EXHIBIT 99.A
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THIS
AGREEMENT is made this 29th day of June, 2006; |
BETWEEN:
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RNC
RESOURCES LIMITED, a corporation existing under the laws of Belize |
(the
“Seller”)
— and –
(the “Guarantor”)
— and —
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GLENCAIRN
GOLD CORPORATION, a corporation existing under the laws of Canada |
(the “Buyer”)
RECITALS:
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1. |
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The
Seller is the legal and beneficial owner of all of the issued and outstanding
shares in the capital of Central American Mine Holdings Limited, a corporation
existing under the laws of Belize (“CAMH”). |
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2. |
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The
Buyer wishes to purchase all of the issued and outstanding shares of CAMH and
the Seller has agreed to sell to the Buyer all of the issued and outstanding
shares in the capital of CAMH. |
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3. |
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The
Guarantor is the indirect legal and beneficial owner of all of the issued and
outstanding shares in the capital of the Seller. |
IN
CONSIDERATION of the premises and the mutual agreements in this Agreement, and of
other consideration (the receipt and sufficiency of which are acknowledged by each Party),
the Parties agree as follows:
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ARTICLE 1
INTERPRETATION
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“Act”means
the Canada BusinessCorporations Act and the regulations thereunder; |
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“affiliate”and
“body corporate” have the respective meanings ascribed to those terms by
the Act on the date hereof; |
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“Agreement”means
this share purchase agreement and all attached schedules, in each case as the same may be
supplemented, amended, restated or replaced from time to time in accordance with its
terms; |
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“AMEX”
means the American Stock Exchange; |
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“Applicable
Law” means, any Canadian or foreign federal, provincial, state, local or
municipal statute, law (including the common law), ordinance, rule having the force of
law, regulation, by-law (zoning or otherwise) or Order of any Governmental Authority or
rule of any stock exchange or securities commission, that applies in whole or in part to
the Seller, the Guarantor, the Buyer, the Subsidiaries, or to any of the Purchased
Securities; |
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“Belize
Liabilities” means all long-term liabilities and indebtedness of CAMH, Bemilasa
and RNC (Panama) Limited calculated in accordance with Canadian generally accepted
accounting principles; |
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“Bemilasa”means
Beneficio ▇▇▇▇▇▇ Los Angeles S.A., a corporation existing under the laws of Nicaragua; |
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“Bemilasa
Shares” has the meaning set forth in Section 3.1.2(c); |
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“Bonanza
Agreements” has the meaning set forth in Section 4.1.6; |
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“Bonanza
Exploitation Concession” means the one (1) mining or exploitation concession in
northeast Nicaragua, as more particularly described in Schedule A attached hereto; |
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“Bonanza
Exploration Concessions” means the six (6) mineral exploration concessions in
northeast Nicaragua, as more particularly described in Schedule B attached hereto; |
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“Books
and Records” have the meaning set forth in Section 6.4; |
-3-
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“Business
Day” means a day other than a Saturday or Sunday, on which Canadian chartered
banks, are open for the transaction of domestic business in Toronto, Ontario; |
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“Buyer
Financial Statements” has the meaning set forth in Section 3.3.13; |
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“Buyer
Indemnified Parties” has the meaning set forth in Section 10.6.2; |
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“Buyer
Leased Premises” has the meaning set forth in Section 3.3.19; |
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“Buyer
Mining Rights” has the meaning set forth in Section 3.3.5; |
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“Buyer
Public Documents” means all financial statements, management information
circulars, annual information forms, material change reports, prospectuses and other
documents issued by the Corporation before the date of this Agreement and during the
Interim Period; |
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“Buyer
Subsidiaries” and “Buyer Subsidiary” have the meanings set
forth in Section 3.3.4; |
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“Buyer’s
Post-Closing Notice” has the meaning set forth in Section 7.4(b); |
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“Buyer’s
Post-Closing Statements” has the meaning set forth in Section 7.5(a); |
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“CAMH”has
the meaning set forth in Recital No.1 of this Agreement |
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“CAMH
Shares” means 1,000 common shares in the capital of CAMH which shares represent
all of the issued and outstanding Equity Securities in the capital of CAMH; |
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“Closing”means
the completion of the sale to and purchase by the Buyer of the Purchased Securities and
the completion of all other transactions contemplated by this Agreement which are to
occur contemporaneously with the purchase and sale of the Purchased Securities; |
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“Closing
Date” means July 6, 2006, or such other Business Day as the Parties agrees in
writing as the date that the Closing shall take place; |
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“Closing
Date Shares” has the meaning set forth in Section 2.2.1; |
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“Closing
Document”means any document delivered at the Closing Time as provided in or
pursuant to this Agreement; |
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“Closing
Time” means 9 o’clock a.m. Toronto time on the Closing Date or such
other time on the Closing Date as the Parties agree in writing that the Closing shall
take place; |
-4-
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“Combined
Working Capital Deficit” means the combined consolidated Working Capital deficit
of CAMH and RNC (Panama) Limited (“RNC Panama”) as at the Closing Date; |
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“Contracts”means
the contracts, agreements, licence agreements and other legally binding instruments
entered into by the Subsidiaries including contracts in respect of indebtedness; |
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“Desminic”means
Desarrollo ▇▇▇▇▇▇ de Nicaragua S.A., a corporation existing under the laws of Nicaragua; |
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“Desminic
Shares” has the meaning set forth in Section 3.1.2(b); |
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“Encumbrance”means
any encumbrance of any kind whatever (registered or unregistered) and whether contingent
or otherwise and includes a security interest, mortgage, lien, hypothec, pledge,
hypothecation, assignment, charge, security or security interest; |
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“Environment”means
the air, surface water, underground water, any land, soil or underground space even if
submerged under water or covered by a structure, all living organisms and interacting
natural systems that include components of air, land, water, organic and inorganic
matters and living organisms and environment or natural environment as defined in any
Environmental Law and “Environmental” shall have a similar extended
meaning; |
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“Environmental
Laws” means all Applicable Laws relating in whole or in part to the Environment
and includes those relating to pollution or protection of the Environment, public health,
safety or natural resources; |
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“Equity
Participation Agreement”has the meaning set forth in Section 4.2.10; |
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“Equity
Securities” means all shares and all other securities of a body corporate of any
kind or class which confer on the holders thereof one or more of the following rights: |
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(i) |
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to
vote for the election of directors either under all circumstances or in certain
circumstances whether or not such circumstances exist or have occurred; or |
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(ii) |
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to
receive the remaining property of the body corporate upon dissolution; or |
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(iii) |
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to
receive any dividend or similar distribution from the body corporate; |
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and
includes (i) any securities of a body corporate which are convertible into, exchangeable
for or which carries a right to purchase one or more such shares or other securities of
such body corporate, and (ii) any options, rights, warrants or |
-5-
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subscription
privileges issued or granted by a body corporate (whether or not currently exercisable or
exercisable on conditions) to acquire one or more such shares or other securities or such
convertible securities of such body corporate of such body corporate; |
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“Execution
Date” means the date of this Agreement; |
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“Glencairn
Equity Financing” means one or more equity financings undertaken by the Buyer
during the Interim Period; |
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“Glencairn
Shares” means common shares in the capital of the Buyer; |
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“Governmental
Authority” means any Canadian or foreign (including Belizean or Nicaraguan)
government whether federal, provincial, state or municipal and any governmental agency,
governmental authority, governmental tribunal, court, governmental commission (including
a securities commission) of any kind whatsoever, any subdivision, agency, commission,
board or authority of any of the foregoing or any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the amount of
any of the foregoing or any stock exchange or securities commission, having jurisdiction; |
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“Hazardous
Substance” means any chemical, material or substance in any form, whether solid,
liquid, gaseous, semisolid or any combination thereof, whether waste material, raw
material, finished product, intermediate product, by-product or any other material or
article, that is listed or regulated under any Environmental Laws as a hazardous
substance, toxic substance, waste or contaminant or is otherwise listed or regulated
under any Environmental Laws because it poses a hazard to human health or the
environment, including petroleum products, asbestos, PCBs, urea formaldehyde foam
insulation and lead-containing paints or coatings; |
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“Initial
Adjustment” has the meaning set forth in Section 7.4(a); |
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“Information”means
all information (whether oral or in writing, or stored in computerised, electronic, disk,
tape, microfilm or other form) furnished by a Party, its affiliates, and their respective
Representatives, and all analyses, compilations, data, studies or other documents or
records prepared by a Party or its Representatives containing or based, in whole or in
part, upon any such furnished information or derived from access provided by a Party, its
affiliates, and their respective Representatives, and each item thereof, whether obtained
before or after the Execution Date, but for greater clarity the term “Information” does
not include information that (i) is already in the other Party’s possession, if the
possession of such information is not known to the other Party to be subject to a
confidentiality agreement with or other obligations of secrecy or fiduciary
responsibility to the disclosing Party or another person, (ii) becomes available to the
other Party on a non-confidential basis from a source other than the disclosing Party,
its affiliates, and their respective Representatives, which source to the other |
-6-
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Party’s
knowledge is not bound by a confidentiality agreement or other obligation of secrecy or
fiduciary responsibility to the disclosing Party or another person and is not otherwise
under an obligation of secrecy to the disclosing Party or another person, or (iii) is
independently developed by the other Party; |
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“Interim
Period” means the period from and including the Execution Date to and including
the Closing Time; |
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“La
Libertad Mine” means the mine located approximately ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ in the La Libertad-Santo Domingo Region of the Chantales Department in
Central Nicaragua and is identified as Ministerial Decrees 032-RN-MC-94 and
200-RN-MC/2002 under the laws of Nicaragua; |
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“Legal
Proceeding” means any judicial, administrative or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding; |
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“Licence”means
any licence, permit, approval, right, privilege, concession or franchise issued, granted,
conferred or otherwise created by a Governmental Authority; |
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“Material
Adverse Effect” when used in connection with Party means any change, event,
violation, inaccuracy, circumstance or effect that is or could reasonably be expected to
be materially adverse to the business, assets, liabilities, capitalization, financial
condition or results of operations of such Party and its parent (if applicable) or
subsidiaries, taken as a whole other than any change, event, violation, inaccuracy,
circumstance or effect: (i) relating to the global economy or securities markets in
general; (ii) resulting from changes in the price of gold; (iii) resulting from the rate
at which Canadian dollars or United States dollars can be changed for any foreign
currency; and (iv) relating to the gold mining industry in general and not specifically
relating to or affecting such Party; |
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“Neutral
Auditors” has the meaning set forth in Section 7.4(c); |
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“NI
45-102” has the meaning set forth in Section 2.2.2(b); |
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“Nomination
Rights Agreement”has the meaning set forth in Section 4.2.9; |
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“notice”has
the meaning ascribed thereto in Section 11.2(a); |
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“Order”means
any order (including any judicial or administrative order and the terms of any
administrative consent), judgement, injunction, decree, ruling or award of any court,
arbitrator or Governmental Authority; |
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“ordinary
course” or “normal course” means any transaction which
constitutes an ordinary day-to-day business activity of the Subsidiaries in accordance
with its past business practices; |
-7-
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“Panama
Closing” means the completion of the sale to and purchase by the Buyer of all
the issued and outstanding shares of RNC (Panama) Limited owned by the Seller and the
completion of all other transactions contemplated by the Cerro Quema Share Purchase
Agreement dated the date hereof between the Seller, the Guarantor and the Buyer; |
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“Parties”means
the Seller, the Guarantor and the Buyer collectively, and “Party”means
either one of them; |
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“Permitted
Encumbrances” means: |
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(a) |
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inchoate
or statutory liens for Taxes not at the time overdue and inchoate or statutory
liens for overdue Taxes the validity of which is being contested in good faith
but only for so long as such contestation effectively postpones enforcement of
any such liens or Taxes; |
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(b) |
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statutory
liens incurred or deposits made in the ordinary course of a Subsidiary’s
business in connection with workers’ compensation, unemployment insurance
and similar legislation, but only to the extent that each such statutory lien
or deposit relates to amounts not yet due; |
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(c) |
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liens
and privileges arising out of any judgement with respect to which a Subsidiary
intends to prosecute an appeal or proceedings for review but only for so long
as there is a stay of execution pending the determination of such appeal or
proceedings for review; |
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(d) |
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security
given by a Subsidiary to a public utility or any Governmental Authority when
required in the ordinary course of business of the Subsidiary; |
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(e) |
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undetermined
or inchoate construction or repair or storage liens arising in the ordinary
course of a Subsidiary’s business, a claim for which has not been filed or
registered pursuant to law or which notice in writing has not been given to the
Subsidiary; |
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(f) |
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any
reservations or exceptions underlying or related to any property; |
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(g) |
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easements
and any registered restrictions or covenants that run with the land provided
they have been complied with; |
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(h) |
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rights
of way for, or reservations or rights of others relating to, sewers, water
lines, gas lines, pipelines, electric lines, telephone and cable lines and
other similar products or services; and |
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(i) |
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zoning
by-laws, ordinances or other restrictions as to the use of real property and
agreements with other Persons registered against title to the properties of the
Subsidiaries. |
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“Person”shall
be broadly interpreted and includes an individual, body corporate, partnership, joint
venture, trust, association, unincorporated organization, any Governmental Authority or
any other entity recognized by law; |
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“Plans”has
the meaning set forth in Section 3.1.13(b)(iv); |
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“Purchase
Price” means the purchase price to be paid by the Buyer to the Seller for the
Purchased Securities as provided in Section 2.2.1; |
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“Purchased
Securities” means the CAMH Shares; |
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“Release”shall
mean any release, spill, leak, discharge, abandonment, disposal, pumping, pouring,
emitting, emptying, injecting, leaching, dumping, depositing, dispersing, passive
migration, allowing to escape or migrate into or through the environment (including
ambient air, surface water, ground water, land surface and subsurface strata or within
any building, structure, facility or fixture) of any Hazardous Substance, including the
abandonment or discarding of Hazardous Substances in barrels, drums, tanks or other
containers, regardless of when discovered; |
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“Representative”means
each director, officer, employee, agent, solicitor, accountant, consultant, or financial
adviser of a Party and its affiliates and all other persons acting for or in conjunction
with the Party referred to in connection with the transactions contemplated herein; |
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“Securities
Law” has the meaning set forth in Section 3.3.11; |
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“SEDAR”means
the System for Electronic Document Analysis and Retrieval; |
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“Seller
Indemnified Parties” has the meaning set forth in Section 10.6.3; |
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“Seller’s
Post-Closing Notice” has the meaning set forth in Section 7.5(b); |
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“Seller’s
Post-Closing Statements” has the meaning set forth in Section 7.4(a); |
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“Seller’s
Financial Statements” means: |
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(j) |
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the
financial statements of CAMH for the years ended December 31, 2005, 2004 and
2003, including notes thereto, and an unaudited balance sheet for the three
month period ended March 31, 2006; |
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(k) |
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the
financial statements of Desminic for the years ended December 31, 2004 and 2003
including notes thereto and prepared in accordance with Canadian generally
accepted accounting principles, and the unaudited balance sheets and income
statements for the year ended December 31, 2005 and the three months ended
March 31, 2006; and |
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(l) |
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the
financial statements of Bemilasa for the years ended December 31, 2005, 2004
and 2003, and an unaudited balance sheet and income statement for the three
month period ended March 31, 2006; |
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“Statutory
Plans” means all statutory plans for the benefit of any of the employees or
contractual workers or persons who were employees or contractual workers of the
Subsidiaries with which such companies are required to comply, including any plans
administrated pursuant to applicable health, workers’ compensation, workers’safety
and insurance and employment insurance legislation. |
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“Subsidiaries”means
CAMH, Desminic and Bemilasa, and “Subsidiary” means any one of the
Subsidiaries; |
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“Taxes”means
all taxes and similar governmental charges, including |
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(m) |
|
all
income, franchise, capital, real property, withholding, payroll, employer
health, transfer, sales, use, excise, consumption, anti-dumping, countervailing
and value added taxes, all other taxes of any kind for which the Subsidiaries
may have any liability, whether disputed or not; and |
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(n) |
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assessments,
charges, duties, rates, fees, imposts, levies or other governmental charges and
interest, penalties or additions associated therewith. |
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“Tax
Returns” means all reports, returns and other documents filed or required to be
filed by the Subsidiaries in respect of Taxes or in respect of or pursuant to any taxing
statute; |
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“Transmission”has
the meaning ascribed thereto in Section 11.2(a); |
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“TSX”means
the Toronto Stock Exchange; and |
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“Working
Capital” means current assets less current liabilities, and 50% of the current
liability portion of the indebtedness set out in Schedule F attached hereto, all
calculated in accordance with Canadian generally accepted accounting principles
consistently applied. |
| 1.2 |
Certain Rules of Interpretation |
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(a) |
|
Consent – Whenever
a provision of this Agreement requires an approval or consent and such
approval or consent is not delivered within the applicable time limit,
then, unless otherwise specified, the party whose consent or approval is
required shall be conclusively deemed to have withheld its approval or
consent. |
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(b) |
|
Governing
Law – This Agreement is a contract made under and shall be governed by
and construed in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable herein. The parties to this Agreement
irrevocably attorn to the jurisdiction of the courts of Ontario in respect of
all matters arising under or in relation to this Agreement. |
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(c) |
|
Headings – Headings
of Articles and Sections are inserted for convenience of reference only and
shall not affect the construction or interpretation of this Agreement. |
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(d) |
|
Including
– Where the word “including” or “includes” is
used in this Agreement, it means “including without limitation” or
“includes without limitation”. |
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(e) |
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No
Strict Construction – The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party. |
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(f) |
|
Number
and Gender – Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders. |
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(g) |
|
Severability – If,
in any jurisdiction, any provision of this Agreement or its application to any
party or circumstance is restricted, prohibited or unenforceable, such
provision shall, as to such jurisdiction, be ineffective only to the extent of
such restriction, prohibition or unenforceability without invalidating the
remaining provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction and without
affecting its application to other parties or circumstances. |
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(h) |
|
Statutory
References – A reference to a statute includes all regulations made
pursuant to such statute and, unless otherwise specified, the provisions of any
statute or regulation which amends, supplements or supersedes any such statute
or any such regulation. |
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(i) |
|
Time – Time
is of the essence in the performance of the parties’ respective
obligations under this Agreement. |
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(j) |
|
Time
Periods – Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be calculated by
excluding the day on which the period commences and including the day on which
the period ends and by extending the period to the next Business Day following
if the last day of the period is not a Business Day. |
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(k) |
|
Currency – Unless
specified otherwise, all statements or references to dollar amounts in this
Agreement are to United States of America dollars. |
-11-
This
Agreement constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and cancels and supersedes any prior understandings and agreements
between the parties with respect thereto. There are no representations, warranties, terms,
conditions, opinions, advice, assertions of fact, materials, undertakings or collateral
agreements, express, implied or statutory, by or between the parties (or by any
Representative thereof) other than as expressly set forth in this Agreement.
The
following schedules form part of this Agreement:
|
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| Schedule A |
|
Bonanza Exploitation Concession |
|
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| Schedule B | |
Bonanza Exploration Concessions | |
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| Schedule C | |
La Libertad Mining Properties | |
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| Schedule D | |
Buyer's Consents | |
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| Schedule E | |
Buyer Subsidiaries | |
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| Schedule F | |
Indebtedness | |
|
| Schedule G | |
Royalties | |
|
ARTICLE 2
PURCHASE AND SALE OF PURCHASED SECURITIES
| 2.1 |
Purchase and Sale of Purchased Securities |
The
Seller hereby agrees to sell, transfer, assign, convey and set over to the Buyer, and the
Buyer hereby agrees to purchase and acquire from the Seller, on the Closing Date the
Purchased Securities, free and clear of all Encumbrances, on the terms and conditions
contained in this Agreement.
| |
2.2.1 |
|
Aggregate
Purchase Price |
The
aggregate purchase price payable by the Buyer to the Seller for the Purchased Securities
shall be C$20,020,000 (the “Purchase Price”). The Buyer hereby agrees to
pay and satisfy the Purchase Price by the issuance of and delivery of 26,000,000 Glencairn
Shares (the “Closing Date Shares”) to and in the name of the Seller or
its nominee on the Closing.
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2.2.2 |
|
Closing
Date Shares |
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The
Closing Date Shares shall be: |
-12-
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(a) |
|
issued
as fully paid, non-assessable shares in the capital of the Buyer, free and
clear of all Encumbrances; |
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(b) |
|
issued
pursuant to an exemption from the prospectus requirements of the Securities Act (Ontario)
such that the restricted period and other conditions set out in Section 2.5 of
National Instrument 45-102 (“NI 45-102”) will apply to the
Closing Date Shares; |
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(c) |
|
issued
in certificate form with the restrictive legend required by Section 2.5(2)3.(a)
of NI 45-102 and the restrictive legend required by the rules of the TSX; and |
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(d) |
|
listed
and posted for trading on the TSX and AMEX commencing on the Closing Date. |
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
| 3.1 |
|
Representations
and Warranties of the Seller |
The
Seller represents and warrants to the Buyer as follows and acknowledges that the Buyer is
relying upon such representations and warranties in entering into this Agreement.
| |
3.1.1 |
|
Corporate
Matters – Seller and the Subsidiaries |
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(a) |
|
The
Seller and each Subsidiary is a corporation duly incorporated, organized and
validly existing under the laws of its jurisdiction of incorporation. The
Seller and each Subsidiary is duly qualified, authorized or licensed to conduct
its business and is in good standing under the laws of (i) each jurisdiction in
which it conducts its business or owns leases or has a right, title or interest
in and to real property, and (ii) each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification,
authorization or licence. |
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(b) |
|
No
proceedings have been taken or authorized by the Seller or each Subsidiary, or,
to the Seller’s knowledge, by any other Person, with respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of the Seller or
each Subsidiary or with respect to any amalgamation, merger, consolidation,
arrangement or reorganization relating to each Subsidiary. |
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(c) |
|
The
Seller has all necessary corporate power and capacity to execute and deliver,
and to observe and perform its covenants and obligations under, this Agreement
and the Closing Documents to which it is or will be a party. The Seller has
taken all corporate action necessary to authorize the execution and delivery,
and the observance and performance of its covenants and obligations under, this
Agreement and the Closing Documents to which it is or will be a party. |
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(d) |
|
This
Agreement has been, and each Closing Document to which the Seller is a party
will when executed and delivered be, duly executed and delivered by the Seller,
and this Agreement constitutes, and each Closing Document to which the Seller
is a party will when executed and delivered constitute, a legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms subject to applicable bankruptcy, insolvency, reorganization and
other laws of general application limiting the enforcement of creditors’ rights
generally and to the fact that specific performance is an equitable remedy
available only in the discretion of the court. |
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(e) |
|
The
Seller and each Subsidiary has all necessary corporate power and authority to
own the assets currently owned by it and to carry on the business as at present
carried on by it. |
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(f) |
|
To
the Seller’s knowledge, the corporate records and minute books of each of
the Subsidiaries contain complete and accurate minutes of all meetings of
directors and shareholders of each of the Companies held since its date of
incorporation and all such meetings were duly called and held. The share
certificate books, register of shareholders, register of transfers and register
of directors of each of the Subsidiaries are complete and accurate in all
material respects. |
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3.1.2 |
|
Authorized
and Issued Capital of the Subsidiaries |
| |
(a) |
|
The
authorized capital of CAMH consists of 50,000 common shares, of which 1,000
common shares have been validly issued and are outstanding as fully paid and
non-assessable shares, free of pre-emptive rights. |
| |
(b) |
|
The
authorized capital of Desminic consists of 1,000 common shares, of which 1,000
common shares (the “Desminic Shares”) have been validly issued
and are outstanding as fully paid and non-assessable shares, free of
pre-emptive rights. |
| |
(c) |
|
The
authorized capital of Bemilasa consists of 1,000 common shares, of which 1,000
common shares (the “Bemilasa Shares”) have been validly issued
and are outstanding as fully paid and non-assessable shares, free of
pre-emptive rights. |
| |
(d) |
|
There
are no outstanding bonds, debentures or other evidences of indebtedness of any
of the Subsidiaries having the right to vote. There are no outstanding
contractual obligations of any of the Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding equity securities or with respect to the
voting or disposition of any outstanding Equity Securities. |
| |
(a) |
|
The
Seller is the sole legal, beneficial and registered owner of the Purchased
Securities. The Seller now has, and on Closing, the Buyer will acquire, good
and marketable title to the Purchased Securities, free and clear of all
Encumbrances other than the restrictions on transfer set forth in the
constating or constituent documents of CAMH. The Purchased Securities
constitute all of the issued and |
-14-
| |
outstanding
Equity Securities of CAMH. There are no agreements or understandings with respect to the
voting, sale or transfer of any of the Purchased Securities or which prohibit, limit or
would be breached by, the completion of the transactions contemplated by this Agreement. |
| |
(b) |
|
CAMH
is the sole legal, beneficial and registered owner of 998 of the Desminic
Shares, ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the sole legal, beneficial and registered owner of 1
of the Desminic Shares and ▇▇▇▇▇▇▇ ▇▇▇▇ is the sole legal, beneficial and
registered owner of 1 of the Desminic Shares. The Desminic Shares constitute
all of the issued and outstanding securities of Desminic. The Desminic Shares
are owned free and clear of all Encumbrances. There are no agreements or
understandings with respect to the voting, sale or transfer of any of the
Desminic Shares or which prohibit, limit or would be breached by, the
completion of the transactions contemplated by this Agreement. |
| |
(c) |
|
CAMH
is the sole legal, beneficial and registered owner of 998 of the Bemilasa
Shares, ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the sole legal, beneficial and registered owner of 1
of the Bemilasa Shares and ▇▇▇▇▇▇▇ ▇▇▇▇ is the sole legal, beneficial and
registered owner of 1 of the Bemilasa Shares. The Bemilasa Shares constitute
all of the issued and outstanding securities of Bemilasa. The Bemilasa Shares
are owned free and clear of all Encumbrances. There are no agreements or
understandings with respect to the voting, sale or transfer of any of the
Bemilasa Shares or which prohibit, limit or would be breached by, the
completion of the transactions contemplated by this Agreement. |
No
Person other than the Buyer has any oral or written agreement, option, right, privilege or
any other right capable of becoming any of the foregoing (whether legal, equitable,
contractual or otherwise) for the purchase of the Purchased Securities, the Desminic
Shares or the Bemilasa Shares and none of the Purchased Securities, the Desminic Shares or
the Bemilasa Shares is subject to any of the foregoing. There are no outstanding
agreements or other obligations of each Subsidiary to issue any securities of the
Subsidiary to any Person or that would prohibit, or would be breached by, the completion
of the transactions contemplated by this Agreement. None of the Purchased Securities, the
Desminic Shares or the Bemilasa Shares is subject to any option, warrant, right of
conversion, exchange or purchase, or any similar right. None of the Purchased Securities,
the Desminic Shares or the Bemilasa Shares has been issued in violation of any pre-emptive
rights of any Person, including any past or present shareholder of a Subsidiary, the
Seller or the Guarantor. There are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise)
obligating the Seller or any of the Subsidiaries to issue or sell any shares of any of the
Subsidiaries or any securities or obligations of any kind convertible into or exchangeable
for any shares of any of the Subsidiaries.
-15-
| |
3.1.5 |
|
Absence
of Conflicting Agreements |
None
of the execution and delivery of, or the observance and performance by the Seller of, any
covenant, condition or obligation under this Agreement or any Closing Document to which it
is a party:
| |
(a) |
|
contravenes
or results in, or will contravene or result in, a violation of or a default
under (with or without the giving of notice or lapse of time, or both) or in
the acceleration of any obligation under: |
| |
|
(ii) |
|
the
articles, by-laws, directors or shareholders resolutions of the Seller or the
Subsidiaries; |
| |
|
(iii) |
|
the
provisions of any contract, agreement, arrangement, lease, mortgage, security
document, obligation, licence, permit or instrument to which the Seller or the
Subsidiaries is a party, or by which the Seller, the Subsidiaries or the
Purchased Securities are bound or affected; |
| |
(b) |
|
relieves
any other party to any Contract to which the Subsidiaries are a party of that
party’s obligations thereunder or enable them to terminate or accelerate
their obligations thereunder; or |
| |
(c) |
|
results
in the creation or imposition of any Encumbrance on the assets of the
Subsidiaries or the Purchased Securities, other than a Permitted Encumbrance or
restricts, hinders, impairs or limits the ability of the Seller or the
Subsidiaries to conduct their respective businesses as and where they are now
being conducted; or |
| |
(d) |
|
results
in any payment (including severance, unemployment compensation, “golden
parachute”, bonus or otherwise) becoming due to any director or officer of
any Subsidiary or increase any benefits otherwise payable under any pension or
benefits plan of any Subsidiary or result in the acceleration of the time of
payment or vesting of any such benefits. |
| |
3.1.6 |
|
Consents
and Approvals |
No
consent, approval, Order, authorization, registration or declaration of, or filing with,
any Governmental Authority or other Person is required by the Seller or the Subsidiaries
in connection with:
| |
(b) |
|
the
execution and delivery by the Seller of this Agreement or the Closing Documents
to which it is a party; or |
-16-
| |
(c) |
|
the
observance and performance by the Seller of its obligations under this
Agreement or the Closing Documents to which it is a party. |
Since
February 28, 2006, except as disclosed (i) by the Seller to the Buyer, or (ii) on SEDAR as
of the date hereof:
| |
(a) |
|
each
of the Subsidiaries has conducted its business only in the ordinary course of
business; |
| |
(b) |
|
none
of the Subsidiaries has incurred or suffered a Material Adverse Effect; |
| |
(c) |
|
there
has not been any acquisition or sale by any of the Subsidiaries of any material
property or assets thereof; |
| |
(d) |
|
other
than in the ordinary course of business, there has not been any incurrence,
assumption or guarantee by any of the Subsidiaries of any debt for borrowed
money, any creation or assumption by any of the Subsidiaries of any
Encumbrance, any making by any of the Subsidiaries, of any loan, advance or
capital contribution to or investment in any other person (other than loans and
advances in an aggregate amount which does not exceed $50,000 outstanding at
any time) or any entering into, amendment of, relinquishment, termination or
non-renewal by any of the Subsidiaries of any contract, agreement, licence,
lease transaction, commitment or other right or obligation which would,
individually or in the aggregate, have a Material Adverse Effect on a
Subsidiary; |
| |
(e) |
|
other
than in the ordinary course of business, there has not been any material
increase in or modification of the compensation payable to or to become payable
by any of the Subsidiaries to any of their respective directors, officers,
employees or consultants or any grant to any such director, officer, employee
or consultant of any increase in severance or termination pay or any increase
or modification of any bonus, pension, insurance or benefit arrangement made
to, for or with any of such directors or officers; |
| |
(f) |
|
none
of the Subsidiaries have effected any material change in its accounting
methods, principles or practices; |
| |
(g) |
|
none
of the Subsidiaries have adopted any, or materially amended any, collective
bargaining agreement, bonus, pension, profit sharing, stock purchase, stock
option or other benefit plan or shareholder rights plan; and |
| |
(h) |
|
no
dividends have become or are payable on or in respect of the Purchased
Securities and no other distribution on any of its securities or shares or any
of the securities or shares of the other Subsidiaries has become or is payable
by CAMH or the other Subsidiaries. |
-17-
| |
(a) |
|
To
the knowledge of the Seller, each Subsidiary has timely filed (or there have
been filed on its behalf) with the appropriate Governmental Authorities all Tax
Returns and all material filings related to any Statutory Plans required to be
filed by each Subsidiary on or before December 31, 2004, and to the extent any
Tax Return or material filing related to any Statutory Plan has not been filed
before or after December 31, 2004 up to and including the Closing Date, such
circumstance has not caused a Material Adverse Effect. |
| |
(b) |
|
No
Governmental Authority has asserted, or, to the knowledge of the Seller, is
threatening to assert, against the Subsidiaries any material deficiency or
claim for Taxes or in respect of any Statutory Plan. |
| |
(c) |
|
To
the knowledge of the Seller, there are no material proposed (but unassessed)
Taxes outstanding and none have been asserted by any applicable taxing
authority, including, any sales tax authority, and no waiver of any statute of
limitations has been given or requested with respect to any of the
Subsidiaries. No lien for Taxes has been filed or exists other than for Taxes
not yet due and payable. |
| |
3.1.9 |
|
Compliance
with Applicable Law |
Each
Subsidiary is and, to the knowledge of the Seller, at all times has been in material
compliance with all Licences and all other Applicable Laws promulgated or issued by any
Governmental Authority in respect of or applicable to each Subsidiary and its assets.
There
are no outstanding, pending or, to the knowledge of the Seller, threatened, actions,
suits, proceedings, investigations or claims affecting or in respect of the assets of the
Subsidiaries or any part thereof, including in respect of any material environmental
liability related to or arising out of such assets. Neither the Seller nor any of the
Subsidiaries, nor any of their respective properties or assets is subject to any
outstanding judgment, order, writ, injunction or decree that involves or may involve, or
restricts or may restrict, or requires or may require, the expenditure of an amount of
money in the aggregate in excess of $50,000 as a condition to or a necessity for the right
or ability of the Seller or any Subsidiary, respectively, to conduct its business in all
material respects as it has been carried on prior to the date hereof, or that would
materially impede the consummation of the transactions contemplated by this Agreement.
| |
3.1.11 |
|
Condition
of Assets |
Each of
the Subsidiaries owns, possesses and has good and marketable title to the personal
property owned by it, free of all Encumbrances. All tangible assets of Desminic used in or
in connection with the La Libertad Mine have been subject to ordinary usage and wear and
tear, and comply in all material respects with all Applicable Laws.
-18-
| |
(a) |
|
Schedule
C attached hereto sets out all of the mining properties that comprise the La
Libertad Mine (the “Properties”). Except as specified in
Schedule C, Desminic is the holder of record of, and is the owner of a 100%
undivided beneficial interest in and to its right, title and interest in, all
of the Properties, free and clear of all Encumbrances, other than the Permitted
Encumbrances. |
| |
(b) |
|
There
are no adverse interests or options to acquire or purchase the Properties or
any portion thereof or any right, title or interest therein. No Person has any
proprietary or possessory interest in such mining properties other than
Desminic and subject only to the rights of any Governmental Authority having
jurisdiction and as described in Schedule G attached hereto, no Person is
entitled to any royalty or other payment in the nature of rent or royalty on
any minerals, metals or concentrates or any other such products removed or
produced from such mining properties. |
| |
(c) |
|
Desminic
has all necessary rights of entry and exit to and from the Properties and the
surfaces thereof to carry out all necessary mining operations on such mining
properties. |
| |
(d) |
|
Except
for those notices previously disclosed to the Buyer (including the notice in
respect of environmental obligations pending from 2005), to the knowledge of
the Seller, Desminic has not received any notice from any Governmental
Authority alleging that it or any of its predecessors in interests in respect
of the Properties has violated or is violating in any material respect any
Environmental Law to which such mining properties are subject. |
| |
(e) |
|
To
the knowledge of the Seller, the Properties are in good standing in all
material respects with respect to the performance of all material obligations
required under Applicable Law (including, without limitation, the payment of
all maintenance costs, the performance of all minimum assessment work and the
filing of reports with respect to minimum assessment work) and the condition of
such mining properties is in material compliance with all Applicable Laws and
all Orders of all Governmental Authorities having jurisdiction, including in
respect of any material Environmental liability related to or arising out of
such mining properties. |
| |
3.1.13 |
|
Employment
Matters |
| |
(a) |
|
Each
Subsidiary is in material compliance with all Applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labour practice.
No unfair labour practice complaint against any Subsidiary is pending before
any labour relations board or similar governmental tribunal or agency and no
notice has been received by any Subsidiary of any complaints filed by any
employees against a Subsidiary claiming that a Subsidiary has violated any
employee or |
-19-
| |
human
rights or similar legislation in any jurisdiction in which the business of the Subsidiary
is conducted. |
| |
(b) |
|
Other
than as disclosed to the Buyer: |
| |
|
(i) |
|
None
of the Subsidiaries is a party to any written or oral policy, agreement,
obligation or understanding providing for severance or termination
payments to, or any employment agreement with, any director or officer of
any of the Subsidiaries which cannot be terminated without payment of a
maximum of 12 times such individual’s monthly salary. |
| |
|
(ii) |
|
None
of the Subsidiaries has any employee or consultant whose employment or
contract with the Subsidiary cannot be terminated without payment upon a
maximum of 12 months’ notice. |
| |
|
(iii) |
|
None
of the Subsidiaries is subject to any current, or to the knowledge of the
Seller, pending or threatened strike or lockout. |
| |
|
(iv) |
|
To
the knowledge of the Seller, the Subsidiaries have complied, in all material
respects, with all of the terms of the pension and other employee
compensation and benefit obligations of the Subsidiaries, including the
provisions of any collective agreements, funding and investment contracts
or obligations applicable thereto, arising under or relating to each of
the pension or retirement income plans or other employee compensation or
benefit plans, agreements, policies, programs, arrangements or practices,
whether written or oral, which are maintained by or binding upon the
Subsidiaries, as the case may be (collectively referred to in this
subsection as the “Plans”) and all Plans maintained by or
binding upon any of the Subsidiaries are fully funded and in good standing
with such regulatory authorities as may be applicable and no notice of
underfunding, non-compliance, failure to be in good standing or otherwise
has been received by any of the Subsidiaries from any such regulatory
authority. |
| |
|
(v) |
|
To
the knowledge of the Seller, no action has been taken, no event has occurred
and no condition or circumstance exists that has resulted in or could
reasonably be expected to result in any Plan maintained by or binding upon
any of the Subsidiaries, being ordered or required to be terminated or
wound up in whole or in part or having its registration under applicable
legislation refused or revoked, or being placed under the administration
of any trustee or receiver or regulatory authority. |
| |
|
(vi) |
|
To
the knowledge of the Seller, the Subsidiaries are in compliance with the
terms of the collective or other applicable labour union agreements to
which they are a party and since February 28, 2006 there have been no
material grievance or similar actions filed, registered or otherwise,
relating to or against the applicable Subsidiary in respect of such
agreements. |
-20-
The
Buyer has been offered and provided access to a true and complete copy of all Contracts,
material to the conduct of the business of the Subsidiaries that if breached or in default
would or could reasonably be expected to have a Material Adverse Effect on the
Subsidiaries and there are no current or pending negotiations with respect to the renewal,
termination or amendment of any such material Contracts. None of the Subsidiaries is in
default under, and there exists no event, condition or occurrence which, after notice or
lapse of time or both, would constitute such a default under, any material Contract to
which any of them is a party or by which any of them is bound which would, individually or
in the aggregate, have a Material Adverse Effect on the Subsidiaries.
| |
3.1.15 |
|
Subsidiaries
and Investments |
| |
(a) |
|
CAMH
does not own any subsidiaries or any shares in the capital of any other
corporation or any ownership interest in any person or any other assets other
than the outstanding shares of Desminic and Bemilasa owned by it, nor has it
agreed to acquire any subsidiaries or the shares in the capital of any other
corporation or any ownership interest in any person or to acquire or lease any
other business operations. |
| |
(b) |
|
Neither
Desminic nor Bemilasa owns any subsidiaries or any shares in the capital of any
other corporation or any ownership interest in any person, nor has it agreed to
acquire any subsidiaries or the shares in the capital of any other corporation
or any ownership interest in any person or to acquire or lease any other
business operations. |
| |
(c) |
|
No
person has any agreement or option or any right or privilege capable of
becoming an agreement or option for the purchase from the Subsidiaries of any
of the material assets of any of the Subsidiaries, other than as described or
contemplated herein. |
| |
3.1.16 |
|
Accuracy
of Books and Records and Financial Information |
The
books and records, financial or otherwise, and statements of each Subsidiary present
fairly in all material respects the financial position of the Subsidiary as at the date
thereof and the results of operations for the periods then ended.
| |
(a) |
|
To
the knowledge of the Seller, each of the Subsidiaries is and has been in
compliance with all applicable Environmental Laws, except to the extent that a
failure to be in such compliance would not be reasonably likely to have a
Material Adverse Effect on the applicable Subsidiary. |
| |
(b) |
|
The
Properties have not been used to generate, manufacture, refine, treat, recycle,
transport, store, handle, dispose, transfer, produce or process Hazardous
Substances, except in compliance in all material respects with all
Environmental |
-21-
| |
Laws.
None of the Subsidiaries or any
other person in control of any Property has caused or permitted the Release of
any Hazardous Substances at, in, on, under or from any Property, except in
compliance with all Environmental Laws, except to the extent that a failure to
be in such compliance would not be reasonably likely to have a Material Adverse
Effect. All Hazardous Substances handled, recycled, disposed of, treated or
stored on or off site of the Properties by a Subsidiary or any other person for
whose actions a Subsidiary may be partially or wholly liable have been handled,
recycled, disposed of, treated and stored in compliance with all Environmental
Laws except to the extent that a failure to be in such compliance would not be
reasonably likely to have a Material Adverse Effect. To the knowledge of the
Seller, there are no Hazardous Substances at, in, on, under or migrating from
the Property, except in material compliance with all Environmental Laws. |
| |
(c) |
|
To
the knowledge of the Seller, none of the Subsidiaries or any other person for
whose actions a Subsidiary may be partially or wholly liable has caused or
permitted the Release of any Hazardous Substances on or to any of the
Properties in such a manner as: (i) would be reasonably likely to impose
liability for cleanup, natural resource damages, loss of life, personal injury,
nuisance or damage to other property, except to the extent that such liability
would not have a Material Adverse Effect; or (ii) would be reasonably likely to
result in imposition of a lien, charge or other encumbrance or the
expropriation on any of the Properties or the assets of any of the
Subsidiaries. |
| |
(d) |
|
None
of the Subsidiaries has received any notice, formal or informal, of any
proceeding, action or other claim, liability or potential liability arising
under any Environmental Laws, from any person related to any of the Properties
which is pending as of the date hereof, except to the extent the same would not
have a Material Adverse Effect on the Subsidiaries. |
| |
3.1.18 |
|
Intellectual
Property |
The
Subsidiaries do not own or license any patents, patent rights, trademarks, trade names,
service marks, copyrights, know how or other proprietary intellectual property rights that
are material to the conduct of the business of the Subsidiaries.
None
of the Subsidiaries is a party to or bound by any non-competition agreement or any other
agreement, obligation, judgment, injunction, order or decree which purports to (i) limit
the manner or the localities in which all or any material portion of the business of the
Subsidiaries are conducted, (ii) limit any business practice of any Subsidiary in any
material respect, or (iii) restrict any acquisition or disposition of any property by any
Subsidiary in any material respect.
-22-
To
the knowledge of the Seller, any and all of the agreements and other documents and
instruments pursuant to which the Subsidiaries hold the property and assets thereof
(including any interest in, or right to earn an interest in, any property) are valid and
subsisting agreements, documents or instruments in full force and effect, enforceable in
accordance with terms thereof, subject to applicable bankruptcy and other laws of general
application limiting the enforcement of creditors’ rights generally, the Subsidiaries
are not in default of any of the material provisions of any such agreements, documents or
instruments nor has any such default been alleged and such properties and assets are in
good standing under the applicable statutes and regulations of the jurisdictions in which
they are situated, and all leases, licences and claims pursuant to which the Subsidiaries
derive the interests thereof in such property and assets are in good standing and there
has been no material default under any such lease, licence or claim. None of the
properties (or any interest in, or right to earn an interest in, any property) of the
Subsidiaries is subject to any right of first refusal or purchase or acquisition right.
Except
as disclosed in Schedule F attached hereto, none of the Subsidiaries has entered into any
revolving credit or term loan agreement or other similar financing with any corporation,
bank, financial institution, Governmental Authority or any other Person.
| |
3.1.22 |
|
Prospectus
Exemption |
The
Seller is acquiring the Closing Date Shares under the prospectus exemption set out in
Section 2.12 of National Instrument 45-106 Prospectus and Registration Exemptions.
To
the knowledge of the Seller, the Seller has made available to the Buyer all material
information, including financial, operational and other information, in respect of the
Subsidiaries and all such information as made available to the Buyer is true and correct
in all material respects and no material fact or facts have been omitted therefrom which
would make such information misleading.
| 3.2
|
Representations and Warranties of the Guarantor |
The
Guarantor represents and warrants to the Buyer as follows and acknowledges that the Buyer
is relying upon such representations and warranties in entering into this Agreement.
| |
3.2.1 |
|
Corporate
Matters – Guarantor |
| |
(a) |
|
The
Guarantor is a corporation duly incorporated, organized and validly existing
under the laws of its jurisdiction of incorporation. The Guarantor is duly
qualified, authorized or licensed to conduct its business and is in good
standing under the laws of (i) each jurisdiction in which it conducts its
business or owns |
-23-
| |
leases
or has a right, title or interest in and to real property, and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its properties
requires such qualification, authorization or licence. |
| |
(b) |
|
No
proceedings have been taken or authorized by the Guarantor, or, to the Guarantor’s
knowledge, by any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of the Guarantor or with respect to any
amalgamation, merger, consolidation, arrangement or reorganization relating to
each Subsidiary. |
| |
(c) |
|
The
Guarantor has all necessary corporate power and capacity to execute and
deliver, and to observe and perform its covenants and obligations under, this
Guarantor and the Closing Documents to which it is or will be a party. The
Guarantor has taken all corporate action necessary to authorize the execution
and delivery, and the observance and performance of its covenants and
obligations under, this Agreement and the Closing Documents to which it is or
will be a party. |
| |
(d) |
|
This
Agreement has been, and each Closing Document to which the Guarantor is a party
will when executed and delivered be, duly executed and delivered by the
Guarantor, and this Agreement constitutes, and each Closing Document to which
the Guarantor is a party will when executed and delivered constitute, a legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization and other laws of general application limiting the enforcement
of creditors’ rights generally and to the fact that specific performance
is an equitable remedy available only in the discretion of the court. |
| |
3.2.2 |
|
Absence
of Conflicting Agreements |
None
of the execution and delivery of, or the observance and performance by the Guarantor of,
any covenant, condition or obligation under this Agreement or any Closing Document to
which it is a party contravenes or results in, or will contravene or result in, a
violation of or a default under (with or without the giving of notice or lapse of time, or
both) or in the acceleration of any obligation under:
| |
(b) |
|
the
articles, by-laws, directors or shareholders resolutions of the Guarantor; |
| |
(c) |
|
the
provisions of any contract, agreement, arrangement, lease, mortgage,
security document, obligation, license, permit or instrument to which the
Guarantor is a party, or by which the Guarantor is bound or affected. |
-24-
| |
3.2.3 |
|
Consents
and Approvals |
No
consent, approval, Order, authorization, registration or declaration of, or filing with,
any Governmental Authority or other Person is required by the Guarantor in connection
with:
| |
(b) |
|
the
execution and delivery by the Guarantor of this Agreement or the Closing
Documents to which it is a party; or |
| |
(c) |
|
the
observance and performance by the Guarantor of its obligations under this
Agreement or the Closing Documents to which it is a party. |
| 3.3 |
Representations
and Warranties of the Buyer |
The
Buyer represents and warrants to the Seller as follows and acknowledges that the Seller is
relying upon such representations and warranties in entering into this Agreement.
| |
(a) |
|
The
Buyer is a corporation duly incorporated, organized, and validly existing under
the laws of its jurisdiction of incorporation. The Buyer is duly qualified,
authorized or licensed to conduct its business and is in good standing under
the laws of (i) each jurisdiction in which it conducts its business or owns
leases or has a right, title or interest in and to real property, and (ii) each
other jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification, authorization or licence. |
| |
(b) |
|
No
proceedings have been taken or authorized by the Buyer or, to the Buyer’s
knowledge, by any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of the Buyer, or with respect to the
amalgamation, merger, consolidation, arrangement or reorganization relating to
the Buyer. |
| |
(c) |
|
The
Buyer has all necessary corporate power and capacity to execute and deliver,
and to observe and perform its covenants and obligations under, the Agreement
and the Closing Documents to which it is a party. The Buyer has taken all
corporate action necessary to authorize the execution and delivery of, and the
observance and performance of its covenants and obligations under, the
Agreement and the Closing Documents to which it is a party. |
| |
(d) |
|
This
Agreement has been, and each Closing Document to which the Buyer is a party
will on Closing be, duly executed and delivered by the Buyer, and this
Agreement constitutes, and each Closing Document to which the Buyer is a party
will on Closing constitute, a legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization and other laws of general
application |
-25-
| |
limiting
the enforcement of creditors’ rights generally and to the fact that specific
performance is an equitable remedy available only in the discretion of the court. |
| |
3.3.2 |
|
Absence
of Conflicting Agreements |
None
of the execution and delivery of, or the observance and performance by the Buyer of, any
covenant or obligation under this Agreement or any Closing Document to which it is a party
or the Closing contravenes or results in (with or without the giving of notice or lapse of
time, or both) or will contravene or violate or result in any breach or default of, or
acceleration of any obligation under:
| |
(b) |
|
the
articles, by-laws, directors’ or shareholders’ resolutions of the
Buyer; or |
| |
(c) |
|
except
as identified in Schedule D attached hereto, the provisions of any agreement,
lease, mortgage, security document, obligation or instrument to which the Buyer
is a party or by which the Buyer or its assets is affected or bound. |
| |
3.3.3 |
|
Consents
and Approvals |
Except
as identified in Schedule D attached hereto, no consent, approval, Order, authorization,
registration or declaration of, or filing with, any Governmental Authority or other Person
is required by the Buyer in connection with:
| |
(b) |
|
the
execution and delivery by the Buyer of this Agreement or any Closing Document
to which it is a party, or |
| |
(c) |
|
the
observance and performance by the Buyer of its obligations under this Agreement
or any Closing Documents to which it is a party. |
| |
(a) |
|
The
Buyer has no subsidiaries other than the subsidiaries set out in Schedule E
attached hereto (the “Buyer Subsidiaries” and each a
“Buyer Subsidiary”) nor any investment or proposed investment
in any Person which, for the financial year ended December 31, 2005 accounted
for more than five percent of the consolidated assets or consolidated revenues
of the Buyer or would otherwise be material to the business and affairs of the
Buyer on a consolidated basis. |
| |
(b) |
|
The
Buyer owns, directly or indirectly, the percentage of issued and outstanding
shares of each of the Buyer Subsidiaries set out in Schedule E attached hereto,
all of the issued and outstanding shares of the Buyer Subsidiaries are issued
as fully paid and non-assessable shares, in each case, other than as disclosed
in the Buyer Public Documents, free and clear of all Encumbrances whatsoever
and no Person has any agreement, option, right or privilege (whether
pre-emptive or contractual) |
-26-
| |
capable
of becoming an agreement, for the purchase from the Buyer or any of the Buyer
Subsidiaries of any interest in any of the shares in the capital of any of the Buyer
Subsidiaries. |
| |
3.3.5 |
|
Buyer
Mining Properties |
| |
(a) |
|
The
Buyer Public Documents disclose all of the mining properties of the Buyer (the
“Buyer Properties”). Except as disclosed in the Buyer Public
Documents, either the Buyer or a Buyer Subsidiary is the holder of record of,
and is the owner of a 100% undivided beneficial interest in and to its right,
title and interest in, all of the Buyer Properties, free and clear of all
Encumbrances, other than the Permitted Encumbrances. |
| |
(b) |
|
There
are no adverse interests or options to acquire or purchase the Buyer Properties
or any portion thereof or any right, title or interest therein. No Person has
any proprietary or possessory interest in such mining properties other than a
Buyer Subsidiary and subject only to the rights of any Governmental Authority
having jurisdiction, no Person is entitled to any royalty or other payment in
the nature of rent or royalty on any minerals, metals or concentrates or any
other such products removed or produced from such mining properties. |
| |
(c) |
|
A
Buyer Subsidiary has all necessary rights of entry and exit to and from the
Buyer Properties and the surfaces thereof to carry out all necessary mining
operations on such mining properties. |
| |
(d) |
|
A
Buyer Subsidiary has not received any notice from any Governmental Authority
alleging that it or any of its predecessors in interests in respect of the
Buyer Properties has violated or is violating in any material respect any
Environmental Law to which such mining properties are subject. |
| |
(e) |
|
To
the knowledge of the Buyer, the Buyer Properties are in good standing in all
material respects with respect to the performance of all material obligations
required under Applicable Law (including, without limitation, the payment of
all maintenance costs, the performance of all minimum assessment work and the
filing of reports with respect to minimum assessment work) and the condition of
such mining properties is in material compliance with all Applicable Laws and
all Orders of all Governmental Authorities having jurisdiction, including in
respect of any material Environmental liability related to or arising out of
such mining properties. |
Except
as disclosed in the Buyer Public Documents and as contemplated hereunder, none of the
Buyer or any Buyer Subsidiary has approved, has entered into any binding agreement in
respect of, or has any knowledge of:
| |
(a) |
|
the
purchase of any material property or assets or any interest therein or the
sale, transfer or other disposition of any material property or assets or any
interest |
-27-
| |
therein
currently owned, directly or indirectly, by the Buyer or any Buyer Subsidiary whether by
asset sale, transfer of shares or otherwise; |
| |
(b) |
|
the
change of control (by sale or transfer of shares or sale of all or
substantially all of the property and assets of the Buyer or any Buyer
Subsidiary or otherwise) of the Buyer or any Buyer Subsidiary; or |
| |
(c) |
|
a
proposed or planned disposition of shares by any shareholder who owns, directly
or indirectly, 10% or more of the outstanding shares of the Buyer or any Buyer
Subsidiary. |
Other
than as set out in the Buyer Public Documents:
| |
(a) |
|
no
Person has or will have at the Closing Time any agreement or option, or right
or privilege (whether pre-emptive or contractual) capable of becoming an
agreement or option, for the purchase from the Buyer of any unissued shares or
securities of the Buyer; and |
| |
(b) |
|
there
is no agreement in force or effect which in any manner affects or will affect
the voting or control of any of the securities of the Buyer or of the Buyer
Subsidiaries. |
| |
3.3.8 |
|
Material
Interests of Control Shareholders |
Except
as disclosed in the Buyer Public Documents, none of the officers or employees of the Buyer
or of any Buyer Subsidiary, any person who owns, directly or indirectly, more than 10% of
any class of securities of the Buyer or securities of any person exchangeable for more
than 10% of any class of securities of the Buyer, or any associate or affiliate of any of
the foregoing, had or has any material interest, direct or indirect, in any transaction or
any proposed transaction (including, without limitation, any loan made to or by any such
person) with the Buyer or any of the Buyer Subsidiaries which, as the case may be,
materially affects, is material to or will materially affect the Buyer on a consolidated
basis.
| |
3.3.9 |
|
Authorized
and Issued Capital of the Buyer |
As
at June 6, 2006, the authorized capital of the Buyer consists of an unlimited number of
common shares, of which 172,944,697 are issued and outstanding.
| |
3.3.10 |
|
Compliance
with Securities Regulatory Authorities |
The
Buyer is, and for more than four months preceding the date of this Agreement has been, a
reporting issuer not in material default under any Canadian or United States securities
laws applicable to it or the rules, by-laws or policies of any stock exchange on which any
securities of the Buyer are listed and; (i) it has filed with all applicable securities
regulatory authorities in Canada and the United States of America, all forms, reports and
documents required to be filed by it pursuant to such securities laws and published
policies of such
-28-
regulatory authorities on a timely
basis; (ii) all such filings when made complied in all respects with then-applicable legal
and regulatory requirements; (iii) as of their respective dates, none of these
filings contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading; and (iv) no
confidential disclosure has been made under any Canadian securities laws applicable to it.
| |
3.3.11 |
|
Exemption
from Prospectus Requirements |
The
issuance and delivery of the Closing Date Shares by the Buyer to the Seller or its nominee
is exempt from the prospectus and registration requirements of the Securities Act
(Ontario) and such other securities laws that are applicable to the Buyer (the
“Securities Laws”). In addition, the first trade by the Seller or its
nominee of any of the Closing Date Shares will be exempt from the prospectus requirements
of the Securities Laws and no document will be required to be filed and no proceeding
taken or approval, permit, consent, order or authorization obtained under the Securities
Laws in connection with such first trade provided that:
| |
(i) |
|
the
Buyer is and has been a reporting issuer in a jurisdiction of Canada for the
four months immediately preceding the trade; |
| |
(ii) |
|
at
least four months have elapsed from the Closing Date; |
| |
(iii) |
|
the
certificate representing the Closing Date Shares carries a legend stating: |
| |
“Unless
permitted under securities legislation, the holder of the security must not trade the
security before [insert the date that is 4 months and a
day after the distribution date]” |
| |
(iv) |
|
trade is not a control distribution (as such term in is defined in the
Multilateral Instrument 45-102); |
| |
(v) |
|
no
unusual effort is made to prepare the market or to create a demand for the
securities that are the subject of the trade; |
| |
(vi) |
|
no
extraordinary commission or consideration is paid to a person or company in
respect of the trade; and |
| |
(vii) |
|
if
the Seller is an insider, the selling security holder has no reasonable
grounds to believe that the Buyer is in default of securities legislation. |
| |
3.3.12 |
|
Listing
of Glencairn Shares |
The
outstanding common shares in the capital of the Buyer are, and at the Closing Time the
Closing Date Shares will be, listed and posted for trading on the TSX and AMEX, and no
order ceasing or suspending trading in any securities of the Buyer has been issued and no
-29-
proceedings for such purpose are
pending, or to the knowledge of the Buyer, threatened and the certificates representing
the Closing Date Shares will carry the following legend:
| |
“The
securities represented by this certificate are listed on the Toronto Stock Exchange (“TSX”);
however, the said securities cannot be traded through the facilities of TSX since they
are not freely transferable, and consequently any certificate representing such
securities is not “good delivery” in settlement of transactions on TSX.” |
| |
3.3.13 |
|
Buyer
Financial Statements |
| |
(a) |
|
The
Buyer’s consolidated audited financial statements for the years ended
December 31, 2004 and 2005, including the notes and the related auditors’ reports
thereto, and the Buyer’s consolidated unaudited financial statements for
the three month period ended March 31, 2006 (collectively, the “Buyer
Financial Statements”) were prepared in accordance with Canadian
generally accepted accounting principles and fairly present in all material
respects the consolidated financial position, results of operations and cash
flows of the Buyer as at the date and for the periods indicated therein. Since
their date, there has been no change in the financial condition, assets,
liabilities or business of the Buyer other than changes in the ordinary course
of business that neither individually or in the aggregate would have a Material
Adverse Effect on the Buyer and its subsidiaries; |
| |
(b) |
|
except
as disclosed in the Buyer Financial Statements, all Taxes due and payable by
the Buyer and the Buyer Subsidiaries have been paid, except where the failure
to pay such taxes would not have a Material Adverse Effect on the Buyer or any
Buyer Subsidiary. All tax returns, declarations, remittances and filings
required to be filed by the Buyer and the Buyer Subsidiaries have been filed
with all appropriate Governmental Authorities and all such returns,
declarations, remittances and filings are complete and accurate and no material
fact has been omitted therefrom which would make any of them misleading, except
where the failure to file such documents would not have a Material Adverse
Effect on the Buyer or any Buyer Subsidiary. To the knowledge of the Buyer, no
examination of any tax return of the Buyer or any Buyer Subsidiary is currently
in progress and there are no issues or disputes outstanding with any
Governmental Authority respecting any Taxes that have been paid, or may be
payable, by the Buyer or any Buyer Subsidiary, in any case, except where such
examinations, issues or disputes would not have a Material Adverse Effect on
the Buyer or any Buyer Subsidiary; and |
| |
(c) |
|
the
Buyer’s auditors who audited the audited Buyer Financial Statements and
who provided their audit report thereon are independent public accountants as
required under applicable Securities Laws and there has never been a reportable
event (within the meaning of National Instrument 51-102) between the Buyer and
the Buyer’s auditors or, to the knowledge of the Buyer, any former
auditors of the Buyer. |
-30-
| |
3.3.14 |
|
No
Suspension Orders |
No
orders suspending the sale or ceasing the trading of any securities issued by the Buyer
have been issued by any Governmental Authority in Canada, and no proceedings for such
purpose are pending or, to the knowledge of the Buyer, threatened.
| |
3.3.15 |
|
No
Material Indebtedness or Liabilities |
The Buyer
has no material indebtedness or liabilities other than as disclosed in the Buyer Financial
Statements.
| |
3.3.16 |
|
Material
Obligations |
None
of the Buyer nor any of the Buyer Subsidiaries is in violation of its constating documents
or in default of the performance or observance of any material obligation, agreement,
covenant (which, for the purposes hereof, includes any financial covenants of the Buyer
under its credit facility with RMB Australia Holdings Limited) or condition contained in
any contract, indenture, trust deed, mortgage, loan agreement, note, lease or other
agreement or instrument to which it is a party or by which it or its property may be
bound.
| |
3.3.17 |
|
Intellectual
Property |
The
Buyer and each of the Buyer Subsidiaries owns or has the right to use under licence,
sub-licence or otherwise all material intellectual property used by the Buyer and the
Buyer Subsidiaries in its business, including copyrights, industrial designs, trade marks,
trade secrets, know how and proprietary rights, free and clear of any and all
Encumbrances.
Except
as disclosed to the Seller, any and all of the agreements and other documents and
instruments pursuant to which the Buyer and the Buyer Subsidiaries hold the property and
assets thereof (including any interest in, or right to earn an interest in, any property)
are valid and subsisting agreements, documents or instruments in full force and effect,
enforceable in accordance with terms thereof, subject to applicable bankruptcy and other
laws of general application limiting the enforcement of creditors’ rights generally,
neither the Buyer nor any Buyer Subsidiary is in default of any of the material provisions
of any such agreements, documents or instruments nor has any such default been alleged and
such properties and assets are in good standing under the applicable statutes and
regulations of the jurisdictions in which they are situated, and all leases, licences and
claims pursuant to which the Buyer or any Buyer Subsidiary derive the interests thereof in
such property and assets are in good standing and there has been no material default under
any such lease, licence or claim. None of the properties (or any interest in, or right to
earn an interest in, any property) of the Buyer or any Buyer Subsidiary is subject to any
right of first refusal or purchase or acquisition right which is not disclosed in the
Buyer Public Documents.
-31-
With
respect to each premises of the Buyer or the Buyer Subsidiaries which is material to the
Buyer and the Buyer Subsidiaries on a consolidated basis and which the Buyer or any of the
Buyer Subsidiaries occupies as tenant (the “Buyer Leased Premises”), the
Buyer or such Buyer Subsidiary occupies the Buyer Leased Premises and has the exclusive
right to occupy and use the Buyer Leased Premises and each of the leases pursuant to which
the Buyer and/or the Buyer Subsidiaries occupies the Buyer Leased Premises is in good
standing and in full force and effect.
The
assets of the Buyer and the Buyer Subsidiaries and their business and operations are
insured against loss or damage with responsible insurers on a basis consistent with
insurance obtained by reasonably prudent participants in comparable businesses, and such
coverage is in full force and effect, and the Buyer has not failed to promptly give any
notice of any material claim thereunder.
Equity
Transfer Services Inc., at its principal offices in the City of Toronto, Ontario has
been duly appointed as registrar and transfer agent for the Glencairn Shares.
The
minute books and records of the Buyer and the Buyer Subsidiaries contain copies of all
material proceedings (or certified copies thereof or drafts thereof pending approval) of
the shareholders, the directors and all committees of directors of the Buyer and the Buyer
Subsidiaries, respectively, and there have been no other meetings, resolutions or
proceedings of the shareholders, directors or any committees of the directors of the Buyer
or any of the Buyer Subsidiaries to the date hereof not reflected in such minute books and
other records, other than those which are not material in the context of the Buyer and the
Buyer Subsidiaries, on a consolidated basis.
| |
3.3.23 |
|
Environmental
Matters |
| |
(a) |
|
To
the knowledge of the Buyer, each of the Buyer and the Buyer Subsidiaries is and
has been in compliance with all applicable Environmental Laws, except to the
extent that a failure to be in such compliance would not be reasonably likely
to have a Material Adverse Effect on the Buyer. |
| |
(b) |
|
The
Buyer Properties have not been used to generate, manufacture, refine, treat,
recycle, transport, store, handle, dispose, transfer, produce or process
Hazardous Substances, except in compliance in all material respects with all
Environmental Laws. None of the Buyer, the Buyer Subsidiaries or any other
person in control of any Buyer Property has caused or permitted the Release of
any Hazardous Substances at, in, on, under or from any Buyer Property, except
in compliance with all Environmental Laws, except to the extent that a failure
to be in such |
-32-
| |
compliance
would not be reasonably likely to have a Material Adverse Effect. All Hazardous
Substances handled, recycled, disposed of, treated or stored on or off site of the Buyer
Properties by the Buyer, the Buyer Subsidiaries or any other person for whose actions the
Buyer or a Buyer Subsidiary may be partially or wholly liable have been handled,
recycled, disposed of, treated and stored in compliance with all Environmental Laws
except to the extent that a failure to be in such compliance would not be reasonably
likely to have a Material Adverse Effect on the Buyer. To the knowledge of the Buyer,
there are no Hazardous Substances at, in, on, under or migrating from the Buyer
Properties, except in material compliance with all Environmental Laws. |
| |
(c) |
|
To
the knowledge of the Buyer, none of the Buyer, the Buyer Subsidiaries or any
other person for whose actions the Buyer or a Buyer Subsidiary may be partially
or wholly liable, has treated or disposed, or arranged for the treatment or
disposal, of any Hazardous Substances on or to any of the Buyer Properties in
such a manner as: (i) would be reasonably likely to impose liability for
cleanup, natural resource damages, loss of life, personal injury, nuisance or
damage to other property, except to the extent that such liability would not
have a Material Adverse Effect on the Buyer; or (ii) would be reasonably likely
to result in imposition of a lien, charge or other encumbrance or the
expropriation on any of the Buyer Properties or the assets of any of the Buyer
or the Buyer Subsidiaries. |
| |
(d) |
|
None
of the Buyer or the Buyer Subsidiaries has received any notice, formal or
informal, of any proceeding, action or other claim, liability or potential
liability arising under any Environmental Laws, from any person related to any
of the Buyer Properties which is pending as of the date hereof, except to the
extent that same would not have a Material Adverse Effect on the Buyer. |
| |
3.3.24 |
|
Employment
Matters |
| |
(a) |
|
Other
than as disclosed in the Buyer Public Documents: |
| |
|
(i) |
|
there
has not been in the last two years and there is not currently any labour
disruption, grievance, arbitration proceeding or other conflict which
could reasonably be expected to have a Material Adverse Effect on the Buyer’s
or any of the Buyer Subsidiaries’ business, taken as a whole, and the
Buyer and each of the Buyer Subsidiaries is in compliance with all
provisions of all Applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, except
where non-compliance with any such provisions would not have a Material
Adverse Effect on the Buyer or any of the Buyer Subsidiaries; |
| |
|
(ii) |
|
no
union has been accredited or otherwise designated to represent any employees
of the Buyer or any of the Buyer Subsidiaries and, to the knowledge of the
Buyer, no accreditation request or other representation question is
pending with respect to the employees of the Buyer or any of |
-33-
| |
the
Buyer Subsidiaries and no collective agreement or collective bargaining agreement or
modification thereof has expired or is in effect in any of the Buyer ‘s facilities
and none is currently being negotiated by the Buyer or any Buyer Subsidiary; and |
| |
(b) |
|
the
Buyer Public Documents disclose, to the extent required by applicable
Securities Laws, each material plan for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or termination
pay, insurance, medical, hospital, dental, vision care, drug, sick leave,
disability, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or otherwise contributed to, or required to be contributed
to, by the Buyer for the benefit of any current or former director, officer,
employee or consultant of the Buyer, each of which has been maintained in all
material respects with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations that are applicable to such
employee plans; |
| |
3.3.25 |
|
Internal
Accounting Controls |
The
Buyer maintains a system of internal accounting controls sufficient to provide reasonable
assurances that (a) transactions are executed in accordance with management’s general
or specific authorization, and (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Canadian generally accepted
accounting principles and to maintain accountability for assets;
All
information which has been prepared by the Buyer and the Subsidiaries relating to the
Buyer and the Subsidiaries and the business, property and liabilities thereof and either
publicly disclosed, provided or made available to the Seller, is, as of the date of such
information, true and correct in all material respects, taken as whole, and no fact or
facts have been omitted therefrom which would make such information materially misleading.
Other
than as disclosed in the Buyer Financial Statements, there is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of the Buyer,
threatened against the Buyer or its subsidiaries, by or before any Governmental Authority
or by any third party.
Each
of the Seller and the Buyer represents and warrants to the other that the other will not
be liable for any brokerage commission, finder’s fee or other similar payment in
connection with the transactions contemplated hereby because of any action taken by, or
agreement or understanding reached by, that Party.
-34-
| 3.5 |
Survival
of Representations and Warranties of Seller |
All
representations and warranties made by the Seller in this Agreement or any Closing
Document shall survive the Closing as follows:
| |
(a) |
|
in
the case of the representations and warranties set forth in Section 3.1.8,
until the expiry of the relevant limitations period under Applicable Law for
the institution of proceedings by the relevant Governmental Authority with
respect to the matters contemplated in that Section; and |
| |
(b) |
|
in
the case of all other representations and warranties, for a period of eighteen
(18) months from the Closing Time. |
After such period, the Seller shall
not have any further liability with respect to such representations and warranties except
with respect to claims properly made under them within such period.
| 3.6 |
Survival
of Representations and Warranties of the Buyer and the Guarantor |
All
representations and warranties made by the Buyer and the Guarantor in this Agreement or
any Closing Document shall survive for a period of eighteen (18) months from the Closing
Time. After such period, the Buyer and Guarantor shall have no further liability hereunder
with respect to such representations and warranties except with respect to claims properly
made under them within such period.
| 3.7 |
Knowledge
of the Seller |
Where any
representation or warranty contained in this Agreement is expressly qualified by reference
to the “knowledge” of the Seller, it shall be deemed to refer to the actual
knowledge of any director or officer of the Seller and the actual knowledge of the
officers of the Guarantor, and all knowledge which such persons would have if it made due
enquiry into the relevant subject matter having regard to his role and responsibilities as
a director or officer of the Seller.
| 3.8 |
Knowledge
of the Buyer |
Where any
representation or warranty contained in this Agreement is expressly qualified by reference
to the “knowledge” of the Buyer, it shall be deemed to refer to the actual
knowledge of any director or officer of the Buyer, and all knowledge which such party
would have if it made due enquiry into the relevant subject matter having regard to his
role and responsibilities as a director or officer of the Buyer.
-35-
ARTICLE 4
CONDITIONS PRECEDENT
| 4.1 |
Conditions
of the Buyer |
The
Buyer shall be obliged to complete the Closing only if each of the conditions precedent
set out in the following Subsections of this Section 4.1 have been satisfied in full
at or before the Closing Time. Each of such conditions precedent is for the exclusive
benefit of the Buyer, and the Buyer may waive any of them in whole or in part in writing.
| |
4.1.1 |
|
Accuracy
of Representations and Performance of Covenants |
| |
(a) |
|
all
of the representations and warranties of the Seller and the Guarantor made in,
or pursuant to, this Agreement shall be true and correct in all material
respects at and as of the Closing Time, except to the extent that such
representations and warranties may be affected by events or transactions
expressly permitted by this Agreement; |
| |
(b) |
|
the
Seller shall have observed or performed in all material respects all of the
obligations, covenants and agreements hereunder which it must perform at or
before the Closing Time; and |
| |
(c) |
|
the
Seller and the Guarantor shall have delivered to the Buyer a certificate dated
as of the Closing Date and signed on behalf of an officer of the Seller, to the
effect that the conditions specified in this Section 4.1 have been fulfilled. |
| |
4.1.2 |
|
Consents,
Authorizations and Registrations |
On
or before the Closing Time, all consents, approvals, Orders and authorizations of any
Governmental Authority (or registrations, declarations, filings or recordings with any of
them) and other Persons as set out in Schedule D attached hereto, shall have been
obtained, made or waived, and all applicable waiting periods shall have expired or been
the subject of early termination.
There
shall not be pending any litigation or proceeding against the Buyer or the Seller brought
by any Governmental Authority or any other Person that seeks to restrain, materially
modify or invalidate the transactions contemplated by this Agreement and no Order that
would prohibit, materially modify or restrain such transactions shall be in effect.
| |
4.1.4 |
|
Receipt
of Closing Documentation |
The
Buyer shall have received the Closing Documents required to be delivered by the Seller to
the Buyer pursuant to Sections 6.2 and 6.4 in form (as to certification and otherwise) and
substance satisfactory to the Buyer and its counsel, acting reasonably.
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| |
4.1.5 |
|
Listing
of Glencairn Shares |
The
TSX and AMEX shall have conditionally approved the listing of the Closing Date Shares.
| |
4.1.6 |
|
Transfer
of Bonanza Concessions |
Desminic
shall have entered into agreements with Yamana Nicaragua, S.A., a subsidiary of the
Guarantor, to (i) transfer and assign all of the Bonanza Exploration Concessions and the
Bonanza Exploitation Concession to Yamana Nicaragua, S.A., and (ii) provide that Desminic
will hold legal and registered or recorded title to the Bonanza Exploration Concessions
and the Bonanza Exploitation Concession as bare trustee with no active duties to perform
with respect thereto until such time as such concessions are registered in the name of
Yamana Nicaragua, S.A. (the “Bonanza Agreements”).
| |
4.1.7 |
|
Transfer
of Desminic Shares and Bemilasa Shares |
▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇ shall have transferred to persons identified by the Buyer prior
to the Closing Time the Desminic Shares and the Bemilasa Shares held by them for no or
nominal consideration and shall have each entered into and signed a comprehensive mutual
release from each such person of all claims against the applicable Subsidiaries up to and
including the Closing Time.
| |
4.1.8 |
|
Material
Adverse Effect |
No
Material Adverse Effect shall have occurred during the Interim Period with respect to the
Seller or the Subsidiaries or their respective business, assets or properties.
The
Buyer shall have completed the Panama Closing.
| |
4.1.10 |
|
Inter-company
Indebtedness |
The
inter-company indebtedness of CAMH, Desminic or Bemilasa owing to the Guarantor, the
Seller or any other affiliate of the Guarantor (other than CAMH, Desminic and Bemilasa)
shall have been repaid, assigned to the Buyer or an affiliate of the Buyer or otherwise
extinguished as determined by the Seller after consultation with the Buyer.
The
Seller shall be obliged to complete the Closing only if each of the conditions precedent
set out in the following Subsections of this Section 4.2 have been satisfied in full
at or before the Closing Time. Each of such conditions precedent is for the exclusive
benefit of the Seller and the Seller may waive any of them in whole or in part in writing.
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| |
4.2.1 |
|
Accuracy
of Representations and Performance of Covenants |
| |
(a) |
|
all
of the representations and warranties of the Buyer made in or pursuant to this
Agreement shall be true and correct in all material respects as if made at the
Closing Time except to the extent that such representations and warranties may
be affected by events or transactions expressly permitted in this Agreement; |
| |
(b) |
|
the
Buyer shall have observed or performed in all material respects all of the
obligations, covenants and agreements which it must perform at or before the
Closing Time; and |
| |
(c) |
|
the
Buyer shall have delivered to the Seller a certificate dated as of the Closing
Date and signed on behalf of the Buyer by its Chairman, President or any Vice
President, to the effect that the conditions specified in this Section 4.2 have
been fulfilled. |
| |
4.2.2 |
|
Consents,
Authorizations and Registrations |
All
consents, approvals, Orders and authorizations of any Governmental Authority (or
registrations, declarations, filings or recordings with any of them), including in respect
of the issuance of the Closing Date Shares, and other Persons as set out in Schedule D
attached hereto, shall have been obtained, made or waived, and all applicable waiting
periods shall have expired or been the subject of early termination, on or before the
Closing Time.
There
shall not be pending any litigation or proceeding against the Buyer or the Seller brought
by any Governmental Authority or any other Person that seeks to restrain, materially
modify or invalidate the transactions contemplated by this Agreement and no Order that
would prohibit, materially modify or restrain such transactions shall be in effect.
| |
4.2.4 |
|
Receipt
of Closing Documentation |
The
Seller shall have received the Closing Documents required to be delivered by the Buyer to
the Seller pursuant to Section 6.3 in form (as to certification and otherwise) and
substance satisfactory to the Seller and its counsel, acting reasonably.
| |
4.2.5 |
|
Listing
of Glencairn Shares |
The
TSX and AMEX shall have conditionally approved the listing of the Closing Date Shares, and
satisfactory evidence of such approval shall have been furnished to the Seller on or prior
to the Closing Date.
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| |
4.2.6 |
|
Transfer
of Concessions |
Desminic
shall have entered into the Bonanza Agreements with Yamana Nicaragua, S.A.
| |
4.2.7 |
|
Material
Adverse Effect |
No
Material Adverse Effect shall have occurred during the Interim Period with respect to the
Buyer or its business, assets or properties.
The
Buyer shall have completed the Panama Closing.
| |
4.2.9 |
|
Nomination
Right Agreement |
The
Buyer shall have entered into an agreement with the Seller that will provide that, from
and after Closing, for so long as the Seller owns 10% or more of the issued and
outstanding Glencairn Shares on a non-diluted basis, the Seller shall have the right to
nominate one person for election to the board of directors of the Buyer on an annual basis
(the “Nomination Rights Agreement”).
| |
4.2.10 |
|
Equity
Participation Agreement |
The
Buyer shall have entered into an agreement with the Seller that will provide that from and
after Closing, for so long as the Seller owns 10% or more of the issued and outstanding
Glencairn Shares on a non-diluted basis, the Seller shall have the right to maintain its
then pro rata interest in the Buyer in the event that the Buyer completes any future
equity financings (the “Equity Participation Agreement”).
| |
4.2.11 |
|
Inter-company
Indebtedness |
The
inter-company indebtedness of CAMH, Desminic or Bemilasa owing to the Guarantor, the
Seller or any affiliate of the Guarantor (other than CAMH, Desminic and Bemilasa) shall
have been repaid, assigned to the Buyer or an affiliate of the Buyer or otherwise
extinguished as determined by the Seller after consultation with the Buyer.
Any
Party may waive, by written notice to the other Party, any condition set forth in this
Article 4 which is for its benefit. No waiver by a Party of any condition, in whole
or in part, shall operate as a waiver of any other condition.
-39-
ARTICLE 5
PRE-CLOSING COVENANTS OF THE PARTIES
| 5.1 |
|
Conduct
of Business Prior to Closing |
| |
(a) |
|
During
the Interim Period, except as required by Applicable Law or any Governmental
Authority, the Seller shall cause each Subsidiary to conduct its business only
in the ordinary course in compliance in all material respects with all
Applicable Laws and Licences. |
| |
(b) |
|
During
the Interim Period, except as required by Applicable Law or any Governmental
Authority, the Buyer shall conduct its business, and shall cause each Buyer
Subsidiary to conduct its business, only in the ordinary course in compliance
in all material aspects with all Applicable Laws and Licences. |
| 5.2 |
|
Access
to Information |
| |
(a) |
|
During
the Interim Period, the Seller shall permit the Buyer and its
Representatives to have reasonable access during business hours to: |
| |
|
(i) |
|
the
records and information of the Subsidiaries; and |
| |
|
(ii) |
|
the
officers and senior management and premises of the Subsidiaries on at least
48 hours’ prior written notice, on condition that no Person given
access interferes with the ordinary conduct of the business of the
Subsidiaries; |
| |
solely
for the purpose of confirming the truth and accuracy of the Seller’s representations
and warranties and the performance of the Seller’s covenants made in or pursuant to
this Agreement. |
| |
(b) |
|
During
the Interim Period, the Buyer shall permit the Seller and its
Representatives to have reasonable access during business hours to: |
| |
|
(i) |
|
the
records and information of the Buyer and the Buyer Subsidiaries; and |
| |
|
(ii) |
|
the
officers and senior management and premises of the Buyer and the Buyer
Subsidiaries on at least 48 hours’ prior written notice, on condition
that no Person given access interferes with the ordinary conduct of
business of the Buyer and the Buyer Subsidiaries; |
| |
solely
for the purpose of confirming the truth and accuracy of the Buyer’s representations
and warranties and the performance of the Buyer’s covenants made in or pursuant to
this Agreement. |
-40-
| 5.3 |
|
Actions
to Satisfy Closing Conditions |
Each
Party shall take all such reasonable action as is within its power to control, and shall
use reasonable commercial efforts to cause other actions to be taken which are not within
its power to control, with a view to achieving compliance with all conditions set forth in
Article 4 which are for the benefit of the other Party. The Parties will co-operate
in exchanging such information and providing such assistance as may be reasonably required
in connection with the foregoing.
| |
5.3.1 |
|
Consents
and Waivers |
Subject
to Sections 5.3.2 and 5.3.3, the Buyer, shall at its own expense, subject to obtaining the
full co-operation and assistance of the Seller, use reasonable commercial efforts to
obtain by the Closing Time all consents or waivers of any Person listed in Schedule D
attached hereto as being required to consummate the transactions contemplated by this
Agreement. For greater certainty, this Section shall not obligate the Buyer to make any
payment to any Person or to pay any other charge or fee (except a payment contracted for
with a third party or a payment to a third party to cover the third party’s expenses
associated with the consents referred to in this Section) or make additional payments,
guarantees or financial contributions or arrangements or to institute legal or arbitration
or other proceedings to obtain such consents or waivers. The Seller shall provide to any
Person whose consent is required to the transactions contemplated hereby, all such
information relating to the Seller including financial information, information relating
to its business experience and the business experience of the individuals who ultimately
control and operate the Seller and with respect to its ability to perform and to operate
the Business, as may be required by such Persons.
If
any court or Governmental Authority having jurisdiction over any of the Parties issues any
Order before the Closing Time which would prohibit or materially restrict or hinder the
Closing, the Parties shall use their respective reasonable efforts to have such Order
dissolved, revoked or otherwise eliminated as promptly as possible and, in any event,
prior to the Closing Time.
| |
5.3.3 |
|
Filings
with Governmental Authorities |
As
soon as practicable after the Execution Date, the Parties shall make or cause to be made
all filings, notices or requests for consent or approval required to be given or made to
any Governmental Authority in connection with the sale and transfer of the Purchased
Securities including, application by the Buyer to the TSX and AMEX for the listing and
posting for trading of the Closing Date Shares. Each Party shall furnish to the other such
information and assistance as it may reasonably request in order to prepare any filings or
submissions or notices to be made or given by such other Party.
| 5.4 |
|
Investments
in Other Persons |
During
the Interim Period, the Seller shall ensure that the Subsidiaries do not directly or
indirectly, make any loan or advance (other than in connection with currently
-41-
approved capital expenditures and
exploration expenses) to any Person or purchase or otherwise acquire any equity, assets or
obligations of, or any interest in, any Person other than in the ordinary course of
business.
| |
(a) |
|
During
the Interim Period, the Seller shall ensure that the Subsidiaries do not,
directly or indirectly, merge, amalgamate or consolidate with any Person, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of their respective assets
(whether now owned or hereafter acquired) to any Person or acquire (whether in
one transaction or in a series of transactions) all or substantially all of the
assets of any Person without the prior written consent of the Buyer. |
| |
(b) |
|
During
the Interim Period, the Buyer shall not, and shall ensure that the Buyer
Subsidiaries do not directly or indirectly, merge, and amalgamate or
consolidate with any Person, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transaction) all or substantially
all of the assets of the Buyer or the Buyer Subsidiaries (whether now owned or
hereafter acquired) as applicable, to any Person or acquire (whether in one
transaction or in a series of transactions) all or substantially all of the
assets of any Person, in each case without the prior written consent of the
Seller. |
| 5.6 |
|
Restrictions
on Dividends and Redemptions |
During
the Interim Period, the Seller shall ensure that the Subsidiaries do not declare, order,
pay or make any dividend or other distribution, directly or indirectly, in respect of any
shares of any class of stock of the Subsidiaries. During the Interim Period, the Seller
shall ensure that the Subsidiaries do not make or pay any payments, disbursements or fees
to any director, officer, employee or agent of the Subsidiaries, except in the ordinary
course of business.
| 5.7 |
|
Glencairn
Equity Financing |
| |
(a) |
|
The
Buyer acknowledges that it has completed the marketing of the Glencairn Equity
Financing. The Buyer shall use commercially reasonable efforts to conclude the
Glencairn Equity Financing as soon as practicable after the Closing and the
Panama Closing. Subject to obligations of confidentiality to which the Buyer
may be subject, the Seller and the Guarantor may enquire of the Buyer as to the
progress of the Glencairn Equity Financing and after such enquiry the Buyer
will inform the Seller as to such progress and the Buyer will notify the Seller
as soon as practicable of any development that could have a Material Adverse
Effect on the timely completion of the Glencairn Equity Financing; provided
that in either case, doing so is in compliance with applicable securities laws. |
| |
(b) |
|
The
Seller or one or more of its affiliates shall participate in the Glencairn
Equity Financing. The Seller or one or more of its affiliates shall subscribe
for 20% of |
-42-
| |
the
equity securities to be issued by the Buyer pursuant to the Glencairn Equity Financing to
a maximum total investment of CDN$2,500,000. |
| 5.8 |
|
CAMH
Financial Statements |
| |
(a) |
|
The
Seller shall prepare (or cause to be prepared) and deliver to the Buyer on or
prior to June 30, 2006: |
| |
|
(i) |
|
the
financial statements of CAMH for the years ended December 31, 2005, 2004 and
2003, including notes thereto, and an unaudited balance sheet for the three
month period ended March 31, 2006; and |
| |
|
(ii) |
|
the
financial statements of Bemilasa for the years ended December 31, 2005, 2004
and 2003, and an unaudited balance sheet and income statement for the three
month period ended March 31, 2006. |
| |
(b) |
|
The
Buyer agrees to assist and cooperate with the Seller to prepare the Seller’s
Financial Statements. |
| |
(c) |
|
The
Seller’s Financial Statements shall be in a form acceptable to the Buyer,
acting reasonably. |
| |
(d) |
|
Up
to and including the Closing Date, the Seller will ensure that the Subsidiaries
do not incur, contingent or other liabilities of any nature whatsoever other
than in the ordinary course of business. |
| |
(e) |
|
The
Buyer acknowledges that the financial statements of Desminic for the years
ending December 31, 2003, 2004 and 2005 have previously been provided to the
Buyer. |
ARTICLE 6
CLOSING ARRANGEMENTS
The
Closing shall take place on the Closing Date at the Closing Time at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, or at such other place as may be agreed upon
by the Seller and the Buyer.
| 6.2 |
|
Deliveries
by the Seller |
At
the Closing Time, the Seller shall deliver or cause to be delivered to the Buyer (unless
delivered previously) the following documents, agreements, instruments and items, in form
and substance satisfactory to the Buyer and its legal counsel, acting reasonably:
| |
(a) |
|
all
share certificates representing the Purchased Securities duly endorsed in blank
for transfer or accompanied by an executed stock transfer power of attorney; |
-43-
| |
(b) |
|
resignations,
effective as of the Closing Date, of each director and officer of the
Subsidiaries from whom the Buyer requests such resignations; and a signed
comprehensive release from and in favour of each such director and officer of
all claims against the applicable Subsidiaries up to and including the Closing
Time, including claims for current unpaid remuneration and advances made to the
applicable Subsidiaries but excluding claims for indemnity to which they are
entitled under the constating or constituent documents of the applicable
Subsidiaries or under any Applicable Laws; |
| |
(c) |
|
certificates
dated as of the Closing Date from the Seller, the Guarantor and each
Subsidiary, as the case may be, in the agreed form: |
| |
|
(i) |
|
to
the effect that the articles and by-laws attached to the certificate are
correct and complete copies of the articles and by-laws of the Seller, the
Guarantor and each Subsidiary, as in effect at the Closing Date; |
| |
|
(ii) |
|
to
the effect that the resolutions of the board of directors of the Seller and the
Guarantor attached to the certificate approving this Agreement and authorising
signature or execution of the same and of any documents required to be signed
or executed by the Seller or the Guarantor under this Agreement is a correct
and complete copy of the relevant resolutions; and |
| |
|
(iii) |
|
attaching
a copy of the signatures of the persons authorised to sign this Agreement
and/or any of the Closing Documents contemplated herein on behalf of the Seller
or the Guarantor and certifying the genuineness of such signatures. |
| |
(d) |
|
evidence
in form satisfactory to the Buyer, acting reasonably, that all actions required
to be taken by the Seller prior to Closing pursuant to Section 5.3 have been
taken and all consents, approvals, Orders and authorizations required to be
obtained by the Seller for the Closing pursuant to Section 4.1.2 have been
obtained; |
| |
(e) |
|
a
certificate dated as of the Closing Date and signed on behalf of the Seller in
the agreed form to the effect that the representations and warranties of the
Seller contained in the Agreement and the Closing Documents are true and
correct in all respects as of the Closing Date (except to the extent that such
representations and warranties may be affected by events or transactions
expressly permitted by this Agreement) and that the Seller has performed all of
its covenants and agreements to be performed under the Agreement on or prior to
the Closing Date as required by Section 4.1.1(c); |
| |
(f) |
|
certificate
dated as of the Closing Date and signed on behalf of the Guarantor in the
agreed form to the effect that the representations and warranties of the
Guarantor contained in the Agreement and the Closing Documents are true and
correct in all respects as of the Closing Date and that the Guarantor has
performed |
-44-
| |
all
of its covenants and agreements to be performed under the Agreement on or prior to the
Closing Date as required by Section 4.1.1(c); |
| |
(g) |
|
a
legal opinion of counsel pertaining to corporate and enforceability matters in
respect of the Seller, the Guarantor and each Subsidiary and that all action
has been taken to register the Buyer as the sole owner of the Purchased
Securities, in form and substance reasonably satisfactory to the Buyer and its
counsel; |
| |
(h) |
|
the
Nomination Rights Agreement and the Equity Participation Agreement, duly
executed by the Seller; |
| |
(i) |
|
the
Bonanza Agreements, duly executed by Desminic and Yamana Nicaragua, S.A.; and |
| |
(j) |
|
such
other conveyances, transfers, approvals, documents, instruments or certificates
dated as of the Closing Date as would be usual in completing transactions of
the nature contemplated by this Agreement or as are, in the opinion of counsel
for the Buyer, reasonably necessary or desirable to consummate the transactions
contemplated by this Agreement. |
| 6.3 |
|
Deliveries
by the Buyer |
At
the Closing Time, the Buyer shall deliver or cause to be delivered to the Seller (unless
previously delivered) the following documents, agreements, instruments or items, in form
and substance satisfactory to the Seller and its legal counsel, acting reasonably:
| |
(a) |
|
the
Purchase Price in accordance with Sections 2.2.1 and 2.2.2; |
| |
(b) |
|
a
certificate dated as of the Closing Date from the Buyer in the agreed form: |
| |
|
(i) |
|
to
the effect that the articles and by-laws attached to the certificate are
correct and complete copies of the articles and by-laws of the Buyer as in
effect at the Closing Date; |
| |
|
(ii) |
|
to
the effect that the resolutions of the board of directors of the Buyer attached
to the certificate approving this Agreement and authorising signature or
execution of the same and of any documents required to be signed or executed by
the Buyer under this Agreement is a correct and complete copy of the relevant
resolutions; and |
| |
|
(iii) |
|
attaching
a copy of the signatures of the persons authorised to sign this Agreement
and/or any of the documents contemplated herein on behalf of the Buyer and
certifying the genuineness of such signatures; |
| |
(c) |
|
a
letter from Equity Transfer Services Inc. dated the Closing Date confirming
number of Glencairn Shares outstanding as at the Closing Date; |
-45-
| |
(d) |
|
evidence
in form satisfactory to the Seller, acting reasonably, that all actions required to
be taken by the Buyer prior to the Closing pursuant to Section 5.3 have been taken and
all consents, approvals, Orders and authorizations required to be obtained by the Buyer
for the Closing pursuant to Section 4.2.2 have been obtained; |
| |
(e) |
|
a
certificate dated as of the Closing Date and signed on behalf of the Buyer in
the agreed form to the effect that the representations and warranties of the
Buyer contained in the Agreement and the Closing Documents are true and correct
in all respects as of the Closing Date (except to the extent that such
representations and warranties may be affected by events or transactions
expressly permitted by this Agreement) and that the Buyer has performed all of
its covenants and agreements to be performed by it under the Agreement on or
before the Closing Date as required by Section 4.2.1(c); |
| |
(f) |
|
a
legal opinion of counsel to the Buyer pertaining to corporate and
enforceability matters in respect of the Buyer and securities law matters under
the laws of the Province of Ontario in respect of the issuance of the Closing
Date Shares and the first trade of such shares, in form and substance
reasonably satisfactory to the Seller and its counsel; |
| |
(g) |
|
the
Nomination Rights Agreement and the Equity Participation Agreement, duly
executed by the Buyer; and |
| |
(h) |
|
such
other conveyances, transfers, approvals, documents, instruments or certificates
dated as of the Closing Date as would be usual in the completing transactions
of the nature contemplated by this Agreement or as are, in the opinion of
counsel for the Seller, reasonably necessary or desirable to consummate the
transactions contemplated by this Agreement. |
On
the Closing Date (or as soon thereafter as practicable), Seller shall deliver or cause to
be delivered to the Buyer all books and records owned by or in the possession or control
of the Seller pertaining to the Subsidiaries and their respective businesses (the
“Books and Records”).
ARTICLE 7
POST-CLOSING COVENANTS OF THE PARTIES
| |
(a) |
|
The
Buyer shall cause the Subsidiaries to prepare and file all Tax Returns of the
Subsidiaries required to be filed from and after the Closing Time, including
the Tax return for the period ending at the Closing Time. |
-46-
| |
(b) |
|
The
Buyer does not assume and will not be liable for any Taxes which may be or
become payable by the Seller, including any Taxes resulting from or arising as
a consequence of the sale by the Seller to the Buyer of the Purchased
Securities herein contemplated and the Seller will indemnify and save harmless
the Buyer and its directors, officers and employees from and against all such
Taxes. |
After
the Closing, upon reasonable written notice which shall be given at least 48 hours prior
to any proposed access, the Buyer will give, or cause to be given, to the Seller and its
Representatives, access, during normal business hours, to the Books and Records and such
other records, data or information in the possession or control of the Buyer or the
Subsidiaries that relate to the Subsidiaries and their respective businesses for the
period prior to the Closing, and will permit such persons to examine and copy the Books
and Records and such other records, data or information all to the extent reasonably
requested by the Seller and only in connection with the preparation of tax and financial
reporting matters, audits, legal proceedings, governmental investigations and other
business purposes in respect of periods up to and including the Closing Date. However, the
Buyer shall not be obligated to take any action pursuant to this Section 7.2 that would
unreasonably disrupt the Subsidiaries or the operation of their respective businesses. The
Seller, the Buyer and the Subsidiaries will co-operate with each other in the conduct of
any tax audit or similar proceedings involving or otherwise relating to the Subsidiaries
or the Purchased Securities in respect of periods up to and including the Closing Date.
| 7.3 |
|
Maintenance
of Reporting Issuer Status |
The Buyer
shall, for a period of at least 12 months after Closing, use its best efforts to remain a
reporting issuer not in default of any requirement under and in respect of the Securities
Laws.
| 7.4 |
|
Working
Capital Deficit |
| |
(a) |
|
No
later than thirty (30) days after the Closing Date, the Seller shall prepare,
or cause its accountants or auditors to prepare, and the Seller shall deliver
to the Buyer, a statement containing a calculation of the Combined Working
Capital Deficit and a statement containing the Belize Liabilities (the
“Seller’s Post-Closing Statements”). If the aggregate of
the Combined Working Capital Deficit and the Belize Liabilities exceeds
$2,000,000, the Seller shall pay to the Buyer within five (5) days of delivery
of the Seller’s Post-Closing Statements, by wire transfer, the amount
equal to the difference between the (i) aggregate of the Combined Working
Capital Deficit and the Belize Liabilities, and (ii) $2,000,0000 (the “Initial
Adjustment”). |
| |
(b) |
|
Within
thirty (30) days of receipt of the Seller’s Post-Closing Statements, the
Buyer shall notify the Seller in writing if it agrees or disagrees with the
calculation of the Combined Working Capital Deficit and/or the Belize
Liabilities by the Seller (the “Buyer’s Post-Closing
Notice”). If the Buyer disagrees with |
-47-
| |
the
calculation of the Combined Working Capital Deficit and/or the Belize Liabilities
delivered pursuant to Section 7.4(a), it shall specify in the Buyer’s Post-Closing
Notice those items or amounts as to which the Buyer disagrees, and the Buyer shall be
deemed to have agreed with all other items and amounts contained in the Seller’s
Post-Closing Statements and the calculation of the Combined Working Capital Deficit and
the Belize Liabilities. |
| |
(c) |
|
The
Buyer shall be deemed to have agreed with the Combined Working Capital Deficit
and the Belize Liabilities contained in the Seller’s Post-Closing
Statements delivered pursuant to Section 7.4(a) if it has not delivered the
Buyer’s Post-Closing Notice to the Seller within thirty (30) days of
receipt of the Seller’s Post-Closing Statements. |
| |
(d) |
|
If
the Buyer notifies the Seller pursuant to Section 7.4(b) that it disagrees with
the Seller’s calculation of the Combined Working Capital Deficit and/or
the Belize Liabilities, the Seller and the Buyer shall, within ten (10)
Business Days following such delivery, use their best efforts to reach an
agreement on the disputed items or amounts in order to determine the Combined
Working Capital Deficit and/or the Belize Liabilities. If, during such period,
the Seller and the Buyer are unable to reach such agreement, they shall
promptly retain a mutually agreeable accounting firm (the “Neutral
Auditors”), other than the Seller’s auditors, the Buyer’s
auditors or any professional accounting firm or other professional services
firm that has provided accounting, tax or other financial advice to either the
Buyer or the Seller or their respective affiliates in the previous 24 months
(failing which either party may apply to the Ontario Superior Court of Justice
to appoint a Neutral Auditor), to promptly review the disputed items or amounts
for the purpose of calculating the Combined Working Capital Deficit and/or the
Belize Liabilities. In making any such calculation, the Neutral Auditors shall
consider only those items or amounts in the Seller’s Post-Closing
Statement to which the Buyer has disagreed. The Neutral Auditors shall deliver
to the Seller and the Buyer, as promptly as practicable, a report setting forth
each such calculation. The Neutral Auditor’s report shall, in the absence
of bad faith or clerical error, be final and binding upon the Seller and the
Buyer and the cost of such review and report shall be shared equally by the
Seller and the Buyer. |
| |
(e) |
|
The
Seller and the Buyer agree that they will, and agree to cause their respective
accountants or auditors to, cooperate and assist in the preparation of the
Seller’s Post-Closing Statement, the calculation of the Combined Working
Capital Deficit and the Belize Liabilities and the conduct of any review by the
Neutral Auditors referred to in this Section 7.4, including making available to
the extent reasonably necessary, required books, work papers and personnel. |
| |
(f) |
|
If
the Buyer has disagreed with the Seller’s calculation of the Combined
Working Capital Deficit and/or Belize Liabilities in accordance with Section
7.4(b), then within five (5) Business Days after the Combined Working Capital
Deficit and/or the Belize Liabilities have been agreed upon by the Seller and
the Buyer or determined by the Neutral Auditors in accordance with Section
7.4(d), (i) if the |
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| |
aggregate
of the Combined Working Capital Deficit and the Belize Liabilities exceeds the sum of
$2,000,000 plus the Initial Adjustment, then the Seller shall promptly pay to the Buyer
the difference between such amounts by wire transfer, and (ii) if the aggregate of the
Combined Working Capital Deficit and the Belize Liabilities is less than the sum of
$2,000,000 plus the Initial Adjustment, then the Buyer shall promptly pay to the Seller
by wire transfer the difference between such amounts, to a maximum of the Initial
Adjustment. |
| 7.5 |
|
Buyer’s
Calculation of the Working Capital Deficit |
| |
(a) |
|
If
the Seller’s Post-Closing Statement is not delivered by the Seller to the
Buyer within the time frame set out in Section 7.4(a), the Buyer shall prepare,
or cause its accountants or auditors to prepare, and the Buyer shall deliver to
the Seller within sixty (60) days after the Closing Date, a statement
containing a calculation of the Combined Working Capital Deficit and a
statement containing the Belize Liabilities (the “Buyer’s
Post-Closing Statements”), provided that the reasonable costs of
preparing the Buyer’s Post-Closing Statements shall be paid by the Seller
to the Buyer promptly after the delivery of any invoice in respect thereof. If
the aggregate of the Combined Working Capital Deficit and the Belize
Liabilities exceeds $2,000,000, the Seller shall pay to the Buyer, within five
(5) days of receipt of the Buyer’s Post-Closing Statements, by wire
transfer, the Initial Adjustment, except in respect of any amounts that the
Seller considers to be calculated in bad faith or by gross, manifest or
clerical error. |
| |
(b) |
|
Within
thirty (30) days of receipt of the Buyer’s Post-Closing Statements, the
Seller shall notify the Buyer in writing if it agrees or disagrees with the
calculation of the Combined Working Capital Deficit and/or the Belize
Liabilities by the Buyer (the “Seller’s Post-Closing
Notice”). If the Seller disagrees with the calculation of the Combined
Working Capital Deficit and/or the Belize Liabilities delivered pursuant to
Section 7.5(a), it shall specify in the Seller’s Post-Closing Notice those
items or amounts as to which the Seller disagrees, and the Seller shall be
deemed to have agreed with all other items and amounts contained in the
Buyer’s Post-Closing Statement and the calculation of the Combined Working
Capital Deficit and the Belize Liabilities. |
| |
(c) |
|
The
Seller shall be deemed to have agreed with the Combined Working Capital Deficit
and the Belize Liabilities contained in the Buyer’s Post-Closing
Statements delivered pursuant to section 7.5(a) if it has not delivered a
Seller’s Post-Closing Notice to the Buyer within fifteen (15) days of
receipt of the Buyer’s Post-Closing Statements. |
| |
(d) |
|
If
the Seller notifies the Buyer pursuant to Section 7.5(b) that it disagrees with
the Buyer’s calculation of the Combined Working Capital Deficit and/or the
Belize Liabilities, the Seller and the Buyer shall, within ten (10) Business
Days following such delivery, use their best efforts to reach an agreement on
the disputed items or amounts in order to determine the Combined Working
Capital Deficit and/or the Belize Liabilities. If, during such period, the
Seller and the |
-49-
| |
Buyer
are unable to reach such agreement, they shall promptly retain Neutral Auditors, other
than the Seller’s auditors, the Buyer’s auditors or any professional accounting
firm or other professional services firm that has provided accounting, tax or other
financial advice to either the Buyer or the Seller or their respective affiliates in the
previous 24 months (failing which either party may apply to the Ontario Superior Court of
Justice to appoint a Neutral Auditor), to promptly review the disputed items or amounts
for the purpose of calculating the Combined Working Capital Deficit and/or the Belize
Liabilities. In making any such calculation, the Neutral Auditors shall consider only
those items or amounts in the Buyer’s Post-Closing Statement to which the Seller has
disagreed. The Neutral Auditors shall deliver to the Seller and the Buyer, as promptly as
practicable, a report setting forth each such calculation. The Neutral Auditor’s
report shall, in the absence of bad faith or clerical error, be final and binding upon
the Seller and the Buyer and the cost of such review and report shall be shared equally
by the Seller and the Buyer. |
| |
(e) |
|
The
Seller and the Buyer agree that they will, and agree to cause their respective
auditors to, cooperate and assist in the preparation of the Buyer’s
Post-Closing Statement, the calculation of the Combined Working Capital Deficit
and the Belize Liabilities and the conduct of any review by the Neutral
Auditors referred to in this Section 7.5, including making available to the
extent reasonably necessary, required books, work papers and personnel. |
| |
(f) |
|
If
the Seller has disagreed with the Buyer’s calculation of the Combined
Working Capital Deficit and/or Belize Liabilities in accordance with Section
7.5(b), then within five (5) Business Days after the Combined Working Capital
Deficit and/or Belize Liabilities have been agreed upon by the Seller and the
Buyer or determined by the Neutral Auditor in accordance with Section 7.5(d),
(i) if the aggregate of the Combined Working Capital Deficit and Belize
Liabilities exceeds the sum of $2,000,000 plus the Initial Adjustment, then the
Seller shall promptly pay to the Buyer the difference between such amounts by
wire transfer, and (ii) if the aggregate of the Combined Working Capital
Deficit and the Belize Liabilities is less than the sum of $2,000,000 plus the
Initial Adjustment, then the Buyer shall promptly pay to the Seller by wire
transfer the difference between such amounts, to a maximum of the Initial
Adjustment. |
ARTICLE 8
GUARANTEE OF GUARANTOR
| 8.1 |
|
Guarantee
of Guarantor |
The
Guarantor hereby agrees with the Buyer to take such actions as may be necessary to cause
the Seller at all time to fully and faithfully to perform and discharge its obligations
hereunder and, if the Seller shall at any time fail to do so, the Guarantor shall itself
perform and discharge such obligations. The foregoing agreement of the Guarantor is
absolute,
-50-
unconditional, present and continuing
and is in no way conditional or contingent upon any event, circumstance, action or
omission which might in any way discharge a guarantor or surety in whole or in part.
ARTICLE 9
GENERAL TERMINATION PROVISIONS
This
Agreement may be terminated at any time at or prior to the Closing
(the “Termination Date”):
| |
(a) |
|
in
writing, by mutual consent of the Parties; |
| |
(b) |
|
by
written notice from the Seller to the Buyer if any of the conditions set forth
in Section 4.2 is not satisfied at the Closing Time, or it becomes apparent
that any such condition cannot be satisfied at the Closing Time, and it is not
waived by the Seller; |
| |
(c) |
|
by
written notice from the Buyer to the Seller if any of the conditions set forth
in Section 4.1 is not satisfied at the Closing Time, or it becomes apparent
that any such condition cannot be satisfied at the Closing Time, and it is not
waived by the Buyer; or |
| |
(d) |
|
by
written notice by the Buyer or the Seller if, for any reason other than default
hereunder of the Party seeking such termination, the Closing has not occurred
on or prior to July 31, 2006, except as such date may be extended by the mutual
agreement of the Parties. |
| 9.2 |
|
Termination
Procedure |
In
the event of the termination of this Agreement pursuant to Section 9.1 hereof, written
notice thereof shall forthwith be given by the Party so terminating to the other Party,
and this Agreement shall terminate without further action by any Party. If this Agreement
is terminated pursuant to Section 9.1 hereof:
| |
(a) |
|
all
Information received by any Party shall be treated as confidential, and each
Party shall promptly and, in any event, within five (5) Business Days of
receipt of a written request from the other Party, |
| |
|
(i) |
|
deliver
to the other Party or, |
| |
|
(ii) |
|
if
so requested by the other Party, destroy, |
| |
all
tangible Information, and erase all Information in electronic form furnished by the other
Party, its affiliates, and their respective Representatives to the Party or its
Representatives, without retaining copies thereof. In such event, within the same time
period, the Party shall destroy or erase, as the case may be, all other documents or
records constituting or containing Information created by or for the |
-51-
| |
Party
or its Representatives, unless prepared exclusively from publicly available information.
The Party shall deliver to the other Party a certificate confirming in writing its
compliance with this clause; |
| |
(b) |
|
all
filings, applications and other submissions made pursuant hereto shall, to the
extent practicable, be withdrawn from the Governmental Authority or other
Person to which made; and |
| |
(c) |
|
the
obligations provided for in this Section 9.2 and Sections 9.3, Article 10,
and Sections 11.1, 11.2 and 11.3 hereof shall survive any such termination. |
| 9.3 |
|
Effect
of Termination |
| |
(a) |
|
If
this Agreement is terminated pursuant to Sections 9.1(b) or 9.1(c) by the Party
entitled to the benefit of the conditions referred to in said Sections (the
“First Party”): |
| |
|
(i) |
|
unless
the condition or conditions which have not been satisfied and for which the
First Party has terminated this Agreement are reasonably capable of being
performed or caused to be performed by the First Party or have not been
satisfied by reason of a default by the First Party hereunder, and except as
otherwise provided herein to the contrary, the First Party shall be released
from all obligations hereunder; and |
| |
|
(ii) |
|
unless
the condition or conditions which have not been satisfied and for which the
First Party has terminated this Agreement are reasonably capable of being
performed or caused to be performed by the other Party or have not been
satisfied by reason of a default by the other Party hereunder, and except as
otherwise provided herein to the contrary, then the other Party shall also be
released from all obligations hereunder. |
| |
(b) |
|
If
this Agreement is terminated pursuant to any other subsection of Section 9.1,
there shall be no liability or obligation hereunder on the part of the Seller,
the Guarantor, the Buyer or any of their respective affiliates or
Representatives, except for liability arising from a wilful or negligent breach
of this Agreement in which case each Party will retain all remedies against the
other Party, and except as otherwise provided herein to the contrary. |
ARTICLE 10
INDEMNIFICATION
| |
As
used in this Article 10: |
| |
“Claim”means
any act, omission or state of facts and any demand, action, suit, proceeding, claim,
assessment, judgement or settlement or compromise relating |
-52-
| |
thereto
which may give rise to a right to indemnification under Sections 10.2 or 10.3; |
| |
“Claim
Notice” means a written notice of a Claim specifying in reasonable detail the
specific basis of the Claim, the specific nature of the Losses and the estimated amount
of such Losses; |
| |
“Direct
Claim” means any Claim by an Indemnified Party against an Indemnifier which does
not result from a Third Party Claim; |
| |
“Indemnifier”means
any Party obligated to provide indemnification under this Agreement; |
| |
“Indemnified
Party” means any Person entitled to indemnification under this Agreement; |
| |
“Indemnity
Payment” means any amount of Loss required to be paid pursuant to Sections 10.2
or 10.3; |
| |
“Loss”means
any and all actual loss, liability, damage, cost, expense, charge, fine, penalty or
assessment, resulting from or arising out of any Claim, including the costs and expenses
of any action, suit, proceeding, demand, assessment, judgement, settlement or compromise
relating thereto and all interest, fines and penalties and reasonable legal fees and
expenses incurred in connection therewith, but excluding any indirect, consequential,
special, punitive or exemplary damages including loss of profit or revenue, any multiple
of reduced cash flow, interference with operations, or loss of lenders, investors or
buyers; and |
| |
“Third
Party Claim” means any Claim asserted against an Indemnified Party that is paid
or payable to, or claimed by, any Person who is not a Party or an affiliate of a Party. |
| 10.2 |
|
Indemnification
by Seller |
Subject
to the limits set forth in Section 10.6, the Seller shall indemnify, defend and save
harmless the Buyer and its directors, officers and employees from and against any and all
Loss suffered or incurred by them, as a result of, or arising in connection with:
| |
(a) |
|
any
breach of a representation or warranty or any false statement made or given by
the Seller or the Guarantor in this Agreement or in any Closing Document in
respect of which a Claim Notice is properly given to the Seller within the
survival period set forth in Section 3.5 with respect to such representation,
warranty or statement; or |
| |
(b) |
|
any
failure by the Seller to observe or perform any covenant or obligation
contained in this Agreement or in any Closing Document. |
-53-
| 10.3 |
|
Indemnification
by the Buyer |
Subject to
the limits set forth in Section 10.6, the Buyer shall indemnify, defend and save
harmless the Seller and its directors, officers and employees from and against any and all
Loss suffered or incurred by them, as a result of, or arising in connection with:
| |
(a) |
|
any
breach of a representation or warranty or any false statement made or given by
the Buyer in this Agreement or in any Closing Document in respect of which a
Claim Notice is properly given to the Buyer within the survival period set
forth in Section 3.6 with respect to such representation, warranty or
statement; or |
| |
(b) |
|
any
failure by the Buyer to observe or perform any covenant or obligation contained
in this Agreement or in any Closing Document. |
| 10.4 |
|
Agency
for Directors, Officers and Employees |
Each
of the Buyer and Seller agrees that it accepts each indemnity in favour of its directors,
officers and employees as agent and trustee of each such director, officer and employee.
Each Party agrees that an Indemnified Party may enforce an indemnity in favour of any of
that Party’s directors, officers and employees on behalf of each such director,
officer and employee.
| 10.5 |
|
Indemnification
Procedure |
| |
10.5.1 |
|
Procedures
for Third Party Claims. |
| |
(a) |
|
Promptly
after receipt by an Indemnified Party of notice of a Third Party Claim, such
Indemnified Party shall provide a Claim Notice to the Indemnifier within five
(5) days after the Indemnified Party’s receipt of notice of the Third
Party Claim. |
| |
(b) |
|
The
Indemnifier shall have the right, upon written notice delivered to the
Indemnified Party within thirty (30) days after receipt of the Claim Notice, to
assume the defence of such Third Party Claim, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of the
reasonable fees and disbursements of such counsel. The Indemnified Party shall
co-operate in good faith in the defence of each Third Party Claim, even if the
defence has been assumed by the Indemnifier and may participate in such defence
assisted by counsel of its own choice at its own expense. |
| |
(c) |
|
If
the Indemnifier declines or fails to assume the defence of the Third Party
Claim on the terms provided above within such thirty (30) day period, the
Indemnified Party may, at its option, employ counsel to represent or defend it
in any such Third Party Claim and, if such Third Party Claim is a matter with
respect to which the Indemnified Party is entitled to receive payment from the
Indemnifier for the Loss in question, the Indemnifier will pay the reasonable
fees and disbursements of such counsel as incurred; provided, however, that the
Indemnifier will not be |
-54-
| |
required
to pay the fees and disbursements of more than one (1) counsel for all Indemnified
Parties in any jurisdiction in any single Third Party Claim. |
| |
(d) |
|
In
any Third Party Claim with respect to which indemnification is being sought
hereunder, the Indemnified Party or the Indemnifier, whichever is not assuming
the defence of such action, shall have the right to participate in such matter
and to retain its own counsel at such Party’s own expense. The Indemnifier
and the Indemnified Party, as the case may be, shall at all times use all
reasonable efforts to keep each other reasonably apprised of the status of any
matter the defence of which they are maintaining and to co-operate in good
faith with each other with respect to the defence of any such matter. |
| |
(e) |
|
The
Indemnified Party may not make any admission of liability or settle or
compromise any Third Party Claim or consent to the entry of any judgement with
respect to such Third Party Claim without the prior written consent of the
Indemnifier, such consent not to be unreasonably withheld or delayed. Without
the prior written consent of the Indemnified Party, the Indemnifier shall not
enter into any compromise or settlement of any Third Party Claim which would
lead to liability or create any financial or other material obligation on the
part of the Indemnified Party. |
| |
10.5.2 |
|
Failure
to Give Timely Notice of Third Party Claim |
The
failure to provide a Claim Notice of a Third Party Claim to the Indemnifier shall relieve
the Indemnifier from liability under this Agreement with respect to such Third Party Claim
only if, and only to the extent that, such failure to provide a Claim Notice to the
Indemnifier results in (i) the forfeiture by the Indemnifier of rights and defences
otherwise available to the Indemnifier with respect to such Third Party Claim, (ii)
material prejudice to the Indemnifier with respect to such Third Party Claim, or (iii) the
loss of any right by the Indemnifier to recover any payment under its applicable insurance
coverage.
| |
10.5.3 |
|
Procedures
for Direct Claims |
Any
Direct Claim shall be asserted by giving the Indemnifier reasonably prompt written notice
thereof, but in any event not later than 60 days after the Indemnified Party becomes aware
of the facts and circumstances that would give rise to such Direct Claim. The Indemnifier
shall then have a period of 30 days within which to respond in writing to such Direct
Claim. If the Indemnifier does not so respond within such 30-day period, the Indemnifier
shall be deemed to have rejected such Claim, and in such event the Indemnified Party shall
be free to pursue such remedies as may be available to the Indemnified Party.
