agreement. Counterparts of a Carbon
---------------------------
Processing Agreement in the form attached as Exhibit 8.2(e) (the "Carbon
-------------- ------
Processing Agreement"), executed by Newmont.
--------------------
(f) Estoppel Certificate. An Estoppel Certificate in form
--------------------
satisfactory to Seller and Buyer's lender.
(g) Other. Such other documents and instruments as shall be
-----
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
8.3 Buyer's Obligations. At Closing, WGI and/or Buyer shall deliver or
-------------------
cause to be delivered to Sellers the following:
(a) Deed and Assignment. The Deed and Assignment, executed by
-------------------
Buyer.
(b) Assumption Agreement. An Assumption Agreement in the form
--------------------
attached as Exhibit 8.3(b), executed by Buyer.
--------------
(c) NSR Royalty Agreement. The NSR Royalty Agreement, executed by
---------------------
Buyer.
(d) NOCF Royalty Agreement. The NOCF Royalty Agreement, executed
----------------------
by Buyer.
(e) Certificate for Closing Shares. Duly executed stock
------------------------------
certificates for the Closing Shares.
(f) Warrant. The Warrant, executed by WGI.
-------
(g) Registration Rights Agreement. Counterparts of the
-----------------------------
Registration Rights Agreement, executed by WGI.
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(h) Carbon Processing Agreement. Counterparts of the Carbon
---------------------------
Processing Agreement, executed by Buyer.
(i) a Guaranty in the form attached as Exhibit 8.3(i), executed by
--------------
WGI;
(j) Evidence of Corporate Actions. Certified resolutions of the
-----------------------------
board of directors of Buyer, or other evidence reasonably satisfactory to
Sellers, that Buyer has taken all action necessary to authorize the execution of
this Agreement and the consummation of the transactions contemplated by this
Agreement.
(k) Other. Such other documents and instruments as shall be
-----
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
ARTICLE 9
Indemnification; Release.
------------------------
9.1 Indemnification by Hospah. From and after Closing, Sellers jointly
-------------------------
and severally shall indemnify and hold harmless Buyer and WGI and their
Affiliates and their respective officers and directors, employees, agents, and
representatives, and any Person claiming by or through any of them, as the case
may be, from and against any and all Losses arising out of or resulting from:
(a) any representations and warranties of Sellers in this
Agreement not being true and accurate when made or at Closing; and
(b) any failure by Sellers to perform any of their covenants,
agreements, or obligations in this Agreement.
9.2 Indemnification by Buyer. From and after Closing, Buyer and WGI
------------------------
jointly and severally shall indemnify and hold harmless Sellers and their
affiliates and their respective officers and directors, agents, and
representatives, and any Person claiming by or through any of them, as the case
may be, from and against any and all Losses arising out of or resulting from:
(a) any representations and warranties of Buyer or WGI in this
Agreement not being true and accurate when made or at Closing;
(b) any failure by Buyer or WGI to perform any of its covenants,
agreements, or obligations in this Agreement;
(c) the Assumed Liabilities; and
(d) any claim by any Person related to assignment, or the validity
of assignment, of the California State Lease, the consummation of the
transactions contemplated by this Agreement without having first obtained the
consent of the California State Land Commission to assignment of the California
State Lease, or the license granted in Section 6.10 hereof as it relates to the
California State Lease.
