CLOSING MEMORANDUM FOR THE TRANSFER OF SHARES IN DMC CAYMAN INC. December 2, 2005
EXECUTION
VERSION
FOR
THE TRANSFER OF SHARES
IN
DMC CAYMAN INC.
December
2, 2005
THIS
CLOSING MEMORANDUM (the “Closing Memorandum”) sets forth certain actions and
agreements by and among Trend Mining Company, a Delaware corporation; Oro Chile
LLC, a Colorado limited liability company; and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇, each an individual, with regard to the
transfer of the ordinary and preference shares in DMC Cayman Inc.
1.
Definitions.
As used
in this Closing Memorandum, the following terms have the meanings
indicated:
“Additional
Costs and Fees” has the meaning set forth in Section 3b.
“AGI”
means Andacollo Gold Inc., a Cayman Islands exempted company.
“Chile”
means the Republic of Chile.
“Closing”
means the actions taken by Trend, Oro Chile, The Russells and ▇▇▇▇▇▇ on the
Effective Date, as contemplated in this Closing Memorandum.
“Closing
Memorandum” has the meaning set forth in the introductory paragraph, and
includes the attached Exhibits.
“CMD”
means Compañia Minera Dayton, a Chilean sociedad
contractual minera.
“CMD
Royalty” means a one percent (1%) Net Smelter Returns Royalty to be granted by
CMD to Trend, substantially in the form attached to this Closing Memorandum
as
Exhibit
A.
“DCEM”
means Dayton Chile Exploraciones Mineras Limitada, a Chilean sociedad
de responsabilidad limitada.
“DCEM
Royalty” means a one percent (1%) Net Smelter Returns Royalty to be granted by
DCEM to Trend, substantially in the form attached to this Closing Memorandum
as
Exhibit
B.
“Deed
of
Release” means the deed of release executed by ▇▇▇▇▇▇ in respect of the Original
Charge and the Original Promissory Note.
“DMC
Cayman” means DMC Cayman Inc., a Cayman Islands exempted company.
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“Dollars”
or “$” means the official currency of the United States of America.
“Effective
Date” means December 2, 2005.
“Expenses”
has the meaning set forth in Section 8b.
“Legal
Costs” means any and all legal costs, fees and expenses reasonably incurred by
Trend and/or Pacrim in respect of the transactions described in this Closing
Memorandum.
“Letter
Agreement” has the meaning set forth in Section 7.
“LSI”
means La Serena Inc., a Cayman Islands exempted company.
“New
Charge” means the charge over shares granted by Oro Chile and The Russells to
Pacrim in respect of the Shares.
“New
Promissory Note” means the promissory note in the principal amount of Two
Million Four Hundred Thousand Dollars ($2,400,000), made by Oro Chile and The
Russells to the order of Pacrim.
“Non-Prevailing
Party” has the meaning set forth in Section 8b.
“Original
Charge” means the charge over shares granted by Trend to Pacrim in respect of
the Shares.
“Original
Promissory Note” means the promissory note in the principal amount of Two
Million Four Hundred Thousand Dollars ($2,400,000), made by Trend to the order
of Pacrim.
“Oro
Chile” means Oro Chile LLC, a Colorado limited liability company.
“Pacrim”
means Pacific Rim Mining Corp., a British Columbia corporation.
“Pacrim
Loan” has the meaning set forth in the Share Purchase Agreement.
“Pacrim
Loan Assignment” means the Assignment of Right to Repayment of Loan in respect
of the Pacrim Loan.
“Prevailing
Party” shall have the meaning set forth in Section 8b.
“Purchase
Price” means a total amount of Three Million One Hundred Thousand Dollars
($3,100,000).
“Representatives”
means, in respect of all or any one of Trend, Oro Chile or The Russells, the
heirs, relatives, beneficiaries, executors, personal representatives,
administrators, legal representatives, agents, attorneys, affiliates,
subsidiaries, directors, officers, managers, members, employees, successors
and
assigns of all or any one of Trend, Oro Chile or The Russells.
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“Repurchase
Right” has the meaning set forth in Section 7.
“Royalty
Payments” means the royalty payments to be made by CMD to Trend pursuant to the
CMD Royalty, and by DCEM to Trend pursuant to the DCEM Royalty.
“Share
Purchase Agreement” means the Share Purchase Agreement dated September 20, 2005,
between Pacrim and Trend.
“Share
Purchase Agreement Assignment and Assumption” means the Share Purchase Agreement
Assignment and Assumption Agreement in respect of the Share Purchase
Agreement.
“Shares”
means the ordinary and preference shares in DMC Cayman.
“The
Russells” means, jointly and severally, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇, each an individual.
“Trend”
means Trend Mining Company, a Delaware corporation.
“Vector”
means Vector Colorado, LLC.
2.
Actions
Taken at Closing.
The
following actions will be taken at the Closing:
a.
Transfer
of Shares.
i. Execution
and delivery of share transfer by Trend to transfer 648,796 ordinary Shares
to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇.
ii. Execution
and delivery of share transfer by Trend to transfer 2,828,238 preference Shares
to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇.
iii. Execution
and delivery of share transfer by Trend to transfer 5,839,164 ordinary Shares
to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as joint tenants.
iv. Execution
and delivery of share transfer by Trend to transfer 25,454,140 preference Shares
to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as joint tenants.
v. Execution
and delivery of share transfer by Trend to transfer 6,487,959 ordinary Shares
to
Oro Chile.
vi. Execution
and delivery of share transfer by Trend to transfer 28,282,379 preference Shares
to Oro Chile.
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b.
Promissory
Note.
Execution of New Promissory Note by Oro Chile and The Russells, and delivery
of
New Promissory Note to Pacrim.
c.
Charges
and Releases.
i. Execution
by ▇▇▇▇▇▇ of Deed of Release and delivery of Deed of Release to
Trend.
ii. Delivery
by Pacrim to Trend of Original Promissory Note.
iii. Execution
of New Charge by Oro Chile and The Russells and delivery of New Charge to
Pacrim.
d.
Assignments.
i. Execution
of the Share Purchase Agreement Assignment and Assumption by Oro Chile, The
Russells, Pacrim and Trend.
ii. Execution
of the Pacrim Loan Assignment by Oro Chile, The Russells, Pacrim and
Trend.
e.
Corporate
Actions in Respect of DMC Cayman.
i. Removal
of annotation in share registry of DMC Cayman in respect of the Original
Charge.
ii. Notice
of
Charge in respect of New Charge, delivered by Oro Chile and The Russells to
DMC
Cayman.
iii. Annotation
of New Charge in share registry of DMC Cayman.
iv. Director’s
Memorandum in respect of New Charge, delivered by DMC Cayman to
Pacrim.
v. Resignations
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ as directors of DMC Cayman.
vi. Minutes
of board meeting of DMC Cayman.
vii. Minutes
of shareholders meeting of DMC Cayman.
viii. Releases
for ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ by DMC Cayman.
ix. Revocation
of powers of attorney granted by DMC Cayman.
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f.
Corporate
Actions in Respect of AGI.
i. Resignations
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ as directors of AGI.
ii. Minutes
of shareholders meeting of AGI.
iii. Releases
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ by AGI.
iv. Revocation
of powers of attorney granted by ▇▇▇.
g.
Corporate
Actions in Respect of LSI.
i. Resignations
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ as directors of LSI.
ii. Minutes
of shareholders meeting of LSI.
iii. Releases
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ by LSI.
iv. Revocation
of powers of attorney granted by LSI.
h.
Corporate
Actions in Respect of CMD.
i. Resignations
of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ as
directors of CMD.
ii. Minutes
of shareholders meeting of CMD.
iii. Releases
of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ by
CMD.
iv. Resignation
of ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as general manager of CMD.
i.
Corporate
Actions in Respect of DCEM.
i. Resignations
of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇ as directors of
DCEM.
ii. Minutes
of directors meeting of DCEM.
iii. Releases
of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ by DCEM.
iv. Resignation
of ▇▇▇▇▇ ▇▇▇▇▇ as general manager of DCEM.
v. Transfer
of participation held by ▇▇▇▇▇ ▇▇▇▇▇ in DCEM to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Drouilly.
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3.
Payment
of Purchase Price and Other Costs, Fees and Expenses.
a.
Purchase
Price for Shares and the Pacrim Loan.
i. On
and as
of the Closing, Oro Chile and The Russells shall have paid to Trend the Purchase
Price for the Shares and the Pacrim Loan. The Purchase Price shall be allocated
between the Shares and the Pacrim Loan as follows:
(1) Two
Hundred Dollars ($200) of the Purchase Price shall be allocated to the Shares;
and
(2) Three
Million Ninety-Nine Thousand Two Hundred Dollars ($3,099,800) shall be allocated
to the Pacrim Loan.
ii. Each
of
Trend, Oro Chile and The Russells agree that the Purchase Price constitutes
full
and fair consideration for the Shares and the Pacrim Loan. Except for the
Additional Costs and Fees and the Legal Costs to be paid or reimbursed by Oro
Chile and The Russells, and the Royalty Payments, each of Trend, Oro Chile
and
The Russells agree that Trend is not entitled to any further consideration
or
other payment for the Shares and the Pacrim Loan. Trend, Oro Chile and The
▇▇▇▇▇▇▇▇ agree that neither Oro Chile nor The Russells is entitled to any
reimbursement, reduction or set off of the Purchase Price, whether through
a
reduction or set off against the Additional Costs and Fees, the Legal Costs,
the
Royalty Payments, or otherwise.
b. Additional
Costs and Fees.
In
addition to the Purchase Price, within fifteen (15) days following the Closing,
Oro Chile and The Russells will pay the costs and fees incurred by Trend as
follows (the “Additional Costs and Fees”):
i. Oro
Chile
and The Russells will reimburse Trend in the amount of One Hundred Twenty-Two
Thousand Nine Hundred Seventy-Five and 93/100 Dollars ($122,975.93) for costs,
fees and expenses incurred by Trend in respect of the initial purchase of the
Shares and the Pacrim Loan.
ii. Oro
Chile
and The Russells will pay directly to Vector Seventy-Nine Thousand Four Hundred
Eighty-Two and 71/100 Dollars ($79,482.71) for costs, fees and expenses incurred
by Trend for services performed by ▇▇▇▇▇▇.
c. Legal
Costs.
Oro
Chile and The Russells will pay when due any and all Legal Costs on and after
the Closing. Oro Chile and The Russells will reimburse Trend and Pacrim for
any
such Legal Costs paid by Trend or Pacrim prior to the Closing.
4.
Royalty
Agreements.
a. Oro
Chile
and The Russells shall cause CMD to execute and deliver to Trend the CMD Royalty
and shall cause CMD to take such actions as are necessary in order for Trend
to
register the CMD Royalty as a public deed pursuant to the laws of
Chile.
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b. Oro
Chile
and The Russells shall cause DCEM to execute and deliver to Trend the DCEM
Royalty and shall cause CMD to take such actions as are necessary in order
for
Trend to register the DCEM Royalty as a public deed pursuant to the laws of
Chile.
5.
Releases.
a. Except
for the payment of Additional Costs and Fees and Legal Costs or as otherwise
specifically set forth in the Share Purchase Agreement Assignment and
Assumption, Trend, for itself and its Representatives, hereby forever releases
and discharges each of Oro Chile and The Russells and their respective
Representatives, jointly and severally, from any and all causes of action,
actions, judgments, demands, liens, indebtedness, damages, losses, claims,
penalties, interest and other liabilities of whatever nature, whether known
or
unknown, suspected or unsuspected, past, present or future, whether for damages
or equitable relief of any sort, including without limitation, economic damages,
lost profits, consequential damages, exemplary damages, punitive damages, direct
damages or indirect damages, asserted or which could have been asserted by
Trend
or on its behalf in any action in any forum, including all common law, civil
law, civil code, statutory, tort, contractual, or other claims and claims to
attorneys’ fees up to and including the Effective Date. Without limiting the
generality of the foregoing, and except for the payment of the Additional Costs
and Fees and Legal Costs or as otherwise specifically set forth in the Share
Purchase Agreement Assignment and Assumption, Trend specifically releases,
indemnifies and holds harmless each of Oro Chile and The Russells and their
respective Representatives, jointly and severally, from all claims, demands,
guarantees and other liabilities of whatsoever kind and character in any manner
whatsoever arising from the facts or allegations in respect of the ownership
and
operation of DMC Cayman, AGI, LSI, CMD and DCEM.
b. Except
as
specifically set forth in the Share Purchase Agreement Assignment and
Assumption, each of Oro Chile and The Russells, for themselves and their
respective Representatives, hereby forever releases and discharges Trend and
its
Representatives, jointly and severally, from any and all causes of action,
actions, judgments, demands, liens, indebtedness, damages, losses, claims,
penalties, interest and other liabilities of whatever nature, whether known
or
unknown, suspected or unsuspected, past, present or future, whether for damages
or equitable relief of any sort, including without limitation, economic damages,
lost profits, consequential damages, exemplary damages, punitive damages, direct
damages or indirect damages, asserted or which could have been asserted by
each
of Oro Chile or The Russells or on their behalf in any action in any forum,
including all common law, civil law, civil code, statutory, tort, contractual,
or other claims and claims to attorneys’ fees up to and including the Effective
Date. Without limiting the generality of the foregoing, and except as
specifically set forth in the Share Purchase Agreement Assignment and Asumption,
each of Oro Chile and The Russells specifically releases, indemnifies and holds
harmless Trend and its Representatives, jointly and severally, from all claims,
demands, guarantees and other liabilities of whatsoever kind and character
in
any manner whatsoever arising from the facts or allegations in respect of the
ownership and operation of DMC Cayman, AGI, LSI, CMD and DCEM.
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6.
Further
Assurances.
Each of
Trend, Oro Chile and The Russells shall cooperate in order to complete the
transactions contemplated in this Closing Memorandum. In connection therewith,
from time to time after the Closing, upon request and without further
consideration, Trend, Oro Chile and The Russells, as appropriate, will execute
and deliver such documents and instruments; assist in obtaining the necessary
approvals; and take such other action as may be necessary, in order to effect
the transactions contemplated in this Closing Memorandum.
7.
Letter
Agreement.
Trend,
Oro Chile and The Russells entered into a letter agreement dated October 3,
2005, and fully executed as of October 4, 2005 (the “Letter Agreement”), which
Letter Agreement grants to Trend the right to repurchase a thirty percent (30%)
interest in DMC Cayman (the “Repurchase Right”). The Letter Agreement and the
Repurchase Right are incorporated into this Closing Memorandum by this
reference.
8.
Governing
Law and Jurisdiction.
a. This
Closing Memorandum shall be governed by and construed in accordance with the
laws of the State of Colorado, without giving effect to Colorado conflicts
of
law principles. Each of Trend, Oro Chile and The Russells irrevocably submits
to
the exclusive jurisdiction of the federal courts of the United States and state
courts of Colorado located in Denver, Colorado, with regard to any action,
suit,
proceeding, claim or counterclaim arising out of or relating to this Closing
Memorandum. EACH OF TREND, ORO CHILE AND THE RUSSELLS IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, CLAIM OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CLOSING MEMORANDUM.
b. In
any
action suit, proceeding, claim or counterclaim brought to enforce this Closing
Memorandum or any of its provisions, the party that substantially prevails
in
any such action, suit proceeding, claim or counterclaim (the “Prevailing Party”)
shall recover its costs, fees and expenses, including, but not limited to,
the
reasonable costs, fees and expenses of attorneys and outside experts
(collectively, “Expenses”), from the other party (the “Non-Prevailing Party”),
and the court shall be so instructed to determine which party is the Prevailing
Party, to grant recovery of the Expenses incurred by the Prevailing Party,
and
to order the Non-Prevailing Party to pay forthwith the Expenses of the
Prevailing Party.
[REMAINDER
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IN
WITNESS WHEREOF, the parties hereto have caused this Closing Memorandum to
be
executed all as of the Effective Date.
| TREND MINING COMPANY | ORO CHILE LLC | ||
| By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ | ||
|
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
|
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
|
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| /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
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| /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ | |||
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