| |
10.6.1 |
|
General
Liability Limits |
Notwithstanding
anything to the contrary set forth in this Agreement, the Indemnifier’s obligation to
indemnify, defend and hold an Indemnified Party harmless shall be limited as follows:
-55-
| |
(a) |
|
for
the purposes of computing the aggregate amount of Losses incurred by the
Indemnified Party, the amount of the Losses in respect of a Claim shall be
deemed to be an amount equal to, and any Indemnity Payments by the Indemnifier
shall be limited to, the amount of Losses that remain after deducting therefrom
(i) any third party insurance and any indemnity, contributions or other similar
payment payable by any third party with respect thereto, and (ii) any net tax
benefit recognized (by reason of a tax deduction, basis adjustment, shifting of
income, credit and/or deductions or otherwise) by the Indemnified Party or any
affiliate thereof with respect to the Losses or items giving rise to such claim
for indemnification; |
| |
(b) |
|
the
amount of an Indemnity Payment shall be reduced to the extent appropriate to
reflect the relative contribution to such Loss, if any, caused by actions taken
by the Indemnified Party or any affiliate thereof after the Closing; and |
| |
(c) |
|
in
any case where an Indemnified Party recovers from third Persons any amount in
respect of a matter with respect to which the Indemnifier has indemnified it
pursuant to this Agreement, such Indemnified Party shall promptly pay over to
the Indemnifier the amount so recovered except to the extent that such amount
has already been deducted in calculating the Indemnity Payment pursuant to
Section 10.6.1(a) (after deducting therefrom the full amount of the expenses
incurred by the Indemnified Party in procuring such recovery), but not in
excess of the sum of (i) any amount previously so paid by the Indemnifier to or
on behalf of the Indemnified Party in respect of such matter, and (ii) any
amount expended by the Indemnifier in pursuing or defending any claim arising
out of such matter. |
| |
10.6.2 |
|
Seller’s
Liability Limits |
Notwithstanding
anything to the contrary set forth in this Agreement, the Seller’s obligations to
indemnify, defend and hold harmless the Buyer and its directors, officers and employees
(the “Buyer Indemnified Parties”) shall be limited as follows:
| |
(a) |
|
no
claims for indemnification may be made and no Indemnity Payment shall be
payable unless and until, after taking into account the limitations imposed by
Section 10.6.1, the Buyer Indemnified Parties shall have suffered or incurred
indemnifiable Losses in excess of $100,000, at which point the Buyer
Indemnified Parties shall be entitled to recover all such Losses, except in the
case of a claim for indemnification in respect of a breach of the covenant
contained in Section 7.4 or Section 7.5 or for a false statement in a Closing
Document that is in respect of the Combined Working Capital Deficit or the
Belize Liabilities, which Loss shall not be subject to such limitation in that
the Buyer Indemnified Party shall be entitled to recover all such losses; |
| |
(b) |
|
in
no event shall the aggregate Losses required to be paid by the Seller to the
Buyer Indemnified Parties hereunder exceed the Purchase Price, unless such
Losses related to a breach of the covenant contained in Section 7.4 or Section
7.5 |
-56-
| |
or
to a false statement in a Closing Document that is in respect of the Combined Working
Capital Deficit or the Belize Liabilities; and |
| |
(c) |
|
if
any Applicable Law would give the Buyer Indemnified Parties, or any of them,
the right, notwithstanding the express terms of Sections 10.2 and 3.5 to the
contrary, to make a Claim in respect of a breach of a representation or
warranty made or given by the Seller in this Agreement or in any Closing
Document after the expiry of the survival period set forth in Section 3.5 with
respect to such representation and warranty, the Parties agree that the
aggregate Loss suffered or incurred by all the Buyer Indemnified Parties as a
result of, or arising in connection with, any such Claim shall be deemed to be
limited to $1.00. |
| |
10.6.3 |
|
Buyer’s
Liability Limits |
Notwithstanding
anything to the contrary set forth in this Agreement, the Buyer’s obligations to
indemnify, defend and hold harmless the Seller and its directors, officers and employees
(the “Seller Indemnified Parties”) shall be limited as follows:
| |
(a) |
|
no
claims for indemnification may be made and no Indemnity Payment shall be
payable unless and until, after taking into account the limitations imposed by
Section 10.6.1, the Seller Indemnified Parties shall have suffered or incurred
indemnifiable Losses in excess of $100,000, at which point the Seller
Indemnified Parties shall be entitled to recover all such Losses; |
| |
(b) |
|
in
no event shall the aggregate Losses required to be paid by the Buyer to the
Seller Indemnified Parties hereunder exceed the Purchase Price; and |
| |
(c) |
|
if
any Applicable Law would give the Buyer Indemnified Parties, or any of them,
the right, notwithstanding the express terms of Sections 10.3 and 3.6 to the
contrary, to make a Claim in respect of a breach of a representation or
warranty made or given by the Seller in this Agreement or in any Closing
Document after the expiry of the survival period set forth in Section 3.6 with
respect to such representation and warranty, the Parties agree that the
aggregate Loss suffered or incurred by all the Buyer Indemnified Parties as a
result of, or arising in connection with, any such Claim shall be deemed to be
limited to $1.00. |
| |
10.6.4 |
|
Reasonable
Steps to Mitigate |
The
Indemnified Party will take all reasonable steps to mitigate all Losses, including
availing itself of any defences, limitations, rights of contribution, claims against third
Persons and other rights at law or equity, and will provide such evidence and
documentation of the nature and extent of the Loss as may be reasonably requested by the
Indemnifier. The Indemnified Party’s reasonable steps include the reasonable
expenditure of money to mitigate or otherwise reduce or eliminate any Loss for which
indemnification would otherwise be due under this Article 10, and the Indemnifier
will reimburse the Indemnified Party for the Indemnified Party’s reasonable
expenditures in undertaking the mitigation of such Losses.
-57-
| 10.7 |
|
No
Rights in Addition |
The
rights of indemnity set forth in this Article 10, as limited, are the respective
Indemnified Party’s sole and exclusive remedies for any Loss for which indemnity may
be claimed by the Indemnified Party pursuant to Section 10.2 or 10.3, as the case may be,
and are expressly in lieu of all other remedies, including any independent common law or
statutory rights or remedies which the Indemnified Party may have at any time, now or in
the future, notwithstanding anything to the contrary in this Agreement.
ARTICLE 11
GENERAL
Except
as otherwise provided herein, each Party shall pay all expenses it incurs in authorizing,
preparing, negotiating, executing and performing this Agreement and the transactions
contemplated hereunder, whether or not the Closing occurs, including all fees and expenses
of its legal counsel, bankers, investment bankers, brokers, accountants or other
Representatives.
| |
(a) |
|
Method
of Delivery. Any notice, demand or other communication (in this
Section, a “notice”) required or permitted to be given or
made hereunder shall be in writing and shall be sufficiently given or made
if: |
| |
|
(i) |
|
delivered
in person (including by courier) during normal business hours on a day
which is a business day at the place of delivery and left with a
receptionist or other responsible employee of the relevant party at the
applicable address set forth below; or |
| |
|
(ii) |
|
sent
by any electronic means of sending messages, including facsimile
transmission or e-mail, which produces a paper record (“Transmission”)
during normal business hours on a day which is a business day at the place
of receipt, charges prepaid and confirmed by prepaid first class mail; |
| |
in
the case of a notice to the Seller or the Guarantor, addressed to it at: |
| |
c/o Yamana Gold Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President and Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
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| |
with
a copy, which shall not constitute notice, to: |
| |
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
Suite 2100, Scotia Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
| |
and
in the case of a notice to the Buyer, addressed to it at: |
| |
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President and Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
| |
with
a copy, which shall not constitute notice, to: |
| |
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
| |
(b) |
|
Deemed
Delivery. Each notice sent in accordance with this Section shall be
deemed to have been received: |
| |
|
(i) |
|
in
the case of personal delivery, if delivered before 5:00 p.m., on the day
it was delivered, otherwise, on the first day thereafter which is a
business day at the place of delivery; |
| |
|
(ii) |
|
in
the case of facsimile transmission, on the same day that it was sent if the
machine from which it was sent receives the answer back code of the party
to whom it was sent before 5:00 p.m. (recipient’s time) on such
day, otherwise on the first day thereafter which is a business day at the
place of receipt; or |
| |
|
(iii) |
|
in
the case of e-mail, on the same day it was sent if sent before 5:00 p.m.
(recipient’s time) on such day, otherwise on the first day thereafter
which is a business day at the place of receipt. |
-59-
| |
Any
Party may change its address for notice by giving notice to the other Parties. |
| 11.3 |
|
Confidentiality
and Public Announcements |
Before
the Closing Date, no Party shall make any public statement or issue any press release
concerning the transactions contemplated by this Agreement without the prior written
consent of the other Party except as may be necessary, in the opinion of counsel to the
Party making such disclosure, to comply with the requirements of all Applicable Law. If
any such public statement or release is so required, the Party making such disclosure
shall consult with the other Parties prior to making such statement or release, and the
Parties shall use all reasonable efforts, acting in good faith, to agree upon a text for
such statement or release which is satisfactory to all Parties. In the event that a Party
becomes legally compelled to make any public statement or issue a press release, such
Party shall provide the other Party with prompt written notice so that the other Party may
seek a protective order or other appropriate remedy and/or waive compliance with this
Section 11.3. Such Party shall consent to and assist the other Party in obtaining any
protective order or other appropriate remedy that the other Party or any of its affiliates
may seek for the purpose of delaying or obtaining an exemption from the requirement to
make the public statement or issue the press release in question. In the event that such
protective order or other remedy is not obtained, or that the other party waives
compliance with this Section 11.3, the Party shall make or issue only that portion of the
public statement or the press release which the Party is advised by written opinion of its
counsel is legally required and the Party shall use its reasonable commercial efforts to
obtain a protective order or other reliable assurance that the public statement or press
release shall be accorded confidential treatment.
This
Agreement may be amended, modified or supplemented only by the written agreement of the
Parties.
Any
waiver of, or consent to depart from, the requirements of any provision of this Agreement
shall be effective only if it is in writing and signed by the Party giving it, and only in
the specific instance and for the specific purpose for which it has been given. No failure
on the part of any Party to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver of such right. No single or partial exercise of any
such right shall preclude any other or further exercise of such right or the exercise of
any other right.
No
Party may assign any rights or benefits under this Agreement to any Person without the
prior written consent of the other Party. Each Party agrees to perform its obligations
under this Agreement itself, and not to arrange in any way for any other Person to perform
those obligations. No assignment of benefits or arrangement for substituted performance by
one Party shall be of any effect against the other Party except to the extent that other
Party has consented to it in writing. This Agreement shall enure to the benefit of and be
binding upon the Parties and
-60-
their respective successors
(including any successor by reason of amalgamation or statutory arrangement of any Party)
and permitted assigns.
Except
as expressly provided in this Agreement, any tender of documents or money hereunder may be
made upon the relevant Party or its counsel and money shall be tendered by wire transfer
of immediately available funds to such bank account as shall be designated in writing by
the recipient at least three (3) Business Days prior to the payment date, or to the trust
account of the recipient Party’s solicitor if the recipient has not designated an
account by that time.
In
this Agreement, a period of days shall be deemed to begin on the first day after the event
which began the period and to end at 6:00 p.m. (Toronto time) on the last day of the
period. If, however, the last day of the period does not fall on a Business Day, the
period shall terminate at 6:00 p.m. (Toronto time) on the next Business Day.
| 11.9 |
|
Third
Party Beneficiaries |
Nothing
in this Agreement or in any Closing Document is intended expressly or by implication to,
or shall, confer upon any Person other than the Parties and their Representatives, any
rights or remedies of any kind.
Each
Party shall do such acts and shall execute such further documents, conveyances, deeds,
assignments, transfers and the like, and will cause the doing of such acts and will cause
the execution of such further documents as are within its power as any other Party may in
writing at any time and from time to time reasonably request be done and or executed, in
order to give full effect to the provisions of this Agreement and each Closing Document.
This
Agreement may be executed in any number of counterparts. Each executed counterpart shall
be deemed to be an original. All executed counterparts taken together shall constitute one
agreement.
| 11.12 |
|
Facsimile
Execution |
To
evidence the fact that it has executed this Agreement, a Party may send a copy of its
executed counterpart to all other Parties by facsimile transmission. That Party shall be
deemed to have executed this Agreement on the date it sent such facsimile transmission. In
such event, such Party shall forthwith deliver to the other Party the counterpart of this
Agreement executed by such Party.
-61-
IN
WITNESS WHEREOF this Share Purchase Agreement has been executed by the parties hereto.
| |
RNC RESOURCES LIMITED
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name:
Title:
By:
--------------------------------------------------
Name:
Title:
YAMANA GOLD INC.
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name:
Title:
By:
--------------------------------------------------
Name:
Title:
GLENCAIRN GOLD CORPORATION
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
Name:
Title:
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Name:
Title: |
SCHEDULE A
BONANZA EXPLOITATION CONCESSION
The Bonanza Exploitation Concession
was granted on June 10, 1994 by Ministerial Decree No. 018-RN-MC/94 and consists of seven
lots with an aggregate surface area of 19,369.75 hectares, divided as follows:
|
|
Lot Name |
Area (Ha) |
State |
|
| Siuna |
|
1,200 |
|
Department of ▇▇▇▇▇▇, ▇▇▇▇ |
|
|
| ▇▇▇▇▇▇ | |
3,500 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| Nueva America | |
600 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| Riscos de Oro | |
400 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| Blog | |
600 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| ▇▇ ▇▇▇▇ | |
800 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
SCHEDULE B
BONANZA EXPLORATION CONCESSIONS
|
|
Ministerial Decree No. |
Area (Ha) |
State |
|
| 606-RN-MC/2006 |
|
22,123.43 |
|
Department of ▇▇▇▇▇▇, ▇▇▇▇ |
|
|
| 603-RN-MC/2006 | |
33,533 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| 604-RN-MC/2006 | |
11,576.89 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| 602-RN-MC/2006 | |
24,975 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| 605-RN-MC/2006 | |
20,300.57 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
| 220-RN-MC/2002/356-RN-MC/2003 | |
49,344 | |
Department of ▇▇▇▇▇▇, ▇▇▇▇ | |
|
SCHEDULE C
LA LIBERTAD MINING PROPERTIES
|
|
Exploitation Concession |
Area (Ha) |
Date of Issuance |
State |
|
| 032-RN-MC/94 |
|
10,950 |
|
September 26, 1994 |
|
Department of Chontales, RAAN |
|
|
| 200-RN-MC/2002 | |
2,350 | |
March 7, 2002 | |
Department of Chontales, RAAN | |
|
SCHEDULE D
BUYER’S CONSENTS
| 1. |
|
Approval
of the TSX and the AMEX to list and post for trading the Closing Date Shares. |
| 2. |
|
Consent
under Section 10.3 of the Facility Agreement entered into by the Buyer with RMB
Australia Holdings Limited. |
SCHEDULE E
BUYER’S SUBSIDIARIES
|
Subsidiaries |
Corporate
Jurisdiction
|
Percentage
Ownership |
|
| Glencairn Holdings Inc. |
|
Cayman Islands |
|
100% |
|
| Black Hawk Mining Inc. | |
Quebec | |
100% | |
| Glencairn Enterprises Ltd. | |
Cayman Islands | |
100%(1) | |
| Metales Procesados MRW ▇.▇ | |
▇▇▇▇▇ Rica | |
100% | |
| Compania Rio Minerales ▇.▇ | |
▇▇▇▇▇ Rica | |
100% | |
| 1069024 Ontario Limited | |
Ontario | |
100% | |
| Triton Mining Corporation | |
Ontario | |
100% | |
| Triton Minera S.A | |
Nicaragua | |
95% | |
| Triton Mining (U.S.A.) LLC | |
Wyoming | |
100% | |
(1) The Buyer owns all of the issued and outstanding shares of Glencairn Enterprises Ltd. other than one Class C Share. |
SCHEDULE F
INDEBTEDNESS
|
As at March 31, 2006 |
|
|
| Loan due to Banpro |
|
|
|
| Debt due to Caterpilla | |
US$157,669.70 |
|
| Loan due to Banco Uno | |
US$3,782.24 |
|
| Debt due to Minisa | |
US$180,712.49 |
|
SCHEDULE G
ROYALTIES
| 1. |
|
A
3% production royalty is payable to the Government of Nicaragua pursuant to
Ministerial Decree No. 032-RN-MC-94, clause 2.1. |
| 2. |
|
A
2% production royalty is payable to INVERSIONES MINERAS S.A. (“Imisa”)
pursuant to a Public Deed No. 18 notarized before the Notary Public ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. The public deed was executed by ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
on behalf of Imisa and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ on behalf of Desminic. Public
Deed No. 18, before the Notary Public ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. |