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EXECUTION COPY
9.3 Procedure for Indemnified Third Party Claim. Promptly after
-------------------------------------------
receipt by a party entitled to indemnification hereunder (the "Indemnitee") of
----------
written notice of the assertion or the commencement of any Litigation with
respect to any matter referred to in Sections 9.1 or 9.2, the Indemnitee shall
give written notice thereof to each party from which indemnification is sought
(each an "Indemnitor"), and thereafter shall keep the Indemnitor reasonably
----------
informed with respect thereto; provided, however, that failure of the Indemnitee
to give the Indemnitor notice as provided herein shall not relieve the
Indemnitor of its obligations hereunder except to the extent that the Indemnitor
is prejudiced thereby. If any Litigation shall be commenced against any
Indemnitee by a third party, the Indemnitor shall be entitled to participate in
such Litigation and, at its option, assume the defense thereof with counsel
reasonably satisfactory to the Indemnitee, at the Indemnitor's sole expense;
provided, however, that the Indemnitor shall not have the right to assume the
-------- -------
defense of any Litigation if (i) the Indemnitee shall have one or more legal or
equitable defenses available to it which are different from or in addition to
those available to the Indemnitor, and, in the reasonable opinion of the
Indemnitee, counsel for the Indemnitor could not adequately represent the
interests of the Indemnitee because such interests could be in conflict with
those of the Indemnitor, (ii) such Litigation is reasonably likely to have a
material adverse effect on any other matter beyond the scope or limits of the
indemnification obligation of the Indemnitor, or (iii) the Indemnitor shall not
have assumed the defense of the Litigation in a timely fashion (but in any event
within thirty days of notice of such Litigation). If the Indemnitor shall
assume the defense of any Litigation, the Indemnitee shall be entitled to
participate in any Litigation at its expense, and the Indemnitor shall not
settle such Litigation unless the settlement shall include as an unconditional
term thereof the giving by the claimant or the plaintiff of a full and
unconditional release of the Indemnitee, from all liability with respect to the
matters that are subject to such Litigation, or otherwise shall have been
approved reasonably by the Indemnitee.
9.4 Payment of Indemnification Amounts and Related Matters. Amounts
------------------------------------------------------
payable pursuant to Sections 9.1 or 9.2 shall be payable by the Indemnitor as
incurred by the Indemnitee, and shall bear interest at the Prime Rate from the
date the Losses for which indemnification is sought were incurred by the
Indemnitee until the date of payment of indemnification by the Indemnitor.
9.5 Survival. The representations and warranties of Buyer and Sellers
--------
in this Agreement shall survive Closing.
9.6 Other Indemnification. The provisions of Sections 9.3 and 9.4
---------------------
shall be applicable to any claim for indemnification made under any other
provision of this Agreement, and all references in Sections 9.3 and 9.4 to
Sections 9.1 and 9.2 shall be deemed to be references to such other provisions
of this Agreement.
9.7 Sole Remedy. The provisions of this Article 9 are the sole
-----------
remedies of Buyer, WGI and Sellers with respect to this Agreement and the
transactions contemplated by this Agreement, and Buyer, WGI and Sellers waive
any and all other rights and remedies in respect of this Agreement and such
transactions. However, the foregoing shall in no way limit the rights and
remedies of Sellers under or with respect to the Warrant, the Registration
Rights Agreement, the Transition Services Agreement, the NOCF Royalty Agreement
or the NSR Royalty Agreement.
20
EXECUTION COPY
9.8 Release. Buyer and WGI hereby release Sellers and their affiliates
-------
and their respective officers and directors, agents, and representatives, and
any Person claiming by or through any of them, from any and all liability for
any Losses of Buyer or WGI, as the case may be, arising out of, or resulting
from, any claim by any Person related to assignment, or the validity of
assignment, of the California State Lease, the consummation of the transactions
contemplated by this Agreement without having first obtained the consent of the
California State Land Commission to assignment of the California State Lease, or
the license granted in Section 6.10 hereof as it relates to the California State
Lease.
ARTICLE 10
Miscellaneous Provisions.
------------------------
10.1 Expenses. Except as otherwise provided in Section 10.13 or
--------
elsewhere in this Agreement, each of the parties shall pay its own expenses and
the fees and expenses of its counsel, accountants, and other experts in
connection with this Agreement. Buyer and WGI shall reimburse Sellers for
Sellers' costs incurred in copying and providing to Buyer or WGI any materials
or information relating to the Assets or the Mesquite Mine, including but not
limited to the materials described in Sections 4.5, 4.6 and 4.7.
10.2 Brokerage. Sellers jointly and severally shall indemnify and hold
---------
Buyer and WGI harmless from and against any and all Losses arising from any
employment by either of Sellers of, or services rendered to either of Sellers
by, any finder, broker, agency, or other intermediary, in connection with the
transactions contemplated hereby, or any allegation of any such employment or
services. Buyer and WGI jointly and severally shall indemnify and hold Sellers
harmless from and against any and all Losses arising from any employment by
either Buyer or WGI, or services rendered to either Buyer or WCI by, any finder,
broker, agency, or other intermediary, in connection with the transactions
contemplated hereby, or any allegation of any such employment or services.
10.3 Waivers. No action taken pursuant to this Agreement, including
-------
any investigation by or on behalf of any party hereto, shall be deemed to
constitute a waiver by the party taking the action of compliance with any
representation, warranty, covenant or agreement contained herein or in any
Transaction Document. The waiver by any party hereto of any condition or of a
breach of another provision of this Agreement or any Transaction Document shall
not operate or be construed as a waiver of any other condition or subsequent
breach. The waiver by any party of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement other than with respect to the condition so waived.
10.4 Notices. All notices, requests, demands, applications, services
-------
of process, and other communications which are required to be or may be given
under this Agreement or any Transaction Document shall be in writing and shall
be deemed to have been duly given if sent by telecopy or facsimile transmission
or delivered by courier or mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
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EXECUTION COPY
To Sellers:
Hospah Coal Company
Newmont USA Limited
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Land Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer:
Western Goldfields, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, #▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective
upon receipt.
10.5 Entire Agreement; Amendments. This Agreement embodies the entire
----------------------------
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with
respect thereto, including without limitation the Term Sheet. This Agreement
may not be modified orally, but only by an agreement in writing signed by the
party or parties against whom any waiver, change, amendment, modification, or
discharge may be sought to be enforced.
10.6 Binding Effect; Benefits. This Agreement shall inure to the
------------------------
benefit of and will be binding upon the parties hereto and their respective
heirs, legal representatives, successors, and permitted assigns. Buyer shall
not assign this Agreement or delegate any of its or their duties hereunder to
any other Person without the prior written consent of Sellers. No assignment of
this Agreement shall relieve the assigning party of its obligations or
liabilities under this Agreement.
10.7 Headings, Schedules, and Exhibits. The section and other headings
---------------------------------
in this Agreement are for reference purposes only and will not affect the
meaning of interpretation of this Agreement. Reference to Exhibits and
Schedules shall, unless otherwise indicated, refer to the Exhibits and Schedules
attached to this Agreement, each of which shall be incorporated in and
constitute a part of this Agreement by such reference.
10.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together will be deemed to be one and the same instrument.
10.9 Governing Law. The validity, performance, and enforcement of this
-------------
agreement and all transaction documents, unless expressly provided to the
contrary, shall be governed by the laws of the State of Colorado, without giving
effect to the principles of conflicts of law of such State.
22
EXECUTION COPY
10.10 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
rights of the Person intended to be benefited by such provision or any other
provisions of this Agreement.
10.11 Third Parties; Joint Ventures. This Agreement constitutes an
-----------------------------
agreement solely among the parties hereto, and, except as otherwise provided
herein, is not intended to and will not confer any rights, remedies,
obligations, or liabilities, legal or equitable, including any right of
employment, on any Person (including but not limited to any employee or former
employee of either Seller) other than the parties hereto and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to or shall constitute the parties hereto
partners or participants in a joint venture.
10.12 Construction. This Agreement has been negotiated by Buyer, WGI
------------
and Sellers and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement shall not
apply in any interpretation of this Agreement.
10.13 Attorneys' Fees. If any Litigation among any of Sellers, WGI or
---------------
Buyer with respect to this Agreement or the transaction contemplated hereby
shall be resolved or adjudicated by a Judgment of any court, the party
prevailing under such Judgment shall be entitled, as part of such Judgment, to
recover from the other party its reasonable attorneys' fees and costs and
expenses of litigation.
[SIGNATURE PAGE FOLLOWS.]
23
Buyer, WGI and Seller have executed this Agreement as of the date first
written above.
SELLERS
-------
Hospah Coal Company
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Secretary
Newmont USA Limited dba Newmont Mining
Corporation
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Managing Director
WGI
---
Western Goldfields, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer
BUYER
-----
Western Mesquite Mines, Inc.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer