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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
CROWN RESOURCES CORPORATION
--------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
--------------------------------------------------------------------------------
(Title of Class of Securities)
228569208
----------------------------------------
(CUSIP Number)
KEITH L. POPE
PARR, WADDOUPS, BROWN, GEE & LOVELESS
185 SOUTH STATE STREET, SUITE 1300
SALT LAKE CITY, UT 84111
(801) 532-7840
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
AUGUST 2, 2005
-----------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 9
CUSIP No. 228569208
--------------
--------- ----------------------------------------------------------------------
1 Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
KINROSS GOLD CORPORATION; EIN 650430083
--------- ----------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a) _____________
(b) _____________
--------- ----------------------------------------------------------------------
3 SEC Use Only
--------- ----------------------------------------------------------------------
4 Source of Funds (See Instructions)
WC
--------- ----------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) X
-----------
--------- ----------------------------------------------------------------------
6 Citizenship or Place of Organization
PROVINCE OF ONTARIO
---------------- --------- -----------------------------------------------------
7 Sole Voting Power
6,311,633 (1)
Number of --------- -----------------------------------------------------
Shares 8 Shared Voting Power
Beneficially
Owned by -0-
Each --------- -----------------------------------------------------
Reporting 9 Sole Dispositive Power
Person
With 6,311,633 (1)
--------- -----------------------------------------------------
10 Shared Dispositive Power
-0-
--------- ----------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,311,633 (1)
--------- ----------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
--------- ----------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
12.2%
--------- ----------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
CO
--------- ----------------------------------------------------------------------
(1) The Reporting Person holds a convertible debenture in the principal
amount of $10 million, convertible at $1.72414 per share for an
aggregate of 5,799,993 shares. The debenture bears interest at 4% per
annum. Any unpaid interest at the time of conversion may also be
converted into shares of the common stock of Crown Resources
Corporation. The potential conversion of unpaid interest is not
reflected in these numbers.
Page 2 of 9
Item 1. Security and Issuer
(a) Title of Class of Equity Securities:
Common stock (the "Common Stock")
(b) Name of Issuer:
Crown Resources Corporation ("Crown")
(c) Address of Issuer's Principal Executive Office:
4251 Kipling Street, Suite 390
Wheat Ridge, CO 80033
Item 2. Identity and Background
Kinross Gold Corporation ("KGC") is an Ontario corporation. Its
principal business and principal office are located at 52nd Floor,
Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 3Y2. KGC
is engaged in the business of mining and processing of gold and
silver ore and the exploration for and acquisition and development
of gold bearing properties. During the last five years, neither
KGC nor any of its executive officers or directors has been
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). Except as set forth below, during the
last five years, neither KGC nor any of its executive officers or
directors has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, the result of which
has made any of them once or now subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Mr. John Ivany, an Executive Vice President of KGC, was the
subject of enforcement proceedings by the Alberta Securities
Commission in Re Cartaway Resources Corp. In its order dated
February 22, 2001, the Alberta Securities Commission found that
Mr. Ivany, as Chief Executive Officer of Cartaway Resources Corp.,
had allowed the issuance of a press release which contained a
material factual error in violation of the securities laws of the
Province of Alberta. As a result, Mr. Ivany was prohibited from
acting as a director or officer of any junior issuer for a period
of five years and ordered to pay costs in the amount of Cdn.
$20,000. The Alberta Securities Commission defined a "junior
issuer" as an issuer that has (i) consolidated total assets of
less than Cdn. $10,000,000 as shown in the most recent balance
sheet of the issuer, (ii) consolidated revenue of less than Cdn.
$10,000,000 as shown in the most recent annual income statement of
the issuer, or (iii) shareholders' equity of less than Cdn.
$10,000,000 as shown in the most recent balance sheet of the
issuer. KGC is not a junior issuer under these guidelines.
The information required by Item C of the General Instructions
relating to the executive officers and directors of KGC is set
forth on Appendix A hereto, which is incorporated herein by this
reference.
Page 3 of 9
Item 3. Source and Amount of Funds or Other Consideration
On June 20, 2005, KGC loaned $10,000,000 to Crown in exchange for
which Crown issued a Convertible Debenture (the "Debenture") to
KGC. Pursuant to the terms of the Debenture, the outstanding
principal balance of the Debenture, plus any accrued and unpaid
interest thereon (the "Conversion Value"), or any portion thereof,
is convertible, as of October 1, 2005, into shares of the Common
Stock, on the basis of one share of Common Stock per each 1.72414
dollars ($1.72414) of the Conversion Value, at the sole option of
KGC. The Debenture is currently convertible into 5,799,993 shares
of the Common Stock plus any shares issuable with respect to
accrued but unpaid interest. The source of the funds used for the
loan to Crown was the working capital of KGC.
Item 4. Purpose of Transaction
The Convertible Debenture was purchased by KGC in connection with
the execution of an amendment to the Acquisition Agreement and
Agreement and Plan of Merger between KGC and Crown dated November
20, 2003 (the "Acquisition Agreement"). Under the terms of the
Acquisition Agreement, KGC has the right, subject to the terms and
conditions therein, to acquire Crown as a wholly-owned subsidiary.
Item 5. Interest in Securities of the Issuer
(a) and (b) Pursuant to the terms of the Debenture, KGC has the
right to convert the Debenture to acquire 5,799,993 shares of the
Common Stock. In addition, KGC has the sole voting and dispositive
power over an additional 511,640 shares of the Common Stock. The
shares of the Common Stock beneficially owned by KGC represent
12.2% of the outstanding shares of the Common Stock.
(c) None.
(d) No other person is known to have the right to receive or
the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of the Common Stock acquired by KGC.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Crown and KGC are parties to the Acquisition Agreement, pursuant
to which a subsidiary of KGC will merge with and into Crown and
Crown will become a wholly-owned subsidiary of KGC (the "Merger").
Pursuant to the terms of the Acquisition Agreement, all
outstanding shares of the Common Stock (other than any shares held
by a dissenter) immediately prior to the effective time of the
Merger will be converted into the right to receive Common Shares
of KGC.
Page 4 of 9
Item 7. Material to Be Filed as Exhibits
Exhibit Description
------- -----------
A Acquisition Agreement and Agreement and Plan of
Merger, as amended
B Convertible Debenture (Exhibit A to the Fourth
Amendment to Acquisition Agreement and Agreement
and Plan of Merger, which is included in Exhibit
A attached hereto)
Page 5 of 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
KINROSS GOLD CORPORATION
April 13, 2006 By: /s/ Shelley M. Riley
------------------ ----------------------------------
Date Shelley M. Riley, Vice President,
Administration and Corporate
Secretary
Page 6 of 9
EXHIBIT INDEX
Exhibit Description
------- -----------
A Acquisition Agreement and Agreement and Plan of Merger,
as amended
B Convertible Debenture (Exhibit A to the Fourth Amendment
to Acquisition Agreement and Agreement and Plan of
Merger, which is included in Exhibit A attached hereto)
Page 7 of 9
APPENDIX A
EXECUTIVE OFFICERS AND DIRECTORS OF
KINROSS GOLD CORPORATION
Name/Title Business Address Citizenship
---------- ---------------- -----------
John A. Brough Torwest Inc. Canada
Director 3125 Windsor Blvd.
Vero Beach, FL 32963
Tye W. Burt Scotia Plaza, Suite 5200 Canada
Director, President, and Chief 40 King Street West
Executive Officer Toronto, Ontario M5H 3Y2
Scott A. Caldwell Scotia Plaza, Suite 5200 U.S.
Director, Executive Vice 40 King Street West
President and Chief Operating Toronto, Ontario M5H 3Y2
Officer
John K. Carrington 69 John Street Canada
Director Thornhill, Ontario L3T 1Y3
Richard S. Hallisey 30 South Drive Canada
Director Toronto, Ontario M4W 1R1
John M. H. Huxley Algonquin Power System Inc. Canada
Director Unit 210
2085 Hurontario Street
Mississauga, Ontario
L5A 4G1
John A. Keyes 10 Windhaven Drive Canada
Director The Woodlands, TX 77381
Catherine McLeod-Seltzer Suite 410-625 Howe Street Canada
Director Vancouver, British Columbia V6C 2T6
George A. Michals One Toronto Street, Canada
Director Suite 200
Toronto, Ontario M5C 2V6
John E. Oliver Scotiabank Canada
Director Atlantic Regional Office
1709 Hollis Street, 6th Floor
Halifax, Nova Scotia
B3J 3B7
Terence C.W. Reid 33 Dunloe Road Canada
Director Toronto, Ontario M4V 2W4
Page 8 of 9
Name/Title Business Address Citizenship
---------- ---------------- -----------
Hugh A. Agro Scotia Plaza, Suite 5200 Canada
Sr. Vice President, Corporate 40 King Street West
Development Toronto, Ontario M5H 3Y2
Rick A. Baker 670 Sierra Rose Drive U.S.
Sr. Vice President, Reno, NV 89511
Environmental, Health &
Safety
J. Michael Doyle 670 Sierra Rose Drive U.S.
Sr. Vice President, Operations Reno, NV 89511
Stephanie Holtforster Scotia Plaza, Suite 5200 Canada
Sr. Vice President, Human 40 King Street West
Resources Toronto, Ontario M5H 3Y2
Christopher T. Hill 30 South Drive Canada
Sr. Vice President, Treasurer Toronto, Ontario M4W 1R1
John W. Ivany Scotia Plaza, Suite 5200 Canada
Executive Vice President 40 King Street West
Toronto, Ontario M5H 3Y2
Thomas M. Boehlert Scotia Plaza, Suite 5200 U.S.
Executive Vice President and 40 King Street West
Chief Financial Officer Toronto, Ontario M5H 3Y2
Shelley M. Riley Scotia Plaza, Suite 5200 Canada
Vice President, Administration 40 King Street West
and Corporate Secretary Toronto, Ontario M5H 3Y2
Ronald W. Stewart Scotia Plaza, Suite 5200 Canada
Sr. Vice President, 40 King Street West
Exploration Toronto, Ontario M5H 3Y2
Page 9 of 9
EXHIBIT A
ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF MERGER, AS AMENDED
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
AMONG
KINROSS GOLD CORPORATION
A CORPORATION ORGANIZED IN THE PROVINCE OF ONTARIO, CANADA ("PARENT")
AND
CROWN MERGER CORPORATION
A WASHINGTON CORPORATION AND A WHOLLY-OWNED
SUBSIDIARY OF PARENT ("PURCHASER")
AND
CROWN RESOURCES CORPORATION
A WASHINGTON CORPORATION ("CROWN")
DATED AS OF
NOVEMBER 20, 2003
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF MERGER (this "Agreement")
is dated as of November 20, 2003, and entered into by and among KINROSS GOLD
CORPORATION, a corporation existing under the laws of the Province of Ontario,
Canada ("Parent"), Crown Merger Corporation, a Washington corporation and a
wholly-owned subsidiary of Parent ("Purchaser"), and CROWN RESOURCES
CORPORATION, a Washington corporation ("Crown," and together with Purchaser, the
"Constituent Corporations"). Reference is made to Article X for the definitions
of certain terms used in this Agreement.
BACKGROUND
This Agreement provides for the acquisition of Crown by the merger of Purchaser
with and into Crown (the "Merger") in a transaction in which the stockholders of
Crown will receive 0.2911 Kinross common shares (the "Kinross Common Shares")
for each share of the common stock of Crown (the "Crown Common Stock") issued
and outstanding immediately prior to the Merger, upon the terms and conditions
set forth herein.
The Boards of Directors of each of Parent, Purchaser, and Crown have duly
adopted resolutions approving this Agreement and the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Agreement, and for other good and valuable consideration, the value, receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Purchaser will be merged with and into Crown in accordance
with the terms of this Agreement and the provisions of the Washington Business
Corporation Act (the "Washington Act"). Following the Merger, Crown will
continue as the surviving corporation (the "Surviving Corporation") and a
wholly-owned subsidiary of Parent, and the separate corporate existence of
Purchaser will cease.
1.2 THE CLOSING. Unless this Agreement has been terminated pursuant to
SECTION 8.1, the closing of the Merger contemplated by this Agreement (the
"Closing") will take place at 10:00 a.m., local time, on a date to be specified
by the parties that is no later than the third business day following
satisfaction or waiver of the conditions set forth in Article VII (the "Closing
Date"), unless another date or time is agreed to in writing by the parties.
1.3 EFFECTIVE TIME. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (or on such other date as the parties may agree)
Purchaser and Crown will file with the Washington Secretary of State articles of
merger (the "Articles of Merger") substantially in the form set forth in Exhibit
1.3 and make all other filings or recordings required by the Washington Act in
connection with the Merger. The Merger will be consummated on the later of the
date on which the Articles of Merger are filed with the Washington Secretary of
State or such time as is agreed upon by the parties and specified in the
Articles of Merger. The time the Merger becomes effective in accordance with the
Washington Act is referred to in this Agreement as the "Effective Time."
1.4 EFFECTS OF THE MERGER. The Merger will have the effects set forth in
this Agreement and the Washington Act. Without limiting the generality of the
foregoing, as of the Effective Time the Surviving Corporation will succeed to
all the properties, rights, privileges, powers, franchises and assets of the
Constituent Corporations, and all debts, liabilities and duties of the
Constituent Corporations will become debts, liabilities and duties of the
Surviving Corporation.
1.5 ORGANIZATIONAL DOCUMENTS. At the Effective Time, the articles of
incorporation and bylaws of Purchaser (as in effect immediately prior to the
Effective Time), will become the articles of incorporation and bylaws of the
Surviving Corporation until thereafter amended in accordance with their
respective terms and the Washington Act.
1.6 DIRECTORS AND OFFICERS. The directors and the officers of Purchaser at
the Effective Time will become the directors and officers of the Surviving
Corporation and will hold office from the Effective Time in accordance with the
articles of incorporation and bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
1.7 CONVERSION OF SHARES. As of the Effective Time, by virtue of the Merger
and without any action on the part of Crown, Parent, or Purchaser or their
respective stockholders:
1.7.1 CONVERSION OF CROWN COMMON STOCK. Each share of Crown Common
Stock (other than any shares held by a Dissenter) issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive 0.2911 Kinross Common Shares (the "Exchange Ratio"). All outstanding
shares of Crown Common Stock as of the Effective Time, will automatically be
canceled and will cease to exist, and the certificates formerly representing
shares of Crown Common Stock (each such certificate a "Certificate") will
thereafter represent that number of Kinross Common Shares determined by the
Exchange Ratio or the right to pursue such rights as a Dissenter as the holder
may have under the Washington Act.
1.7.2 CONVERSION OF PURCHASER SHARE. At the Effective Time, each
outstanding share of Purchaser common stock shall automatically be converted
into one share of the preferred stock of Crown, as the Surviving Corporation,
with a fair market value and redemption amount equal to the value of the shares
of common stock of Purchaser converted, and the Surviving Corporation shall
continue in existence as a wholly-owned subsidiary of Parent.
2
1.7.3 ISSUANCE OF COMMON STOCK OF SURVIVING CORPORATION. At the
Effective Time, Crown, as the Surviving Corporation, shall issue to Kinross one
share of its common stock for each Kinross Common Share issued to the holders of
Crown Common Stock in connection with the Merger, in consideration of the
issuance of the Kinross Common Shares by Kinross.
1.8 EXCHANGE OF KINROSS COMMON SHARES FOR CROWN WARRANTS. At the election of
the holder of any Crown Warrants outstanding as of the Effective Time, such
Warrants shall be exchanged for 0.2911 Kinross Common Shares for each share of
Crown Common Stock which would have been issued on exercise of the Crown Warrant
if the Warrants had been exercised immediately prior to the Effective Time on a
cashless basis. The exchange of the Crown Warrants for Kinross Common Shares
shall entitle the warrant holder to a distribution of the Solitario Common Stock
in accordance with the provisions of the Amendment to the Warrants attached
hereto as Exhibit 1.8. If a holder elects to exchange the Crown Warrants in
accordance with the provisions of this SECTION 1.8, the Crown Warrants shall be
cancelled at the Effective Time, and the holder shall have no further rights or
obligations relative to such Crown Warrants.
1.9 SURVIVING CROWN WARRANTS. In the event that any Crown Warrants are not
exercised prior to the Merger or exchanged for Kinross Common Shares in the
Merger, such Crown Warrants shall, subsequent to the Merger, represent the right
to acquire Kinross Common Shares and Solitario common stock in accordance with
the provisions of the Amendment to the Warrants attached hereto as Exhibit 1.8.
If any such Crown Warrants are exercised subsequent to the Merger, Kinross shall
issue and deliver such Kinross Common Shares and shall cause the Surviving
Corporation to deliver such Solitario common stock in accordance with the
provisions of the Amendment to the Warrants attached hereto as Exhibit 1.8.
1.10 DISSENTING STOCKHOLDERS. Any Crown Common Stock held by a Dissenter
shall not be converted into the right to receive Kinross Common Shares but shall
become, at the Effective Time, by virtue of the Merger and without any further
action, the right to receive such consideration as may be determined to be due
to such Dissenter pursuant to Washington Act; PROVIDED, HOWEVER, that shares of
Crown Common Stock outstanding immediately prior to the Effective Time and held
by a Dissenter, who shall, after the Effective Time, withdraw his demand for
appraisal or lose his right of appraisal, in either case pursuant to the
Washington Act, shall be deemed to be converted as of the Effective Time into
the right to receive that number of Kinross Common Shares determined in
accordance with the Exchange Ratio.
1.11 JOINT PRESS RELEASE. No later than the first business day following
execution of this Agreement, and subject to the conditions of this Agreement,
Parent will issue a joint press release with Crown substantially in the form set
forth in Exhibit 1.11 (the "Joint Press Release") regarding this Agreement and
will file with the SEC the Joint Press Release in accordance with the provisions
of Rule 425 adopted pursuant to the Securities Act.
ARTICLE II
EXCHANGE AND SURRENDER OF CERTIFICATES
2.1 SURRENDER OF CERTIFICATES. From and after the Effective Time, each
holder of a Certificate will be entitled to receive in exchange therefor, upon
surrender thereof to the exchange agent
3
designated by Parent (the "Exchange Agent"), a certificate representing the
Kinross Common Shares into which the shares of Crown Common Stock evidenced by
such Certificate were converted pursuant to the Merger. No interest will be
payable on the Kinross Common Shares to be issued to any holder of a Certificate
irrespective of the time at which such Certificate is surrendered for exchange.
2.2 EXCHANGE AGENT; CERTIFICATE SURRENDER PROCEDURES.
2.2.1 EXCHANGE AGENT. Parent shall enter into an agreement with the
Exchange Agent to provide for distribution of the Kinross Common Shares to the
holders of Crown Common Stock on surrender of the Certificates representing such
Stock in accordance with the provisions of this Agreement.
2.2.2 TRANSMITTAL INSTRUCTIONS. As soon as reasonably practicable
after the Effective Time, Parent will instruct the Exchange Agent to mail to
each record holder of a Certificate (i) a letter of transmittal (which will
specify that delivery will be effected, and risk of loss and title to such
Certificate will pass, only upon delivery of the Certificate to the Exchange
Agent and will be in such form and have such other provisions as Parent will
reasonably specify) and (ii) instructions for use in effecting the surrender of
Certificates for certificates representing the Kinross Common Shares issuable
upon the conversion of the Crown Common Stock represented thereby. Upon the
surrender to the Exchange Agent of such Certificates, together with a duly
executed and completed letter of transmittal and all other documents and other
materials required by the Exchange Agent to be delivered in connection
therewith, the holder will be entitled to receive the certificates representing
the Kinross Common Shares into which Crown Common Stock represented by the
Certificates so surrendered have been converted in accordance with the
provisions of this Agreement. Until so surrendered, each outstanding Certificate
will be deemed from and after the Effective Time, for all corporate purposes, to
evidence the Kinross Common Shares into which the shares of Crown Common Stock
represented by such Certificate have been converted in accordance with the
provisions of this Agreement or the right to pursue any Dissenter rights the
holder may have, as the case may be.
2.2.3 NO FRACTIONAL SHARES. No fractional Kinross Common Shares shall
be issued. Notwithstanding any other provision of this Agreement, each holder of
shares of Crown Common Stock converted pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a Kinross Common Share
(after taking into account all Certificates delivered by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount equal to such
fractional part of a Kinross Common Share multiplied by the Average Closing
Price. No interest will be payable on the cash to be paid in lieu of the
issuance of a fractional Kinross Common Share to any holder of a Certificate,
irrespective of the time at which such Certificate is surrendered for exchange
and irrespective of the time at which such cash is actually paid. "Average
Closing Price" shall mean the average closing price of Kinross Common Shares on
the NYSE Composite Tape (as reported by THE WALL STREET JOURNAL or, if not
reported thereby, any other authoritative source) for the ten consecutive
trading days ending on the third trading day immediately preceding the Effective
Time. As soon as practicable after determination of the amount of cash to be
paid in lieu of any fractional shares, the Exchange Agent shall make
4
available in accordance with this Agreement such amounts to the former holders
of shares of Crown Common Stock.
2.3 TRANSFER BOOKS. The stock transfer books of Crown will be closed at the
Effective Time, and no transfer of any shares of Crown Common Stock will
thereafter be recorded on any of the stock transfer books. In the event of a
transfer of ownership of any shares of Crown Common Stock prior to the Effective
Time that is not registered in the stock transfer records of Crown at the
Effective Time, the Kinross Common Shares into which such shares of Crown Common
Stock have been converted in the Merger will be issued to the transferee in
accordance with the provisions of SECTION 2.2 only if the Certificate is
surrendered as provided in SECTION 2.1 and is accompanied by all documents
required to evidence and effect such transfer (including evidence of payment of
any applicable stock transfer taxes).
2.4 DISSENTER RIGHTS. Crown Common Stock outstanding immediately prior to
the Effective Time and held by a Dissenter will not be converted into a right to
receive the Kinross Common Shares issuable upon the conversion of such shares,
unless such holder fails to perfect or withdraws or otherwise loses his rights
as a Dissenter. Crown will give Parent written notice of any and all Dissenter
Notices that it receives, within three business days of the receipt of such
notice by Crown, and Crown will give Parent the opportunity, to the extent
permitted by applicable Law, to participate in all negotiations and proceedings
relating to Dissenters. Except with the prior written consent of Parent, Crown
will not voluntarily make any payment with respect to any claim of a Dissenter
and will not settle or offer to settle any such claim.
2.5 LOST CERTIFICATES. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit (in form and substance reasonably
acceptable to Parent) of that fact by the person making such a claim, and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against or with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the Kinross Common
Shares issuable upon surrender thereof pursuant to SECTION 2.2.
2.6 NO RIGHTS AS STOCKHOLDER. From and after the Effective Time, the holders
of Certificates will cease to have any rights as a stockholder of the Surviving
Corporation, and Parent will be entitled to treat each Certificate that has not
yet been surrendered for exchange solely as evidence of the Kinross Common
Shares into which the shares of Crown Common Stock evidenced by such Certificate
have been converted pursuant to the Merger or the right to pursue the holder's
rights as a Dissenter, as the case may be.
2.7 WITHHOLDING. Parent will be entitled to deduct and withhold from the
cash otherwise payable to any former holder of shares of Crown Common Stock in
lieu of fractional shares pursuant to Section 2.2.3 all amounts required by any
Law to be deducted or withheld therefrom. To the extent that amounts are so
deducted and withheld and paid to the appropriate Governmental Entities, such
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Crown Common Stock in respect of which such
deduction and withholding was made by Parent.
5
2.8 ESCHEAT. Neither Parent, Purchaser nor Crown will be liable to any
former holder of shares of Crown Common Stock for any of the Kinross Common
Shares or cash payable in lieu of fractional shares delivered to any public
official pursuant to any applicable abandoned property, escheat or similar Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant jointly and severally to Crown
as follows:
3.1 CORPORATE ORGANIZATION. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the Province of Ontario, Canada,
and has full corporate power and authority to carry on its business as now
conducted. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington and has full corporate
power and authority to carry on its business as now conducted. Parent directly
owns and has power to vote all of the outstanding capital stock of Purchaser.
Each of Parent and Purchaser is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except for where the failure to be so qualified would not have a
Material Adverse Effect on Parent or Purchaser. Purchaser was formed for the
purpose of effecting the Merger and has not conducted, and will not conduct, any
business prior to the Effective Time other than that which is necessary to
effectuate the Merger. True and complete copies of the Organizational Documents
of each of Parent and Purchaser have been provided to Crown.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION.
3.2.1 AUTHORITY. Parent and Purchaser each has the corporate power to
enter into this Agreement, to carry out its obligations hereunder, to perform
and comply with all the terms and conditions hereof to be performed and complied
with by it, and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, the performance and compliance with
all the terms and conditions hereof to be performed and complied with, and the
consummation of the transactions contemplated hereby by Parent and Purchaser
have been duly authorized by all requisite corporate action on the part of each
of Parent and Purchaser. This Agreement has been duly and validly executed and
delivered by each of Parent and Purchaser and is the legal, valid and binding
obligation of each of Parent and Purchaser enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by (i)
laws of general application relating to bankruptcy, insolvency, reorganization,
moratorium and the relief of debtors, and similar laws affecting creditors'
rights and remedies generally, and (ii) the availability of specific
performance, injunctive relief and other equitable remedies, regardless of
whether enforcement is sought in a proceeding at Law or in equity.
3.2.2 COMPLIANCE WITH CHARTER AND LAWS. Neither the execution and
delivery of this Agreement by Parent and Purchaser, the performance and
compliance by Parent and Purchaser of and with the terms and conditions hereof
to be performed and complied with by Parent and Purchaser, nor the consummation
by Parent and Purchaser of the transactions contemplated
6
hereby will (i) violate, conflict with or result in a breach of, any provision
of the Organizational Documents of Parent or Purchaser or (ii) assuming that the
approvals referred to in Section 3.3 are obtained, (A) violate, conflict with or
result in a breach of any Law applicable to Parent or Purchaser or any of the
respective properties or assets of Parent or Purchaser, which violation,
conflict or breach is Material to Parent or Purchaser or could prevent or
materially delay Parent or Purchaser from consummating the transactions
contemplated hereby or (B) violate, conflict with, result in a breach of, result
in the impairment of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, result in the creation
or imposition of any Lien upon any of the respective properties or assets of
Parent or Purchaser, or require any consent, approval, waiver, exemption,
amendment, authorization, notice or filing under any of the terms, conditions or
provisions of any agreement or other instrument or obligation to which Parent or
Purchaser is a party or by which any of their respective properties or assets
may be bound or affected, which agreement or other instrument is Material to
Parent or Purchaser, as the case may be, or any two or more such agreements,
instruments or obligations which, taken together, are Material to Parent or
Purchaser, as the case may be.
3.3 CONSENTS AND APPROVALS. There are no consents, approvals or
authorizations of or designations, declarations or filings with any Governmental
Entities on the part of Parent or Purchaser required for the validity of the
execution and delivery by each of Parent and Purchaser of this Agreement or the
performance and compliance by either of them of and with the terms and
conditions of this Agreement or the consummation of the transactions
contemplated hereby, except: (a) the filing with the SEC of: (i) the
Registration Statement, which will include the Proxy Statement/Prospectus; and
(iii) such reports and information under the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, as may be required in connection
with this Agreement and the transactions contemplated hereby; (b) the filing of
the Articles of Merger with the Secretary of State of the State of Washington
and appropriate documents with the relevant authorities of other states in which
Parent is qualified to do business; (c) as may be required under foreign laws,
state securities laws, and the rules of the NYSE or the TSX; (d) such as may be
necessary under the HSR Act or other similar Laws; and (e) those which, if not
obtained or made, would not prevent or delay the consummation of the Merger or
otherwise prevent Parent or Purchaser from performing its obligations under this
Agreement and would not be reasonably likely to have a Material Adverse Effect
on Parent or Purchaser.
3.4 CAPITALIZATION. All of the outstanding shares of capital stock of
Purchaser have been or shall be prior to the Effective Time validly issued,
fully paid and nonassessable. There are no options, warrants, or other
derivative securities of Purchaser outstanding.
3.5 BROKER'S FEES. Neither Parent nor Purchaser nor any of their respective
officers or directors or affiliates has employed any broker, finder or
investment banker or incurred any liability for any broker's fees, investment
banker's or finder's fees in connection with any of the transactions
contemplated by this Agreement for which Crown or any of the Subsidiaries or any
of their respective officers, directors or stockholders shall be liable.
3.6 NO CAPITAL OWNERSHIP IN CROWN. Neither Parent nor any of its
Subsidiaries owns any shares of Crown Common Stock.
7
3.7 REGULATORY REPORTS. Parent has timely filed all reports required by the
provisions of the Exchange Act and applicable Canadian securities laws since
December 31, 2002 (the "Kinross Securities Filings"). None of such Kinross
Securities Filings, including the financial statements included in such filings,
contained, when filed, any untrue statement of a material fact or omitted a
material fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Since January 1, 2002,
there has not occurred any event that (i) has not been disclosed in a Kinross
Securities filing or otherwise in writing to Crown; and (ii) has had, or, in the
reasonable judgment of Kinross management, is likely to have, a Material Adverse
Effect on the business or financial condition of Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CROWN
Except as set forth on the Crown Disclosure Schedule, Crown hereby represents
and warrants to Parent and Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. SECTION 4.1 of the Crown Disclosure
Schedule contains a complete and accurate list of the subsidiaries of Crown
(except for Solitario, the "Crown Subsidiaries"), including their name,
jurisdiction of incorporation, jurisdictions in which they are authorized to do
business, and capitalization (including the identity of each stockholder and the
number of shares held by each). Crown and the Crown Subsidiaries are
corporations duly organized, validly existing, and in good standing under the
laws of their jurisdiction of incorporation, each with full corporate power and
corporate authority to conduct its business as now conducted and to own or use
its properties and assets and to perform all obligations under its contracts.
Crown and the Crown Subsidiaries are duly qualified to do business as foreign
corporations and are in good standing under the laws of each jurisdiction
required, except where the failure to be so qualified would not have a Material
Adverse Effect. Crown has delivered or made available to Parent copies of the
Organizational Documents of each of the Crown Subsidiaries, as currently in
effect.
4.2 CAPITALIZATION.
4.2.1 CAPITAL STOCK. There are 100,000,000 duly authorized shares of
common stock, par value $0.01 per share, and 40,000,000 duly authorized shares
of preferred stock, par value $0.01 per share, of Crown. As of November 10,
2003, there were 16,788,957 shares of Crown Common Stock and no shares of
preferred stock issued and outstanding, including 7,820,892 shares of Crown
Common Stock deemed issued and outstanding from the automatic conversion of all
Crown's outstanding 10% Convertible Subordinated Promissory Notes due 2006 and
10% Convertible Subordinated Promissory Notes due 2006, Series B. All of the
issued and outstanding shares of Crown Common Stock have been duly authorized
and validly issued, fully paid, and nonassessable. Except as set forth in
SECTIONS 4.2.2 through 4.2.4 below, Crown does not have any outstanding
securities convertible into or exchangeable for any shares of its capital stock.
There are no shares of Crown Common Stock held in treasury.
8
4.2.2 OUTSTANDING CROWN CONVERTIBLE NOTES. As of November 10, 2003,
the following convertible notes were outstanding (collectively, the "Crown
Convertible Notes"): (i) 10% Secured Convertible Promissory Notes Due 2006 in
the aggregate principal amount of $3,600,000 with unpaid interest accrued
through November 10, 2003, of $25,643.83; and (ii) 10% Secured Convertible
Promissory Notes Due 2006 in the principal amount of $1,655,333 with unpaid
interest accrued through November 20, 2003, of $11,791.41. SECTION 4.2.2 also
sets forth the conversion price and due date of the Crown Convertible Notes. No
event has occurred which would require an adjustment to the initial conversion
price of any of the Crown Convertible Notes.
4.2.3 OUTSTANDING WARRANTS. As of November 10, 2003, Crown had
outstanding warrants (individually, a "Crown Warrant" and, collectively, the
"Crown Warrants") to purchase an aggregate of 14,408,933 shares of Crown Common
Stock at a weighted average exercise price of $0.74 per share. SECTION 4.2.3 of
the Crown Disclosure Schedule identifies the holders, and sets forth the number
of Crown Warrants held by each holder and the exercise price and expiration date
of each Crown Warrant. All of the Crown Warrants can, at the election of the
holder, be exercised through a cashless exercise feature. No event has occurred
which would require an adjustment to the initial exercise price of any of the
Crown Warrants.
4.2.4 OUTSTANDING OPTIONS. As of November 10, 2003, Crown has
outstanding options (individually, a "Crown Option" and, collectively, the
"Crown Options") to acquire an aggregate of 3,379,000 shares of Crown Common
Stock, exercisable at a weighted average of $0.40 per share. SECTION 4.2.4 of
the Crown Disclosure Schedule identifies the holders, and sets forth the number
of Crown Options held by each holder and the exercise price and expiration date
of each Crown Option. No event has occurred which would require an adjustment to
the original exercise price of any of the Crown Options.
4.2.5 NO OTHER RIGHTS. Except for the Crown Convertible Notes and as
set forth in Section 4.2.5 of the Crown Disclosure Schedule, the Crown Options,
and the Crown Warrants set forth above, there are no other options, warrants,
calls, stock appreciation rights or other rights, or convertible debt or
security, or any shares reserved for issuance or any arrangement, subscription
agreement, plan, or commitment, relating to the issued (including treasury
stock) or unissued capital stock or other securities of Crown granted or made by
Crown or to which Crown is a party or by which it is bound.
4.2.6 VOTING AND DIVIDEND RIGHTS. Except as set forth in SECTION 4.2.6
of the Crown Disclosure Schedules, there is no agreement, arrangement,
commitment or plan restricting voting or dividend rights with respect to any
shares of capital stock or other securities of Crown to which Crown is a party
or of which it is aware. Crown does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
limited liability company, joint venture or other business association or entity
except for the Crown Subsidiaries.
9
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION.
4.3.1 AUTHORITY; APPROVAL; DUE EXECUTION. Crown has the corporate
power to enter into this Agreement, to carry out its obligations hereunder, to
perform and comply with all the terms and conditions hereof to be performed and
complied with by it, and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Crown, the performance and
compliance with all the terms and conditions hereof to be performed and complied
with by Crown, and the consummation by Crown of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of Crown, subject to approval of this Agreement by the holders of at least
66-2/3% of the shares of the outstanding Crown Common Stock, at the special
meeting of the holders of the Crown Common Stock to be held to consider and vote
upon the Merger (the "Crown Stockholders' Meeting"). The Board of Directors of
Crown, at a meeting held on November 19, 2003, approved this Agreement and
resolved to recommend the plan of merger to the Crown Stockholders (such
recommendation by the Board of Directors of Crown being the "Crown
Recommendation"). This Agreement is a legal, valid and binding obligation of
Crown enforceable against Crown in accordance with its terms, except as such
enforceability may be limited by (i) laws of general application relating to
bankruptcy, insolvency, reorganization, moratorium and the relief of debtors,
and similar laws affecting creditors' rights and remedies generally, and (ii)
the availability of specific performance, injunctive relief and any other
equitable remedy.
4.3.2 COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS, LAWS, AND CROWN
CONTRACTS. Except as disclosed in SECTION 4.3.2 of the Crown Disclosure
Schedule, neither the execution and delivery of this Agreement by Crown, the
performance and compliance by Crown of and with the terms and conditions hereof
to be performed and complied with by it, nor the consummation by Crown of the
transactions contemplated hereby will: (i) violate or conflict with any
provision of the Organizational Documents of Crown or the Crown Subsidiaries,
(ii) violate, conflict with or result in a breach of any Law applicable to
Crown, the Crown Subsidiaries, or any of their properties or assets or (iii)
violate, conflict with, result in a breach of, result in the impairment of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, require the consent of any other party, or result in
the creation or imposition of any Lien upon any of the properties or assets of
Crown or the Crown Subsidiaries under any Crown Contract, except, in each case
of clause (i), (ii), and (iii) above, for violations, conflicts, and breaches,
and, if applicable, impairments, defaults, terminations, accelerations, or
Liens, as would not, taken together, have a Material Adverse Effect on Crown.
4.4 FINANCIAL STATEMENTS AND BOOKS AND RECORDS OF CROWN.
4.4.1 FINANCIAL STATEMENTS. Crown has delivered or made available to
Purchaser the following financial statements as filed with the SEC (collectively
the "Financial Statements"): (i) the audited consolidated balance sheets of
Crown and Subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity and cash flows as of
and for the three years ended December 31, 2002; and (ii) the unaudited
consolidated balance sheet of Crown and Subsidiaries as of September 30, 2003,
as filed with the SEC (the
10
"Most Recent Balance Sheet"), and the related consolidated statements of
operations and cash flows as of and for the nine months ended September 30, 2003
(collectively, the "Most Recent Financial Statements"). The Financial Statements
have been prepared in conformity with GAAP, applied on a consistent basis
(except for changes, if any, required by GAAP applied on a consistent basis and
disclosed therein), and the Financial Statements present fairly in all Material
respects the financial condition and results of operations of Crown and the
Crown Subsidiaries included therein as of the date of the balance sheets and for
the respective periods covered, including, in the case of the Most Recent
Financial Statements, all adjustments which are, in the opinion of management of
Crown, necessary to a fair statement of the results of the interim period
presented. All of such adjustments are of a normal reoccurring nature.
4.4.2 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other corporate records of Crown and the Crown Subsidiaries
are complete and correct in all Material respects; Crown has an adequate system
of internal accounting controls; and Crown has an adequate system of disclosure
controls and procedures, all as required by Section 13 of the Exchange Act and
the rules and regulations promulgated thereunder. The minute books of Crown and
the Crown Subsidiaries, contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, Boards of Directors,
and committees of the Board of Directors of the respective entities, and no
meeting of any such stockholders, Board of Directors, or committee has been held
for which minutes have not been prepared and are not contained in such minute
books. At the Effective Time, all of those books and records will be in the
possession of the Surviving Corporation.
4.4.3 INTRACORPORATE DEBT. Crown does not have, and will not have at
the Closing Date, any obligation to, or due from, a Crown Subsidiary that is not
wholly-owned by Crown.
4.5 NO CONSENTS. Except for filings with the SEC, filing the Articles of
Merger with the Washington Secretary of States, filings provided under the HSR
Act, and as set forth in Section 4.5 of the Crown Disclosure Schedule, no
consents, approvals or authorizations of or filings with any Governmental Entity
on the part of Crown are required for the validity of the execution and delivery
by Crown of this Agreement or for Crown to perform its terms.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 2003, Crown
and the Crown Subsidiaries have not engaged in any of the following acts: (i)
entered into any transaction not in the ordinary course of business; (ii) sold,
transferred, or disposed of, or subjected to any Lien, any Material assets or
properties of Crown or the Crown Subsidiaries (including the factoring or
selling of accounts receivable), except for the sale of services and assets in
the ordinary course of business; (iii) Materially deviated from historical
accounting and other practices in connection with the maintenance of their books
and records, except as may be required by Law or GAAP; (iv) incurred any
physical damage, casualty, destruction or loss to property or assets of Crown or
the Crown Subsidiaries, whether or not covered by insurance; (v) declared, set
aside, or paid any dividend or other distribution on or with respect to the
shares of capital stock of Crown except as contemplated by this Agreement, or
directly or indirectly redeemed, purchased, or acquired any of such shares or
split, combined, or reclassified shares of capital stock; (vi) increased, paid,
or delayed payment of any payroll or payroll tax payment with respect to the
compensation (including benefits) payable or to become payable by Crown or the
11
Crown Subsidiaries to any of their respective directors, officers, employees or
agents, or the making of any bonus payment or similar arrangement to or with any
of them; (vii) cancelled any indebtedness due to Crown or the Crown Subsidiaries
from others except for the write-off of accounts receivable in the ordinary
course of business; (viii) created or incurred any Material obligation or
liability (whether absolute, accrued, contingent or otherwise and whether due or
to become due), or entered into any transaction, contract or commitment, other
than such items created or incurred in the ordinary course of business; (ix)
changed the manner in which Crown and the Crown Subsidiaries collect accounts
receivable, extend discounts or credits to customers or otherwise deal with
customers; (x) waived or released any Material rights of Crown or the Crown
Subsidiaries, except in the ordinary course of business and for fair value, or
let lapse or incurred any other loss of a Material right of Crown or the Crown
Subsidiaries to use its assets or conduct its businesses; (xi) committed for or
deferred any capital expenditures of Crown or the Crown Subsidiaries in excess
of amounts budgeted; (xii) changed any accounting policies, except as may be
required by Law or GAAP; (xiii) changed Crown's policies or the Crown
Subsidiaries' policies with respect to the payment of accounts payable or other
current liabilities or the collection of accounts receivable, including, without
limitation, any acceleration or deferral of the payment or collection thereof,
as applicable (including, without limitation, any payment advances); (xiv)
changed the payment terms (including, without limitation, any advances) between
Crown or the Crown Subsidiaries and any of their Material vendors; (xv) changed
any development or permitting plans of Crown or the Crown Subsidiaries or
deferred any costs or expenditures with respect to such plans; (xvi) granted
price discounts on services or products outside the ordinary course of business
and consistent with past practice; or (xvii) entered into any commitment or
agreement to do any of the foregoing.
4.7 TAXES AND TAX RETURNS.
4.7.1 TAXES; RETURNS. Crown and, with respect to periods during which
they were included in any consolidated, combined or unitary return in which
Crown has been included, each other corporation which has been so included, has
(i) duly filed all Material Returns in a timely manner, including extensions
granted for such filing, consistent with applicable laws, as required to be
filed by it (all such Returns being accurate and complete in all Material
respects) and has paid all Taxes shown thereon to be due, and (ii) duly paid all
Material Taxes required to be paid by any of them through the date of this
Agreement, whether or not shown on a Return, other than Taxes that are being
contested in good faith and by appropriate proceedings or as to which Crown has
set aside on its books adequate reserves for Tax liability (as distinguished
from reserves for deferred Taxes established to reflect timing differences
between book and tax income) in accordance with GAAP. All Material Taxes
attributable to all taxable periods ended on or before the Closing Date, to the
extent not required to have been previously paid, will be fully and adequately
reserved for as a Tax liability on Crown's financial statements in accordance
with GAAP. The amounts recorded as reserves for Tax liability on the Most Recent
Balance Sheet are sufficient in the aggregate for the payment by Crown of all
unpaid Material Taxes (including any interest or penalties thereon) whether or
not disputed or accrued, for all periods ended on or prior to the date of such
statement. There are no Liens for Taxes upon the assets of Crown or the Crown
Subsidiaries, other than Liens for current Taxes not yet due and payable and
Liens for Taxes that are being contested in good faith by appropriate
proceedings. Since January 1, 1998, to the Knowledge of Crown, no claim has ever
been made by an authority in a
12
jurisdiction where Crown does not file Returns that it or the Crown Subsidiaries
is or may be subject to taxation by that jurisdiction. Since January 1, 1998, to
the Knowledge of Crown, (i) there are no claims asserted for deficiencies in
Taxes against Crown or the Crown Subsidiaries, (ii) neither Crown nor the Crown
Subsidiaries has given any currently effective waivers extending the statutory
period of limitation applicable to any Return for any period or entered into any
"closing agreements" as described in Section 7121 of the Code, (iii) neither
Crown nor the Crown Subsidiaries has in effect any power of attorney or other
authorization for anyone to represent it with respect to any Taxes and (iv)
neither Crown nor the Crown Subsidiaries has received written notification of a
Tax audit and, to the Knowledge of Crown there are no Tax audits in progress of
any Returns of Crown or the Crown Subsidiaries. Neither Crown nor the Crown
Subsidiaries has been a party to any Tax allocation agreement or arrangement
pursuant to which it has any contingent or outstanding liability for Taxes of
anyone other than Crown. Neither Crown nor the Crown Subsidiaries has filed a
consent under Section 341(f) of the Code. Crown has provided to Parent or its
representatives complete and correct copies of its and the Crown Subsidiaries'
Returns which have been filed on or subsequent to December 31, 1997, and all
examination reports, if any, relating to the audit of such Returns by the IRS or
other Tax authority. Neither Crown nor the Crown Subsidiaries (i) has agreed to,
or is required to, make any adjustments under Section 481(a) of the Code (or any
corresponding provision of state, local or foreign Laws) by reason of a change
in accounting method or otherwise; (ii) is, was, or will be, at any time during
the five-year period ending on the date on which the Effective Time occurs, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code; (iii) has filed or been required to file any reports
under Section 999 of the Code; (iv) has failed to disclose on its federal income
Tax Returns any positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code; (v) other than the consolidated group of which Crown is now the common
parent, has ever been a member of an Affiliated Group filing a consolidated
United States federal income Tax Return and has any liability for the Taxes of
any other Person other than a Subsidiary under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise; (vi) is a party to any joint
venture, partnership, limited liability company or other arrangement or contract
properly treated as a partnership for United States federal income Tax purposes;
or (vii) has entered into any gain recognition agreements under Section 367 of
the Code and the Treasury Regulations promulgated thereunder. For United States
federal income tax purposes: (i) Crown's adjusted tax basis in the Solitario
common stock held by Crown as of the date hereof is not less than $8,150,000;
and (ii) any gain recognized as a result of Crown's distribution of the
Solitario common stock on or before the Closing Date under Section 7.3.5 below
will be offset by tax losses of Crown occurring at or prior to the Effective
Time and available for such purpose.
4.7.2 TAX WITHHOLDING. All Material amounts required to be withheld by
Crown or the Crown Subsidiaries from employees, creditors, stockholders or other
third parties for Taxes have either been withheld or collected and paid, when
due, to the appropriate governmental authority, or an adequate reserve has been
established and Crown and the Crown Subsidiaries have otherwise complied in all
Material respects with applicable laws, rules, and regulations relating to Tax
withholding and remittance.
13
4.7.3 PARACHUTE PAYMENTS. Except as provided in Section 4.7.3 of the
Crown Disclosure Schedules, Crown and the Crown Subsidiaries have not made any
payments, are not obligated to make any payments, and are not a party to any
agreement that under certain circumstances could obligate them, Parent or
Purchaser, to make any payment that would constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
4.8 EMPLOYEES.
4.8.1 AGREEMENTS; BENEFIT PLANS. SECTION 4.8.1 of the Crown Disclosure
Schedule contains a list of each compensation, consulting, employment,
termination or collective bargaining agreement, and each stock option, stock
purchase, stock appreciation right, recognition and retention, life, health,
accident or other insurance, bonus, deferred or incentive compensation,
severance or separation plan, fringe benefit plan or any agreement providing any
payment or benefit resulting from a change in control, pension, profit sharing,
retirement, or other employee benefit plan, practice, policy or arrangement of
any kind, oral or written, covering employees, former employees, directors or
former directors of Crown and the Crown Subsidiaries, or their beneficiaries,
including, but not limited to, any employee benefit plans within the meaning of
Section 3(3) of ERISA, which Crown or the Crown Subsidiaries maintain, to which
Crown or the Crown Subsidiaries contribute, or under which any employee, former
employee, director or former director of Crown or the Crown Subsidiaries is
covered or has benefit rights and pursuant to which any liability of Crown or
the Crown Subsidiaries exists or is reasonably likely to occur (the "Benefit
Plans"). Except as set forth in SECTION 4.8.1 of the Crown Disclosure Schedule,
neither Crown nor the Crown Subsidiaries maintain or has entered into any
Benefit Plan or other document, plan or agreement which contains any change in
control provisions which would cause an increase or acceleration of benefits or
benefit entitlements to employees or former employees of Crown or the Crown
Subsidiaries or their beneficiaries, or other provisions which would cause an
increase in the liability to Crown or the Crown Subsidiaries or to Parent as a
result of the transactions contemplated by this Agreement or any related action
thereafter including, but not limited to, termination of employment or
directorship (a "Change in Control Benefit"). Except as provided in SECTION
4.8.1 of the Crown Disclosure Schedule, the execution of this Agreement does not
constitute a "change in control" for purposes of any Benefit Plan or any Change
in Control Benefits. The term "Benefit Plans" as used herein refers to all plans
contemplated under the preceding sentences of this SECTION 4.8.1, provided that
the term "plan" or "plans" is used in this Agreement for convenience only and
does not constitute an acknowledgment that a particular arrangement is an
employee benefit plan within the meaning of Section 3(3) of ERISA. Copies of the
Benefit Plans have been previously made available to Parent. There is no
liability under the Benefit Plan for employees of subsidiaries previously sold
or otherwise disposed of by Crown or the Crown Subsidiaries.
4.8.2 DOCUMENTS DELIVERED TO PARENT. Crown has delivered or made
available to Parent true and complete copies of the following documents, as they
may have been amended to the date hereof, relating to the Benefit Plans, other
than any multiemployer plan: (i) the most recent version of each of the Benefit
Plans listed in SECTION 4.8.1 of the Crown Disclosure Schedule if in writing,
including all amendments thereto, any related trust agreements, group annuity
contracts, insurance policies or other funding agreements or arrangements; (ii)
the most recent determination letter or opinion letter from the Internal Revenue
Service with respect to each
14
Benefit Plan intended to be qualified under Section 401(a) of the Code; (iii)
the actuarial valuation prepared for the most recent plan year for any Benefit
Plan which is a "defined benefit plan" (as defined in Section 3(35) of ERISA);
(iv) the current summary plan description for each Benefit Plan; and (v) the
complete Form 5500 filings, for each of the Benefit Plans that is obligated to
file such form for the three (3) most recent plan years.
4.8.3 CERTAIN REPRESENTATIONS REGARDING BENEFIT PLANS. Except as
disclosed in SECTION 4.8.3 of the Crown Disclosure Schedule:
4.8.3.1 each of the Benefit Plans and any related trust
agreement, group annuity contract, insurance policy or other funding
arrangement and any applicable collective bargaining agreement, complier
in form and operation with all applicable laws, including ERISA and the
Code, in all Material respects;
4.8.3.2 each of the Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code (the
"Qualified Plans");
4.8.3.3 all accrued contributions and other payments
required to be made by Crown to or with respect to any Benefit Plan have
been made within the time periods prescribed by ERISA and the Code or,
if not yet due, reserves adequate for such purposes have been set aside
therefor and reflected in the Most Recent Balance Sheet. Neither Crown
nor the Crown Subsidiaries is in default in performing any of its
contractual obligations under any of the Benefit Plans or any related
trust agreement or insurance contract in each case, which could result
in any Material liability, and there are no Material outstanding
liabilities of any such Plan other than liabilities for benefits to be
paid to participants in such plan and their beneficiaries in accordance
with the terms of such Plan;
4.8.3.4 neither Crown, the Crown Subsidiaries, nor their
ERISA Affiliates have made or agreed to make, or are they required to
make (in order to bring any of the Benefit Plans into substantial
compliance with ERISA or the Code), any change in benefits that would
Materially increase the costs of maintaining any of the Benefit Plans;
4.8.3.5 neither Crown, the Crown Subsidiaries, nor their
ERISA Affiliates, nor, to the Knowledge of Crown, any other
"disqualified person" or "party in interest" (as defined in Section 4975
of the Code and Section 3(14) of ERISA, respectively) with respect to a
Benefit Plan has breached the fiduciary rules of ERISA or engaged in any
prohibited transaction which could subject Crown or its ERISA Affiliates
to any Material tax or penalty imposed under Section 4975 of the Code or
Sections 502(i) or (l) of ERISA;
4.8.3.6 there are no actions, suits, disputes, arbitration
or claims pending (other than routine claims for benefits) or legal,
administrative or other proceedings or governmental investigations
pending or, to the Knowledge of Crown, threatened against any Benefit
Plan or against the assets of any Benefit Plan;
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4.8.3.7 all bond coverage requirements and all reporting
and disclosure obligations under ERISA and the Code have been complied
with on a timely basis with respect to each of the Benefit Plans and the
related trust, group annuity contract, insurance policy or other funding
arrangement except for any instances of non-compliance that could not
reasonably be expected to result in Material liability for Crown, the
Crown Subsidiaries or, following the Closing Date, for Parent or
Purchaser;
4.8.3.8 each Benefit Plan which is a "group health plan"
(as defined in Section 5000 of the Code) has been maintained and
operated in all Material respects in compliance with Section 4980B of
the Code and Title I, Subtitle B, Part 6 of ERISA (collectively,
"COBRA") and Crown has no liability under COBRA for any Tax penalty or
damages;
4.8.3.9 no benefit payable or which may become payable by
Crown, the Crown Subsidiaries or their ERISA Affiliates pursuant to any
Benefit Plan could reasonably be expected to constitute an "excess
parachute payment" (within the meaning of Section 280G of the Code)
which is subject to the imposition of an excise tax under Section 4999
of the Code or which would not be deductible by reason of Section 280G
of the Code;
4.8.3.10 no Benefit Plan currently or previously maintained
by Crown, the Crown Subsidiaries or their ERISA Affiliates provides any
post-retirement medical, health, life insurance, or welfare benefits,
and neither Crown nor its ERISA Affiliates maintains any obligations to
provide any post-retirement welfare benefits in the future (other than
rights required by COBRA; and
4.8.3.11 neither Crown, the Crown Subsidiaries nor any of
their ERISA Affiliates has ever maintained, sponsored, contributed to,
or incurred liability under any "multiemployer plan," as defined in
Section 3(37) of ERISA, a defined benefit plan, as defined in Section
3(35) of ERISA, or a plan subject to the minimum funding standards set
forth in Section 302 of ERISA and Section 412 of the Code.
4.8.4 EMPLOYEES; COMPENSATION. Crown has furnished to Parent a true
and correct list of each employee of Crown or the Crown Subsidiaries together
with such employee's annual rate of compensation and payments to be due to each
such employee in connection with the consummation of the transactions
contemplated hereby. Except as set forth in SECTION 4.8.4 of the Crown
Disclosure Schedule: (i) as of the date of this Agreement, no officer or
employee of Crown or the Crown Subsidiaries has obtained any binding and
effective commitment of Crown or the Crown Subsidiaries to pay to him or her in
respect of any future year aggregate remuneration in excess of the rate of
compensation set forth in such list, (ii) neither Crown nor the Crown
Subsidiaries is obligated to provide health or welfare benefits to retirees or
other former employees, directors or their dependents (other than rights under
Section 4980B of the Code or Section 601 of ERISA), (iii) no officer or director
of Crown or the Crown Subsidiaries is eligible to receive a Change in Control
Benefit, (iv) neither Crown nor the Crown Subsidiaries is a party to (A) any
management, employment, deferred compensation, severance, bonus or other
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contract for personal services with any officer, director or employee, (B) any
consulting contract with any consultant who prior to becoming a consultant was a
director or officer of Crown or the Crown Subsidiaries or (C) any plan,
agreement, arrangement or understanding similar to any of the foregoing, (v)
neither Crown nor the Crown Subsidiaries is a party to any agreement to loan any
amount to or guarantee a loan of any amount to any employee, (vi) neither Crown
nor the Crown Subsidiaries has been or is not a party to any Plan, contract or
arrangement providing for insurance or for any indemnification of any officer,
director or employee of Crown or the Crown Subsidiaries, (vii) neither Crown nor
the Crown Subsidiaries is a party to any collective bargaining agreement or
other labor agreement with any union or labor organization or to any
conciliation agreement with the Department of Labor, the Equal Employment
Opportunity Commission or any federal, state or local agency which requires
equal employment opportunities or affirmative action in employment, (viii) there
is no unfair labor practice or other complaint against Crown or the Crown
Subsidiaries pending or, to the Knowledge of Crown, threatened, before the
National Labor Relations Board, or any complaint before the Equal Employment
Opportunity Commission, or any state, local or foreign agency similar to either
thereof, (ix) there is no strike, dispute, slowdown, work stoppage or lockout
pending, or to the Knowledge of Crown, threatened against or involving Crown or
the Crown Subsidiaries, and (x) there is no legal, administrative, arbitral or
other proceeding, claim, suit, action or governmental investigation of any
nature pending or, to the Knowledge of Crown, threatened in respect of which any
director, officer, employee or agent of Crown or the Crown Subsidiaries is or
may be entitled to claim indemnification from Crown or the Crown Subsidiaries.
4.9 BROKER'S FEES. Except as set forth in section 7.2.6, neither Crown, the
Crown Subsidiaries nor any of their officers or directors has employed any
broker, finder or investment banker or incurred any liability for any broker's
fees, financial advisory fees, investment banker's or finder's fees in
connection with any of the transactions contemplated by this Agreement.
4.10 LITIGATION. There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, governmental agency or authority or arbitration
tribunal by which Crown or the Crown Subsidiaries is bound, or to which any of
their assets, properties, securities or businesses is subject that individually
require the payment by Crown or the Crown Subsidiaries of the sum of $50,000 or
more. As of the date hereof there are no actions, suits, claims, legal,
administrative or arbitral proceedings or investigations, pending or, to the
Knowledge of Crown, threatened against Crown or the Crown Subsidiaries or any of
their assets or properties, except for actions, suits, or claims that would not
have a Material Adverse Effect.
4.11 AUTHORIZATIONS; COMPLIANCE WITH LAWS. Crown and the Crown Subsidiaries
hold all authorizations, permits, licenses, variances, exemptions, orders and
approvals required by Governmental Entities for the lawful conduct of its
business taken as a whole, to own or hold under lease the properties and assets
it owns or holds under lease and to perform all of its obligations under the
Crown Contracts to which they are a party, except for such authorizations,
permits, licenses, variances, exemptions, orders and approvals which the failure
to hold, taken together, would not have a Material Adverse Effect (the "Crown
Permits"); PROVIDED THAT, Crown does not have, and does not represent that it
has, all authorizations, permits, licenses, variances, exemptions, orders, and
approvals required by Governmental Entities to construct and operate a mine at
its Buckhorn Mountain Project in the state of Washington. Crown and the Crown
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Subsidiaries are in compliance with the terms of the Crown Permits except where
the failure to be in such compliance will not, taken together, have a Material
Adverse Effect. Except as set forth in SECTION 4.11 of the Crown Disclosure
Schedule, since January 1, 1997, neither Crown nor the Crown Subsidiaries has
been in violation of or default under any Law, except for any such violation or
default which will not have a Material Adverse Effect. To Crown's Knowledge,
except as set forth in SECTION 4.11 of the Crown Disclosure Schedule, as of the
date of this Agreement, no investigation or reviews by any Governmental Entity
with respect to Crown or the Crown Subsidiaries is pending nor has any
Governmental Entity notified Crown or the Crown Subsidiaries of an intention to
conduct the same nor do any facts exist which may give rise to such an
investigation or review.
4.12 ENVIRONMENTAL MATTERS. Except as set forth in SECTION 4.12 of the Crown
Disclosure Schedule, and except for such violations, notices and Releases as
would not, taken together, have a Material Adverse Effect: (a) neither Crown nor
the Crown Subsidiaries is in violation of any applicable Environmental Law; (b)
no Hazardous Material has been disposed of or Released by Crown or the Crown
Subsidiaries in violation of applicable Environmental Law; (c) neither Crown nor
the Crown Subsidiaries has any liability under any Environmental Law; and (d)
neither Crown nor the Crown Subsidiaries has received any notice from any
governmental body alleging that Crown or the Crown Subsidiaries is in violation
of, or liable for investigation or cleanup of any Release of Hazardous Material
under, any Environmental Law.
4.13 ABSENCE OF DEFAULTS. Except where a default or violation would not have
a Material Adverse Effect, neither Crown nor the Crown Subsidiaries is in
violation of any provision of its Organizational Documents, or in default under
or violation of any Crown Contract and, to the Knowledge of Crown or the Crown
Subsidiaries, no event has occurred which, with notice, lapse of time and/or
action by a third party, would constitute or result in such a default or
violation.
4.14 MATERIAL CONTRACTS.
4.14.1 MATERIAL CONTRACTS. Crown's Form 10-K and Forms 10-Q disclose
all contracts that constitute "material contracts" as defined in Item 601(b)(10)
of Regulation S-K to which Crown or the Crown Subsidiaries are a party or to
which they or their assets are subject and which are required to be disclosed
therein or listed as exhibits thereto, except as set forth in Section 4.14.1 of
the Crown Disclosure Schedule (collectively, the "Crown Contracts"). True and
complete copies of all of the Crown Contracts have been provided or made
available to Parent.
4.14.2 INSURANCE POLICIES. True copies of the insurance policies now in
effect with respect to the owned and leased real properties, businesses,
employees, officers and directors of Crown or the Crown Subsidiaries and with
respect to any Benefit Plan or a fiduciary thereof and the amounts and types of
casualties and contingencies insured against thereunder, including all
amendments and supplements thereto, have been delivered or made available to
Parent.
4.15 TITLE AND CONDITION OF ASSETS. Crown or the Crown Subsidiaries have
sufficient title (subject, in the case of unpatented mining claims located in
the United States, to the paramount title of the United States of America),
applying customary standards in the mining industry, to
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their operating properties and properties with proven and probable ore reserves
or mineral resources (other than property as to which Crown or the Crown
Subsidiaries are a lessee, in which case it has a valid leasehold interest) to
permit the exploitation of such reserves and resources, except for such defects
in title that, individually or in the aggregate, would not be reasonably likely
to have a Material Adverse Effect on Crown or the Crown Subsidiaries.
Notwithstanding the foregoing, no representation or warranty is made as to a
discovery of valuable minerals for any unpatented mining claim located in the
United States. All real and tangible personal property of Crown or the Crown
Subsidiaries is in generally good repair and is operational and usable in the
operation of Crown or the Crown Subsidiaries, subject to normal wear and tear
and technical obsolescence, repair, or replacement, except for such property
whose failure to be in such condition would not be reasonably likely to have a
Material Adverse Effect on Crown.
4.16 LABOR RELATIONS. As of the date hereof, no employees of Crown or the
Crown Subsidiaries are covered by any collective bargaining agreement and (a)
there are no representation questions, arbitration proceedings, labor strikes,
slow-downs or stoppages, material grievances, or other labor troubles pending
or, to the Knowledge of Crown, threatened as of the date hereof with respect to
the employees of Crown or the Crown Subsidiaries which would have a Material
Adverse Effect on Crown or the Crown Subsidiaries; and (b) to Crown's Knowledge,
as of the date hereof, there are no present or pending applications for
certification (or equivalent procedure under any applicable Law) of any union as
the exclusive bargaining agent for any employees of Crown or the Crown
Subsidiaries.
4.17 RESERVE REPORTS AND RESERVE ESTIMATES. The reports of proven and
probable reserves of Crown summarized in its report on Form 10-K for the year
ended December 31, 2002, and in its subsequent reports on Form 10-Q were
prepared in all Material respects in accordance with applicable requirements of
the Exchange Act and such reports were, as of their respective dates, in all
Material respects in compliance with the requirements applicable to the
presentation of such reserves in documents filed with the SEC.
4.18 INTELLECTUAL PROPERTY RIGHTS. SECTION 4.18 of the Crown Disclosure
Schedule sets forth all Material trade names, patents, trademark registrations,
service mark registrations, copyright registrations and all pending applications
for and registrations of any of the foregoing, owned by Crown or the Crown
Subsidiaries identified by country in which they have been filed or registered
and with applicable serial or registration numbers (the "Intellectual
Property"). Crown or the Crown Subsidiaries is the owner of all right, title and
interest in and to the Intellectual Property. Crown or the Crown Subsidiaries
have, and will continue to have after the Merger, the exclusive right to use
such Intellectual Property (which, subject to the disclosures in SECTION 4.18 of
the Crown Disclosure Schedule, and in combination with any rights of Crown
pursuant to common law or the Crown Contracts, constitutes all Material
Intellectual Property rights necessary for the conduct of its business) and the
use thereof by Crown or the Crown Subsidiaries does not violate or infringe the
rights of any other person, and the transfer to the Surviving Corporation
pursuant to the Merger, will not violate or infringe the rights of any other
person. To the Knowledge of Crown or the Crown Subsidiaries, no other person is
infringing the right of Crown or the Crown Subsidiaries in any such Intellectual
Property. Neither Crown nor
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the Crown Subsidiaries is in default nor, with the giving of notice or lapse of
time or both, would be in default, under any license to use such Intellectual
Property.
4.19 ACCOUNTS RECEIVABLE. All of the receivables (the "Accounts Receivable")
including accounts receivable, loans receivable and advances of Crown or the
Crown Subsidiaries which are reflected in the Most Recent Balance Sheet and all
such Accounts Receivable which have arisen since the Most Recent Balance Sheet,
have arisen only from bona fide transactions in the ordinary course of business.
SECTION 4.19 of the Crown Disclosure Schedule accurately lists as of September
30, 2002, all Accounts Receivable and, for all Material Accounts Receivable, the
amount owing and the aging of such receivable, the name and last known address
for the party from whom such receivable is owing, and any security in favor of
Crown or the Crown Subsidiaries for the repayment of such receivable which Crown
or the Crown Subsidiaries purport to have. Subject to the reserves shown on the
Most Recent Balance Sheet with respect to the Accounts Receivable which have
been established in accordance with GAAP and in a manner consistent with the
prior practice of Crown, the Accounts Receivable as of September 30, 2003, are
collectible in accordance with their terms. There are no contests, claims,
warranty claims, failure of performance claims, or other asserted claims or
rights of set-off under agreements with obligors of the Accounts Receivable as
of September 30, 2003, relating to the amount or validity of such Accounts
Receivable in excess of $25,000 in the aggregate.
4.20 CAPITALIZED LEASE OBLIGATIONS. Neither Crown nor the Crown Subsidiaries
has any capitalized lease obligations.
4.21 CROWN REORGANIZATION. Crown has satisfied all of its obligations under
the plan of reorganization (the "Plan of Reorganization") dated March 25, 2002,
and all court orders related thereto. There are no outstanding claims
(including, without limitation, any executory, priority or administrative
claims) relating to the Plan of Reorganization.
4.22 CROWN SEC DOCUMENTS Crown has filed all forms, reports and documents
with the SEC required to be filed by it after January 1, 2001, and prior to the
date of this Agreement (the "Crown SEC Documents"). Each Crown SEC Document, as
of its filing date (or if amended, as of the date of its last amendment)
complied as to form in all Material respects with the applicable requirements of
the Securities Act and the Exchange Act, as the case may be. No Crown SEC
Document, as of its filing date (or if amended, as of the date of its last
amendment), contains any untrue statement of a Material fact or omitted to state
any Material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. None of
the Crown Subsidiaries is required to file any forms, reports, or other
documents pursuant to the Securities Act or the Exchange Act.
ARTICLE V
CONDUCT OF BUSINESS BY CROWN PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY CROWN PENDING THE MERGER. Crown covenants and
agrees that from the date of this Agreement to the earlier of the Effective Time
or the termination of this Agreement, unless Parent otherwise agrees in writing
or as otherwise contemplated by this Agreement, Crown will cause its business
and the business of the Crown Subsidiaries to be
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conducted only in the ordinary course of business or as reasonably necessary to
consummate the transactions contemplated hereby. Without limiting the generality
of the foregoing, Crown covenants and agrees that from the date of this
Agreement to the earlier of the Effective Time or the termination of this
Agreement:
5.1.1 BUSINESS RELATIONS. Crown will use its commercially reasonable
efforts to (i) preserve intact the business and organization of Crown and the
Crown Subsidiaries; (ii) keep available to itself and Parent the present
services of the employees of Crown and the Crown Subsidiaries; (iii) pursue, in
a professional and commercially reasonable manner, and in consultation with
Parent, its permitting and licensing efforts with respect to the Buckhorn
Mountain Project; and (iv) maintain in full force and effect, at the same levels
of coverage, all the currently existing insurance.
5.1.2 CAPITALIZATION. Crown will not (i) sell or pledge or otherwise
encumber any stock owned by it in the Crown Subsidiaries, other than (A) each of
such contractual obligations as set forth on Section 5.1.2 of the Crown
Disclosure Schedule or (B) encumbrances resulting from the application of
Permitted Liens, (ii) amend its, or permit the amendment of the Subsidiaries'
(other than Solitario's) Organizational Documents, (iii) split, combine or
reclassify any shares of its capital stock; (iv) declare, set aside, make or pay
any dividend or other distribution payable in cash, stock or property or any
combination thereof with respect to its capital stock (other than such payments
as may be required under the provisions of the Crown Convertible Notes and the
declaration and payment by Crown of a dividend solely in Solitario common
shares; PROVIDED THAT, Crown shall reserve from such dividend sufficient
Solitario common shares to permit it to meet any contractual obligations Crown
may have), or (v) enter into any agreement, commitment or arrangement with
respect to any of the foregoing. Crown shall make all interest payments with
respect to the Crown Convertible Notes, when due under their terms, in cash.
5.1.3 SELL OR PURCHASE CAPITAL STOCK; MERGERS; JOINT VENTURES. Crown
shall not (i) issue, authorize the issuance of or sell any additional shares of
Crown common stock or other Crown securities, or issue, reissue or grant any
option, warrant, call, commitment, subscription, stock appreciation right, right
to purchase or agreement of any character to acquire any shares of its capital
stock, except for the vesting of Crown Options in accordance with their existing
terms, the exercise of Crown Options and Crown Warrants in accordance with their
terms, or the conversion of outstanding Crown Convertible Notes; (ii) redeem,
purchase or otherwise acquire or offer to acquire, directly or indirectly, any
of its capital stock; (iii) amend or terminate any Material contract, agreement
or license to which it is a party other than in the ordinary course of business
or as reasonably necessary in connection with the transactions contemplated in
this Agreement; (iv) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division or substantial part thereof; (v) sell, lease, license, transfer,
pledge, mortgage, hypothecate or otherwise dispose of any of its assets other
than in the ordinary course of business, excluding the sale of immaterial assets
of Crown that in the good faith belief of Crown are not necessary to the
operation of its business and except for the distribution of Solitario common
stock to its stockholders; (vi) enter into any joint venture or partnership or
acquire majority ownership of any business entity which involves an investment
by Crown in the aggregate in excess of $25,000; (vii) incur any indebtedness for
borrowed money other than trade payables in the ordinary course of business;
(viii) guarantee
21
any obligation of a third party; (ix) issue any debt securities; or (x) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.
5.1.4 COMPENSATION. Except in the ordinary course of business and
except as required by existing agreements, neither Crown nor the Crown
Subsidiaries shall grant any increase in compensation or pay or agree to pay or
accrue any bonus or like benefit to or for the credit of any director, officer
or employee, or grant any severance or termination pay (other than pursuant to
policies or agreements of Crown in effect on the date hereof and disclosed in
the Crown Disclosure Schedule) or pay any "excess parachute payment" within the
meaning of Section 280G of the Code to, or enter into any employment,
consulting, compensation, severance, termination or other form of agreement
with, any executive officer, director, employee or independent consultant or
advisor, whether past, present or future. Neither Crown nor the Crown
Subsidiaries shall increase benefits payable under, or broaden eligibility for,
their current severance or termination pay policies, and except as required by
applicable Law, regulations or court order. Neither Crown nor the Crown
Subsidiaries shall adopt, enter into or amend to increase the benefits payable
under, or broaden eligibility for, any Benefit Plan.
5.1.5 ALTERNATIVE TRANSACTION.
5.1.5.1 Crown shall not, directly or indirectly through any
of the Crown Subsidiaries or the respective directors, officers, agents,
representatives, affiliates, stockholders or any other persons acting on
any of their behalf, (a) enter into any transaction with any party other
than Parent relative to a merger or consolidation or any other business
combination or any disposition of the assets of Crown or any interest in
its business, its capital stock or any part thereof or a transaction
comparable or similar to the Merger or that would prevent or materially
impede the Merger (any of the foregoing, an "Alternative Transaction"),
(b) solicit or encourage submission of inquiries, proposals or offers
from any other party relative to an Alternative Transaction; (c) except
in the ordinary course of business or as required by Law, regulation, or
court order or by agreements existing at the date of this Agreement,
provide information to any other Person regarding Crown or any of the
Crown Subsidiaries (other than Solitario), (d) conduct any discussions
or negotiations regarding, or enter into any agreement, arrangement or
understanding regarding, or approve, recommend or propose publicly to
approve or recommend, an Alternative Transaction, or (e) agree to do any
of the foregoing. Crown shall promptly notify Parent if it receives any
offer, inquiry or proposal or enters into any discussions, including
without limitation, the terms and conditions of any such Alternative
Transaction and the identity of the potential acquirer relating to an
Alternative Transaction and the details thereof, and shall keep Parent
fully informed on an ongoing basis with respect to each such offer,
inquiry, proposal or discussions with any Person. Crown shall provide
Parent with copies of all such offers, inquiries or proposals that are
in writing and all written materials and correspondence relating thereto
as soon as practicable after receipt by Crown. Crown and its Board of
Directors shall not enter into any agreement with respect to, or
otherwise approve or recommend, any Alternative Transaction, unless
SECTION 5.1.5.4 of this Agreement has been complied with.
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5.1.5.2 Notwithstanding anything to the contrary in this
Agreement, in response to an unsolicited offer, inquiry or proposal from
any Person with respect to an Alternative Transaction, Crown (and its
directors, officers, agents, representatives, affiliates, stockholders
and other persons acting on its behalf) may (a) participate in
discussions or negotiations with, review information from, and, subject
to compliance with Section 5.1.5.4, furnish non-public information to
any third party that has made such offer, inquiry or proposal relative
to an Alternative Transaction and/or (b) approve or accept an
unsolicited Alternative Transaction and may make or authorize any
statement, recommendation or solicitation in support of an unsolicited
Alternative Transaction, in each case only if Crown's Board of Directors
determines in good faith: (i) that, in the case of subclause (a), such
Alternative Transaction proposal is or is reasonably likely to be or
become, or, in the case of subclause (b), such Alternative Transaction
proposal is more favorable to Crown and its shareholders than the
transactions contemplated by this Agreement; and (ii) following
consultation with outside legal counsel, that the failure to participate
in such discussions or negotiations, review such information or furnish
such information regarding, or approve or accept, the Alternative
Transaction would violate the fiduciary duties under applicable Law (any
such Alternative Transaction as to which such a determination has been
made being herein referred to as a "Superior Proposal"); provided,
however, that Crown shall, prior to providing such information or
participating in such discussions, advise Parent that Crown will do so.
5.1.5.3 Crown shall immediately cease and cause to be
terminated any existing discussions or negotiations with any Person
(other than Parent) conducted heretofore with respect to any of the
foregoing. Crown agrees not to release any third party from the
confidentiality and standstill provisions of any agreement to which
Crown is a party, other than agreements with Crown's customers and
suppliers entered into in the ordinary course of business.
5.1.5.4 If Crown proposes to enter into a definitive
agreement in connection with a Superior Proposal, it shall first provide
Parent with the details thereof (including a copy of all written
agreements, correspondence and other documents relating thereto) and a
reasonable period of time (which shall not be less than two (2) business
days) during which Parent may propose changes to the transaction
provided for by this Agreement. Crown may not furnish any of its
non-public information to a potential party to a Superior Proposal
unless it has previously furnished or provided access to, or promptly
thereafter furnishes or provides access to, such information to Parent.
5.1.5.5 Crown shall ensure that the officers and directors
of Crown and the Crown Subsidiaries, and any investment banker, attorney
or other advisor or representative retained by Crown or any of the Crown
Subsidiaries, or providing services to Crown or any of the Crown
Subsidiaries, in connection with the transactions contemplated hereby
are aware of the restrictions described in this SECTION 5.1.5 and shall
direct such Persons to comply therewith.
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5.1.6 VIOLATION OF LAW. Crown shall not take any action which violates
any statute, code, ordinance, rule, regulation, judgment, order, writ, arbitral
award, injunction or decree of any court, governmental agency or body or
arbitrator, domestic or foreign, having jurisdiction over its properties which
would have a Material Adverse Effect.
5.1.7 BOOKS AND RECORDS. Crown shall maintain its books, accounts and
records in accordance with GAAP and, except as otherwise required by GAAP, on a
basis consistent with the Most Recent Financial Statements. Crown shall not make
any change in any method of accounting or accounting practice, or any change in
the method used in allocating income, charging costs or accounting for income,
except as may be required by law, regulation or GAAP.
5.1.8 TAXES. Crown will not (i) incur, pay or be subject to any
obligation to make any payment of, or in respect of, any Tax on or before the
Effective Time, except in the ordinary course of business or (ii) agree to
extend or waive any statute of limitations on the assessment or collection of
any Tax.
5.1.9 PAYMENT OF LIABILITIES. Crown shall pay or discharge its current
liabilities and accounts payable and properly accrue or provide for deferred
liabilities in the ordinary course of business consistent with past practice,
except for such liabilities as may be subject to a good faith dispute or
counterclaim and for which adequate reserves have been established.
5.1.10 COLLECTION OF ACCOUNTS RECEIVABLE. Crown shall use reasonable
commercial efforts to collect its accounts receivable in the ordinary course of
business consistent with past practice. Crown shall not factor or sell or agree
to factor or sell its accounts receivable or any portion thereof.
5.1.11 VENDORS AND SUPPLIERS. Crown shall not change or agree to change
any Material terms with any of its vendors or suppliers except in the ordinary
course of business. Crown shall pay all liabilities to vendors and suppliers in
the ordinary course of business consistent with past practice.
5.1.12 PAYROLL. Except as may be required by Law, Crown shall not make
any Material change in its payroll and payroll tax payment practices.
5.1.13 CAPITAL EXPENDITURES. Crown shall not make any capital
expenditures in excess of $500,000 in the aggregate per calendar quarter.
5.2 PROCESSING OF REQUESTS FOR CONSENT. If Crown wishes to seek the consent
of Parent to any activity requiring such consent pursuant to SECTION 5.1, it
shall request such consent by written notice to Brian W. Penny, the Chief
Financial Officer of Parent. Parent shall use reasonable efforts to cause a
decision with respect to such consent to be made and communicated to Crown as
soon as practical and, in any event, within five business days following receipt
of such notice.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGISTRATION STATEMENT. As promptly as practicable after the execution
of this Agreement, Parent and Crown shall prepare and file with the SEC a
registration statement on Form F-4 (the "Registration Statement"), which will
include a proxy statement for the solicitation of proxies by Crown in connection
with the approval of the Merger by the Crown stockholders (the "Proxy
Statement/Prospectus"). Each of Parent and Crown shall use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
by the SEC as promptly as practicable, and shall take any action required to be
taken under any applicable federal or state securities laws in connection with
the issuance of Kinross Common Shares in the Merger and the solicitation of
proxies for the Crown Stockholders' Meeting. Each of Parent and Crown shall
furnish to the other all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
registration statement. As promptly as practicable after the Registration
Statement shall have been declared effective by the SEC, Crown shall comply with
all applicable requirements of the Exchange Act, rules and regulations
thereunder, and the Washington Act necessary to notice and hold the Crown
Stockholders' Meeting. The Proxy Statement/Prospectus shall include the Crown
Recommendation, unless such recommendation shall have been withdrawn as a result
of a Superior Proposal or as the Board of Directors, after consultation with
outside legal counsel, determines is required by the fiduciary duties of the
Crown Board of Directors. The information supplied by Crown or Parent, as the
case may be, for inclusion in the Registration Statement shall not, at the time
the Proxy Statement/Prospectus is mailed to the stockholders of Crown, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Crown hereby consents to the use of the information it
provides for inclusion in the Registration Statement or contained in Crown's
periodic reports filed with the SEC in any filing Kinross is obligated to make
or makes under the provisions of Canadian securities Laws. If at any time prior
to the Effective Time any event or circumstance relating to Crown or any of its
affiliates, or its or their respective officers or directors, is discovered by
Crown or Parent, as the case may be, that should be set forth in a supplement or
an amendment to the Proxy Statement/Prospectus, such party shall promptly inform
the other thereof in writing. All documents that Crown or Parent, as the case
may be, is responsible for filing with the SEC in connection with the
transactions contemplated herein shall comply as to form in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
6.2 CONVERSION OF OUTSTANDING CROWN CONVERTIBLE NOTES. Crown agrees to use
its commercially reasonable efforts to (i) obtain the necessary approval of the
holders of the outstanding Crown Convertible Notes to amend the terms of such
Crown Convertible Notes; (ii) obtain the necessary agreement of each of the
holders of such Crown Convertible Notes; or (iii) to call the Crown Convertible
Notes for redemption, in any event, so that all of the outstanding Crown
Convertible Notes are redeemed or are converted into Crown Common Shares prior
to the Effective Time.
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6.3 FILINGS BY SOLITARIO. Crown agrees to use its commercially reasonable
efforts to cause Solitario to make all filings and obtain all regulatory
approvals required by the Securities Act, the Exchange Act, and Canadian
securities Laws in connection with the distribution by Crown of the Solitario
Common Stock to the stockholders of Crown. Such filings shall be prepared by and
made at the expense of Solitario. Crown shall cooperate in providing all
information to Solitario necessary to complete such filings.
6.4 ACCESS AND INFORMATION. Crown hereby covenants and agrees that it will
afford to Parent and its representatives full access during normal business
hours throughout the period prior to the Effective Time to all of its properties
upon reasonable prior notice and shall use reasonable efforts to make its
directors, management, other employees and authorized representatives (including
counsel and independent public accountants) available to confer with Parent and
its authorized representatives (provided that Parent shall give the Chief
Executive Officer of Crown reasonable notice) and, during such period, Crown
will (i) make available all papers and records of Crown relating to the assets,
properties, operations, obligations and liabilities of Crown, including but not
limited to, all books of account (including the general ledger), tax records and
returns, title documents, minute books of directors', committees' and
stockholders' meetings, mining plans or permitting applications or strategies
(other than documents relating to the consideration by Crown of the transactions
contemplated by this Agreement), Organizational Documents, Crown Contracts,
filings with and communications from any regulatory authority, accountants' work
papers, litigation files, plans affecting employees, and any other business
activities or prospects as Parent may from time to time reasonably request and
that Crown has, and (ii) promptly furnish to Parent all other information
concerning its business, properties and personnel as Parent may reasonably
request. Throughout the period prior to the Effective Time, Crown will cause one
or more of its designated representatives to be available to confer on a regular
and frequent basis with representatives of Parent and to report the general
status of the ongoing operations of Crown.
6.5 REGULATORY APPROVALS. Parent, Purchaser and Crown shall make all filings
and requests for approval with any and all Governmental Entities as may be
necessary to permit or give effect to the transactions contemplated by this
Agreement.
6.6 ADDITIONAL AGREEMENTS; FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable on the
part of such party, to consummate and make effective the transactions
contemplated by this Agreement at the earliest practicable date, including using
its commercially reasonable efforts to obtain all required consents, approvals,
waivers, exemptions, amendments and authorizations, give all notices, and make
or effect all filings, registrations, applications, designations and
declarations; and each party shall cooperate fully with the other (including by
providing any necessary information) with respect to the foregoing. Crown and
Parent each will make commercially reasonable efforts to conduct its business so
that its representations and warranties shall be true and correct at the
Effective Time (except those representations and warranties which are expressly
limited to some other date, or actions contemplated or permitted hereby) with
the same force and effect as if such representations and warranties were made
anew at and as of the Effective Time. Each party shall give prompt written
notice to the other of (i) the
26
occurrence or failure to occur of any event which occurrence or failure has
caused or could reasonably be expected to cause any representation or warranty
of Crown or Parent as the case may be, contained in this Agreement to be untrue
or inaccurate at any time from the date hereof to the Effective Time or that
will result in the failure to satisfy any of the conditions specified in Article
VII and (ii) any failure of Crown or Parent as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
6.7 PUBLICITY. So long as this Agreement is in effect, neither Crown nor
Parent will, prior to the Effective Time, issue, or permit to be issued any
press release or other announcement or public disclosure of matters related to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party, except as may be required by applicable Law, court process
or by obligations pursuant to any listing agreement with NYSE or the TSX.
6.8 TAX TREATMENT. Each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take, and shall use all reasonable
efforts to prevent any affiliate of such party from taking, any actions that
could prevent the Merger from qualifying, as a reorganization within the meaning
of Section 368(a) of the Code. Nothing herein shall preclude Parent from
transferring its ownership of Crown to another Subsidiary of Parent that is
"controlled" by Parent within the meaning of Code Section 368(a)(2)(c).
6.9 INDEMNIFICATION. Notwithstanding anything in this Agreement to the
contrary, including SECTION 1.5, the Merger shall not diminish or otherwise
adversely affect the rights of the current and former directors and officers of
Crown (each an "Indemnified Party") under Articles XII and XIII of the Articles
of Amendment of the Restated Articles of Incorporation of Crown and under
Article Eleven of the Bylaws of Crown (collectively the "Indemnification
Provisions"). The Surviving Corporation and the Parent assume and shall be
jointly and severally liable for all obligations of Crown under the
Indemnification Provisions for any "proceeding" (as defined in Section 11-1 of
the Bylaws of Crown) that arises with respect to an Indemnified Party within six
(6) years after the Effective Time. Each Indemnified Party shall have the right
to enforce his rights under the Indemnification Provisions directly against the
Surviving Corporation and/or the Parent, with respect to each such proceeding.
The Surviving Corporation and the Parent agree that, notwithstanding the terms
of Section 11-3 of the Bylaws of Crown, in all proceedings not brought by the
Surviving Corporation and/or Parent, the Surviving Corporation and Parent shall
not have the right by resolution of the Board of Directors or other corporate
action to withhold the advancement of expenses to an Indemnified Party, and that
such right to the advancement of expenses shall be subject only to the
Indemnified Party's delivery of the undertaking described in Section 11-3 of the
Bylaws of Crown. This SECTION 6.9 (i) is intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party and his heirs and personal
representatives, (ii) shall be binding on the Surviving Corporation and the
Parent and their respective successors and assigns, and (iii) shall survive the
Merger and Effective Time.
6.10 RULE 145 AFFILIATES. Prior to the Effective Time, Crown shall cause to
be delivered to Parent a list identifying all persons who are, at the time of
the Crown Stockholders' Meeting, deemed to be an affiliate (as defined in the
Securities Act) of Crown. Crown shall use its reasonable efforts to cause each
person who is identified as a possible Securities Act Affiliate to
27
enter into, prior to the Effective Time, an agreement in the form attached
hereto as Exhibit 6.10 pursuant to which each such Person acknowledges its
responsibilities as such an affiliate.
6.11 TAX REPRESENTATION LETTERS. For purposes of the tax opinion described in
SECTION 7.2.4 of this Agreement, each of Crown, Parent, and Purchaser shall
provide representation letters reasonably customary in scope and substance, each
dated as of the date that is two business days prior to the date the Proxy
Statement/Prospectus is mailed to shareholders of Crown and reissued as of the
Closing Date.
6.12 CROWN OPTIONS. The Crown Board of Directors, in a timely fashion, shall
select the alternative set forth in paragraph 10.2-3 of the Crown 2002 Stock
Incentive Plan so that all Crown Options shall be exercised or shall terminate
prior to the Effective Time.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the following conditions, except, to the extent permitted by applicable Law, as
such condition may be waived in writing pursuant to SECTION 7.5 by the joint
action of Parent and Crown:
7.1.1 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and Parent shall have received all other
authorizations necessary under applicable securities laws to consummate the
transactions contemplated by this Agreement.
7.1.2 APPROVAL OF CROWN STOCKHOLDERS. Crown shall have obtained all
approvals of holders of shares of capital stock of Crown necessary to approve
and adopt the Merger, this Agreement and all the transactions contemplated
hereby to the extent required by the Washington Act.
7.1.3 INJUNCTION; COMPLIANCE WITH LAW. No preliminary or permanent
injunction or other order by any foreign court having appropriate jurisdiction
or of any federal or state court preventing consummation of the Merger having
been issued and continuing in effect, and the Merger and the other transactions
contemplated hereby not being prohibited under any applicable Law.
7.1.4 LEGAL PROCEEDINGS. No Law or injunction shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which prohibits,
restrains, enjoins or restricts the consummation of the Merger or litigation
instigated which seeks to prohibit, restrain, enjoin, or restrict the
consummation of the Merger.
7.1.5 REGULATORY APPROVALS. All approvals, consents, or authorizations
of any governmental entity or other regulatory body having jurisdiction over the
matter, including, but not limited to, the NYSE and the TSX, required as a
condition of the consummation of the transactions contemplated herein shall have
been received and shall not have been rescinded; and neither Crown nor Parent
shall have received written notice from any such entity that it is
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conducting any review or investigation to determine whether any such approval,
consent, or authorization should be withdrawn or Materially modified.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CROWN. The obligations of Crown
to effect the Merger and the other transactions contemplated hereby are also
subject the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived in writing by Crown, in whole or
in part, to the extent permitted by applicable law.
7.2.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Parent and Purchaser contained in this Agreement shall be true and
correct as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date). Crown shall have received a certificate of
the President and the Chief Financial Officer of Parent, dated the Closing Date,
to such effect.
7.2.2 AGREEMENTS AND COVENANTS. Parent and Purchaser shall each have
performed or complied, in all Material respects, with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. Crown shall have received a certificate of the
President and the Chief Financial Officer of Parent and Purchaser, dated the
Closing Date, to such effect.
7.2.3 MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence, or circumstance in the current or future
business, assets, liabilities, financial condition, or results of operations of
Parent and its consolidated subsidiaries having, or reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent, viewed on
a consolidated basis.
7.2.4 TAX OPINION. Crown shall have received the written opinion of
Parr Waddoups Brown Gee & Loveless, dated the Closing Date, to the effect that:
(a) the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code; (b) Parent, Purchaser, and Crown will constitute parties to
the reorganization within the meaning of Section 368(b) of the Code; and (c) for
United States federal income tax purposes no gain or loss will be recognized by
the holders of Crown Common Stock or Crown Warrants upon receipt of shares of
Kinross Common Shares in the Merger in exchange for such Crown Common Stock or
Crown Warrants, except for any cash received in lieu of a fractional share
interest in the Kinross Common Shares; and (d) Crown Shareholders will not
recognize taxable gain under Section 367(a) of the Code as a result of the
Merger; and such opinion shall not have been withdrawn or modified. Counsel may
rely on representations from the parties and appropriate assumptions in
rendering its opinion.
7.2.5 APPROVALS AND CONSENTS. Parent shall have obtained any consents
from third parties necessary to consummate the transactions contemplated hereby
without Material Adverse Effect on the business or financial condition of
Parent.
7.2.6 OPINION OF FINANCIAL ADVISOR. The financial advisor of Crown,
Haywood Securities Inc. of Toronto, Ontario, has delivered to the Board of
Directors of Crown a written
29
opinion to the effect that the Exchange Ratio is fair from a financial point of
view to the shareholders of Crown.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser to effect the Merger and the other
transactions contemplated hereby are also subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in writing by Parent and Purchaser, in whole or in part, to the extent
permitted by applicable law.
7.3.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Crown contained in this Agreement shall be true and correct as of
the Closing Date as though made on and as of the Closing Date (except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date). Parent and Purchaser shall have received a
certificate of the President and the Chief Financial Officer of Crown, dated the
Closing Date, to such effect.
7.3.2 AGREEMENTS AND COVENANTS. Crown shall have performed or
complied, in all Material respects, with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date. Parent and Purchaser shall have received a certificate of the
President and the Chief Financial Officer of Crown, dated the Closing Date, to
such effect.
7.3.3 MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence, or circumstance in the current or future
business prospects, assets, liabilities, financial condition or results of
operations of Crown or any of the Crown Subsidiaries having, or reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the business, properties, or prospects of Crown, including any action taken, or
any statute, rule, regulation, or order enacted, entered, or enforced by any
Governmental Entity in connection with the grant or denial of a regulatory
approval necessary, in the reasonable business judgment of Parent and Purchaser,
to the continuing operation of the current or future business of Crown which, in
the reasonable business judgment of Parent and Purchaser, would be materially
burdensome in the context of the transactions contemplated by this Agreement.
Parent and Purchaser shall have received a certificate of the President and the
Chief Financial Officer of Crown, dated the Closing Date, to such effect. For
the purpose of this Agreement, changes in gold prices do not, by themselves,
constitute a change having a Material Adverse Effect.
7.3.4 DISSENTER RIGHTS. The number of shares of Crown Common Stock for
which valid Dissenter Notices have been provided and remain outstanding
immediately prior to the effectiveness of the Merger does not exceed 5% of the
issued and outstanding Crown Common Stock immediately prior to the Effective
Time.
7.3.5 DISTRIBUTION OF SOLITARIO COMMON STOCK. The distribution of the
Solitario Common Stock to the shareholders of Crown, if any, has been completed
in accordance with applicable United States and Canadian securities and
corporate laws in a method reasonably satisfactory to Parent and Purchaser.
30
7.3.6 APPROVALS AND CONSENTS. Crown shall have obtained any consents
from third parties necessary to consummate the transactions contemplated hereby
without Material Adverse Effect on the business or financial condition of Crown.
7.3.7 REDEMPTION OR CONVERSION OF THE CROWN CONVERTIBLE NOTES. All of
the Crown Convertible Notes shall have been converted into shares of Crown
Common Stock or redeemed prior to the Effective Time.
7.3.8 CROWN OPTIONS. All of the Crown Options shall have been
exercised or terminated prior to the Effective Time.
ARTICLE VIII
TERMINATION AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the Crown Stockholders:
8.1.1 BY MUTUAL AGREEMENT. By mutual written agreement of Parent and
Crown.
8.1.2 BY PARENT OR CROWN. By either Parent or Crown, if:
8.1.2.1 the consummation of the Merger has not occurred by
June 30, 2004, provided that the party seeking to terminate this
Agreement pursuant to this clause has not breached in any Material
respect its obligations under this Agreement in any manner that has
contributed to the failure of the consummation of the Merger on or
before the such date;
8.1.2.2 there is any Law that prohibits or makes the
consummation of the Merger illegal, or if an order, decree, ruling,
judgment or injunction has been entered by a Governmental Entity of
competent jurisdiction permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling, judgment or
injunction has become final and non-appealable; or
8.1.2.3 at the Crown Stockholders' Meeting (including any
adjournment or postponement thereof), Crown Stockholder Approval has not
been obtained, if required by applicable Law, unless such failure to
obtain Crown Stockholder Approval is the result of a Material breach of
this Agreement by the party seeking to terminate this Agreement.
8.1.3 BY CROWN. By Crown, if:
8.1.3.1 (A) the representations and warranties of Parent
and/or Purchaser contained in Article III of this Agreement fail to be
true and correct in any Material respect (or if the representation or
warranty already is qualified as to Materiality, shall fail to be true
and correct as so qualified) either (x) as of the date referred to in
any representation or warranty that addresses matters as of a particular
date or (y) as to all
31
other representations and warranties, as of the date of determination,
or (B) Parent or Purchaser Materially breaches or Materially fails to
perform its covenants and other agreements contained herein; provided
that, in each of the foregoing clauses (A) and (B), such breach or
failure cannot be or has not been cured in all Material respects within
ten (10) days after Crown's written notice thereof to Parent or
Purchaser; or
8.1.3.2 Crown's Board of Directors has withdrawn the Crown
Recommendation or has recommended or entered into a definitive agreement
with respect to a Superior Proposal.
8.1.4 BY PURCHASER AND PARENT. By Purchaser and Parent, if:
8.1.4.1 (A) the representations and warranties of Crown
contained in Article IV of this Agreement fail to be true and correct in
any Material respect (or if the representation or warranty already is
qualified as to Materiality, shall fail to be true and correct as so
qualified) either (x) as of the date referred to in any representation
or warranty that addresses matters as of a particular date or (y) as to
all other representations and warranties, as of the date of
determination, or (B) Crown Materially breaches or Materially fails to
perform its covenants and other agreements contained herein; provided
that, in each of the foregoing clauses (A) and (B), such breach or
failure cannot be or has not been cured in all Material respects within
ten (10) days after Parent's written notice thereof to Crown; or
8.1.4.2 Crown's Board of Directors has withdrawn the Crown
Recommendation or has recommended or entered into a definitive agreement
with respect to a Superior Proposal.
8.2 EFFECT OF TERMINATION. If any party terminates this Agreement pursuant
to SECTION 8.1 above, all rights and obligations of the parties hereunder will
terminate without any liability of any party to any other party, except for any
liability of any party as a result of that party's breach, provided that the
provisions of this Article VIII and Article IX will remain in full force and
effect and survive any termination of this Agreement.
8.3 FEES AND EXPENSES. Except as set forth in SECTION 8.4, all fees and
expenses incurred in connection with the transactions contemplated hereby will
be paid by the party incurring such expenses, whether or not the Merger is
consummated.
8.4 TERMINATION FEE AND EXPENSE REIMBURSEMENT. Notwithstanding any other
provision of this Agreement, in the event that Crown does not consummate the
transactions contemplated by this Agreement as a result of entering into any
agreement resulting from a Superior Proposal within six months of the date of
this Agreement, then Crown shall (i) pay to Parent a fee of $2,000,000 (the
"Termination Fee"), and (ii) reimburse Parent for its documented, reasonable
third-party, out-of-pocket expenses in connection with the transactions
contemplated by this Agreement (the "Expense Reimbursement"). Notwithstanding
the foregoing, if a court having jurisdiction of the matter should finally
determine that either the Termination Fee or the Expense Reimbursement is not
permissible, or is in excess of the amount permissible under applicable
32
Law, then the full amount determined by the court to be permissible under
applicable Law shall be paid to Parent.
8.5 OTHER TERMINATION FEE AND EXPENSE REIMBURSEMENT MATTERS. Crown shall
make all payments required by SECTION 8.4 promptly (and in any event within five
(5) business days of receipt by Crown of written notice from Parent) by wire
transfer of immediately available funds to an account designated by Parent in
writing. Crown acknowledges that the agreements regarding the Termination Fee
and Expense Reimbursement contained in this Agreement are an integral part of
the transactions contemplated hereby, and that in the absence of such
agreements, Parent and Purchaser would not have entered into this Agreement.
8.6 WAIVER. At any time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) except as
prohibited by law, waive compliance with any of the agreements or conditions
contained herein the benefit of which such party or its stockholders is entitled
to. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
8.7 CONFIDENTIALITY. All information obtained by Parent pursuant to this
Agreement shall be kept confidential in accordance with the Confidentiality
Agreement. Notwithstanding anything to the contrary in this Agreement or in the
Confidentiality Agreement, however, Crown, Parent, and Purchaser (and each
affiliate and person acting on behalf of Crown, Parent, and Purchaser) agree
that each of them (and each employee, representative, and other agent of such
Person) may disclose to any and all Persons, without limitation of any kind, the
tax treatment and tax structure of the Merger (and any related transactions) and
all materials of any kind (including opinions or other tax analyses) provided to
such Person relating to such tax treatment and tax structure, except to the
extent necessary to comply with any applicable federal or state securities laws.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. No notice or other communication shall be deemed given unless
sent in any of the manners, and to the attention of the persons, specified in
this SECTION 9.1. All notices and other communications hereunder shall be in
writing and shall be deemed given or delivered to any party (i) upon delivery to
the address of such party specified below if delivered personally, (ii) one
business day after being sent by reputable overnight courier (charges prepaid)
or (iii) five business days after being sent by registered or certified mail
(return receipt requested), in any case to the parties at the following
addresses or telecopy numbers (followed promptly by personal, courier or
certified or registered mail delivery) (or at such other addresses for a party
as will be specified by like notice):
33
9.1.1 TO PARENT OR PURCHASER:
Kinross Gold Corporation
52nd Floor Scotia Plaza
40 King Street West
Toronto, Ontario Canada M5H 3Y2
Telephone: (416) 365-5123
Facsimile: (416) 363-6622
with a copy to:
Keith L. Pope
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111-1537
Telephone: (801) 531-7840
Facsimile: (801) 532-7750
9.1.2 To Crown:
Crown Resources Corporation
4251 Kipling Street, Suite 390
Wheat Ridge, Colorado 80033
Telephone: (303) 534-1030
Facsimile: (303) 534-1809
with a copy to:
John J. Halle
Stoel Rives LLP
900 S.W. Fifth Avenue, Suite 2600
Portland, Oregon 97204-1268
Telephone: (503) 224-3380
Facsimile: (503) 220-2480
9.2 SPECIFIC PERFORMANCE AND OTHER REMEDIES. The parties hereto acknowledge
that the rights of each party to consummate the transactions contemplated hereby
are special, unique and of extraordinary character, and that, in the event that
any party violates or fails or refuses to perform any covenant or agreement made
by it herein, the non-breaching party may be without an adequate remedy at law.
The parties agree, therefore, that in the event that any party violates or fails
or refuses to perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this Agreement and
in addition to any remedies at Law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
The prevailing party in any proceeding shall be entitled to
34
reimbursement for all its costs and expenses (including reasonable attorneys'
fees) relating to such proceeding from the non-prevailing party.
9.3 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.4 MISCELLANEOUS. This Agreement (including the documents and instruments
referred to herein) (i) subject to that certain Mutual Nondisclosure Agreement,
dated October 7, 2003 between Parent and Crown, constitutes the entire agreement
between the parties hereto in respect of the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties hereto with respect to such subject matter, (ii) is not
intended to confer upon any other person any rights or remedies hereunder, (iii)
shall be governed in all respects, including validity, interpretation and
effect, by the internal law, not the law of conflicts, of the State of
Washington and (iv) may not be amended, modified or supplemented except by
written agreement of the parties hereto. This Agreement may be executed in two
or more counterparts each of which shall be deemed an original but all of which
together shall constitute but a single agreement. The term "person" as used
herein shall mean any individual, partnership, corporation, limited liability
company, trust or other entity.
9.5 ASSIGNMENT. This Agreement (including the documents and instruments
referred to herein) may not be assigned by any party. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
permitted successors and assigns, and any reference to a party hereto shall also
be a reference to a permitted successor or assign.
9.6 LANGUAGE. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any person.
9.7 SEVERABILITY. Any provision hereof which is prohibited or unenforceable
in any jurisdiction will, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of Law which renders any such provision prohibited or unenforceable in
any respect.
9.8 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement shall
terminate as of the Effective Time.
ARTICLE X
DEFINITIONS
As used in the Agreement, the terms below shall have the meanings set forth
below.
"Accounts Receivable" is defined in SECTION 4.19.
35
"Affiliate" shall mean any person (i) that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common control
with, an other person, (ii) that directly or beneficially owns or holds ten
percent (10%) or more of any equity interest in the other person or (iii) ten
percent (10%) or more of whose voting stock is owned directly or beneficially or
held by the other person.
"Affiliated Group" shall have the meaning ascribed to it under Section 1504(a)
of the Code.
"Alternative Transaction" is defined in SECTION 5.1.5.1.
"Articles of Merger" is defined in SECTION 1.3.
"Average Closing Price" is defined in SECTION 2.2.3.
"Benefit Plans" is defined in SECTION 4.8.1.
"Capitalized Lease Obligations" shall mean all obligations or liabilities
created or arising under any capitalized lease of real or personal property, or
conditional sale or other title retention agreement, whether or not the rights
and remedies of the lessor, seller or lender thereof are limited to repossession
of the property giving rise to such obligations or liabilities.
"Certificate" is defined in SECTION 2.1.
"Change in Control Benefit" is defined in SECTION 4.8.1.
"Closing" is defined in SECTION 1.2.
"Closing Date" is defined in SECTION 1.2.
"Code" shall mean the United States Internal Revenue Code of 1986, as amended.
"Constituent Corporations" is defined in the Preamble.
"Crown" is defined in the Preamble.
"Crown Common Stock" shall mean the shares of common stock of Crown.
"Crown Contracts" shall mean any agreement, written or oral, to which Crown or
the Crown Subsidiaries are a party or by which Crown or the Crown Subsidiaries
are bound or to which the assets of Crown or the Crown Subsidiaries are subject.
"Crown Convertible Notes" is defined in SECTION 4.2.2.
"Crown Disclosure Schedule" shall mean the schedule delivered by Crown to Parent
simultaneously with the execution and delivery of this Agreement.
36
"Crown Option" and "Crown Options" are defined in SECTION 4.2.4.
"Crown Permits" is defined in SECTION 4.11.
"Crown Recommendation" is defined in SECTION 4.3.1.
"Crown Stockholder" shall mean a holder of shares of Crown Common Stock.
"Crown Stockholder Approval" shall mean the approval of the Merger, this
Agreement and the transactions contemplated hereby by the Crown Stockholders in
accordance with the Organizational Documents of Crown and the Washington Act.
"Crown Stockholders' Meeting" is defined in SECTION 5.2.1.1.
"Crown Stockholders' Notice" shall mean the notice of the Crown Stockholders'
Meeting including the proxy card and letter of transmittal in the form to be
delivered to the Crown Stockholders in connection with the Crown Stockholder
Approval of this Agreement and the Merger.
"Crown Subsidiaries" is defined in Section 4.1; PROVIDED, HOWEVER, such term
does not include Solitario as one of the Crown Subsidiaries.
"Crown Warrant" is defined in SECTION 4.2.3.
"Dissenter" has the meaning set forth in Section 13.010(2) of the Washington
Act.
"Dissenter Notice" shall mean a notice described in Section 13.210 of the
Washington Act.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" is defined in SECTION 1.3.
"Environmental Law" shall mean any and all existing federal, international,
state or local statutes, laws, regulations, ordinances, orders, policies, or
decrees and the like, relating to public health or safety, pollution or
protection of human health or the environment, including natural resources,
including but not limited to the Clean Air Act, 42 U.S.C. ' 7401 ET SEQ., the
Clean Water Act, 33 U.S.C. ' 1251 ET SEQ., the Resource Conservation Recovery
Act ("RCRA"), 42 U.S.C. ' 6901 ET SEQ., the Toxic Substances Control Act, 15
U.S.C. ' 2601 ET SEQ., and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. ' 9601 ET SEQ. and any
similar or implementing state or local law, or any common law, which governs:
(i) the existence, clean-up, removal and/or remedy of contamination or threat of
contamination on or about real property; (ii) the emission, discharge or
Release, of Hazardous Materials or contaminants into the environment; (iii) the
control of Hazardous Materials or contaminants; or (iv) the use, generation,
transport, treatment, storage, disposal, removal, recycling, handling or
recovery of Hazardous Materials.
37
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any Person which is or was treated as a single
employer with Crown (or otherwise aggregated with Crown) under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
"Exchange Act" is the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in SECTION 2.1.
"Exchange Ratio" is defined in SECTION 1.8.1.
"Financial Statements" is defined in SECTION 4.4.1.
"GAAP" shall mean the United States generally accepted accounting principles.
"Governmental Entities" shall mean, collectively, any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any state, county, city or other
political subdivision.
"Hazardous Materials" shall mean any material or substance: (i) which is now
defined as a "hazardous substance," "pollutant," "contaminant," "hazardous
material," "hazardous waste," "extremely hazardous waste," "restricted hazardous
waste," "infectious waste," "toxic substance," or any other formulation intended
to define, list or classify substances by reason of deleterious property, such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, or
reproductive toxicity, under or pursuant to CERCLA, or other Environmental Law,
and existing amendments thereto and regulations promulgated thereunder; (ii)
containing gasoline, oil, diesel fuel or other petroleum products, or fractions
thereof; (iii) which is defined as a "hazardous waste" pursuant to RCRA and
existing amendments thereto and regulations promulgated thereunder; (iv)
containing polychlorinated biphenyls; (v) containing asbestos in any form that
is or could become friable; (vi) which is radioactive; (vii) which is
biologically hazardous; or (viii) the presence of which is regulated by or
subject to, or requires investigation or remediation under, any federal,
international, state, or local statute, regulation, ordinance, policy or other
Environmental Law.
"Intellectual Property" is defined in SECTION 4.18.
"IRS" shall mean the United States Internal Revenue Service.
"Joint Press Release" is defined in SECTION 1.8.7.
"Kinross" is defined in the Preamble.
"Kinross Common Shares" is defined in the Background Section.
"Kinross Securities Filings" is defined in SECTION 3.7.
38
"Knowledge" shall mean with respect to a Person or the actual knowledge of the
officers and directors of such Person and its Subsidiaries.
"Laws" shall mean, collectively, any domestic (federal, state, or local) or
foreign law, statute, ordinance, rule, regulation, judgment, decree, order,
writ, permit or license of any Governmental Entity.
"Liens" shall mean all mortgages, liens, pledges, claims, charges, security
interests or other encumbrances.
"Material" shall mean material to the business, assets, financial condition,
operations or results of operations of a Person and its Subsidiaries, taken as a
whole.
"Material Adverse Effect" shall mean with respect to a Person any change,
effect, occurrence or state of facts that is materially adverse to the business,
financial condition, operations or results of operations of such Person and its
Subsidiaries, taken as a whole.
"Material Contracts" is defined in SECTION 4.14.2.
"Merger" is defined in the Background Section.
"Most Recent Balance Sheet" is defined in SECTION 4.4.1.
"Most Recent Financial Statements" is defined in SECTION 4.4.1.
"Organizational Documents" shall mean the articles or certificate of
incorporation, articles or certificate of formation, bylaws, operating
agreement, limited liability company agreement or other similar formation and/or
governing documents.
"Parent" is defined in the Preamble.
"Permitted Liens" shall mean (i) Liens securing liabilities which are reflected
or reserved against in the most recent balance sheet of Crown filed with the SEC
to the extent so reflected or reserved; (ii) Liens for taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on Crown's
books in accordance with GAAP; (iii) existing mechanic's, materialmen's, and
similar Liens, to the extent that adequate reserves with respect thereto are
reflected in the most recent balance sheet of Crown filed with the SEC; (iv)
existing purchase money Liens for amounts that are not yet due and payable or
which are being contested in good faith if adequate reserves with respect
thereto are maintained in Crown's books in accordance with GAAP; (v) with
respect to real property, existing Liens arising from easements, covenants,
conditions, and restrictions which, individually or in the aggregate, do not
Materially interfere with the existing or proposed use of the real property and
Liens securing rental payments under capital lease arrangements; and (vi)
similar matters of record affecting title to such real property that,
individually and in the aggregate, do not and would not Materially detract from
the value of such property and assets of
39
the Crown or the Crown Subsidiaries or Materially interfere with the use thereof
as currently used.
"Person" shall mean an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization.
"Proxy Statement/Prospectus" is defined in SECTION 6.1.
"Purchaser" is defined in the Preamble.
"Purchaser Shares" shall mean the issued and outstanding shares of the common
stock, $0.01 par value per share, of Purchaser.
"Qualified Plans" is defined in SECTION 4.8.3.2.
"Registration Statement" is defined in Section 6.1.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, ejecting, injecting, escaping, leaching, migrating,
dumping or disposing into the indoor or outdoor environment, including without
limitation the abandonment or discarding or disposal of barrels, drums,
containers, tanks and other receptacles containing or previously containing any
Hazardous Materials.
"Returns" shall mean all United States federal, state, county, local and foreign
returns, reports, declarations, claims for refund, information returns and
statements with respect to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Solitario" shall mean Solitario Resources Corporation, a Colorado corporation.
"Subsidiary" shall mean, with respect to any Person, an entity that is
controlled either directly or indirectly by the Person or in which the Person
directly or indirectly owns or controls more than fifty percent of its equity.
"Superior Proposal" is defined in Section 5.1.5.2.
"Surviving Corporation" is defined in SECTION 1.1.
"Tax" and "Taxes" shall mean (i) all United States federal, state, county,
local, foreign and other taxes of any kind whatsoever (including, without
limitation, income, profits, premium, estimated, excise, sales, use, occupancy,
license, gross receipts, franchise, AD VALOREM, severance, capital levy,
production, transfer, payroll, stamp, occupation, withholding, employment,
unemployment, disability, social security, real property, personal property,
transfer import duties and other
40
governmental charges and assessments), whether or not measured in whole or in
part by net income, and including deficiencies, interest, additions to tax and
penalties with respect thereto, whether disputed or not and (ii) any liability
for the payment of any amount of the type described in the immediately preceding
clause (iii) as a result of being (A) a "transferee" within the meaning of
Section 6901 of the Code (or any other applicable law) of another person, (B) a
member of an affiliated or combined group or (C) pursuant to a tax sharing, tax
allocation, or tax indemnity agreement.
"Treasury Regulation" shall mean the Income Tax Regulations promulgated by the
United States Department of Treasury under the Code, including Temporary
Regulations, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Washington Act" is defined in SECTION 1.1.
41
IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Agreement to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By: /s/ John Ivany
--------------------------------
Name: John Ivany
------------------------------
Title: Exec. V.P.
------------------------------
Purchaser:
CROWN MERGER CORPORATION
By: /s/ Scott Caldwell
---------------------------------
Name: Scott Caldwell
-------------------------------
Title: Director
------------------------------
Crown:
CROWN RESOURCES CORPORATION
By: /s/ Christopher E. Herald
---------------------------------
Name: Christopher E. Herald
-------------------------------
Title: President, CEO
------------------------------
SIGNATURE PAGE TO ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
FIRST AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of April 7, 2004, and entered into by and
among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly-owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003 (the
"Acquisition Agreement"), pursuant to which Purchaser will merger with and into
Crown and Crown will become a wholly-owned subsidiary of Parent. The parties
wish to amend the Acquisition Agreement as set forth herein. Defined terms
contained in this Amendment shall have the meaning ascribed to them in the
Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SUBPARAGRAPH 8.1.2.1. Subparagraph 8.1.2.1 is
amended by replacing the date "June 30, 2004" that currently appears in the
Acquisition Agreement, with the date "September 30, 2004."
2. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Section 1 hereof, the parties specifically ratify, confirm, and
adopt as binding and enforceable, all of the terms and conditions of the
Acquisition Agreement.
IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By: /s/ John Ivany
Name: John Ivany
Title: Executive Vice President
Purchaser:
CROWN MERGER CORPORATION
By: /s/ John Ivany
Name: John Ivany
Title: Director
Crown:
CROWN RESOURCES CORPORATION
By: /s/ Christopher Herald
Name: Christopher Herald
Title: President and CEO
Signature Page to First Amendment to Acquisition Agreement and
Agreement and Plan of Merger
SECOND AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS SECOND AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of September 15, 2004, and entered into by
and among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly-owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004 (the "Acquisition Agreement"), pursuant to
which Purchaser will merge with and into Crown and Crown will become a
wholly-owned subsidiary of Parent. The parties wish to amend the Acquisition
Agreement as set forth herein. Defined terms contained in this Amendment shall
have the meaning ascribed to them in the Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SUBPARAGRAPH 8.1.2.1. Subparagraph 8.1.2.1 is
amended by replacing the date "September 30, 2004" that currently appears in the
Acquisition Agreement, with the date "December 31, 2004."
2. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Section 1 hereof, the parties specifically ratify, confirm, and
adopt as binding and enforceable, all of the terms and conditions of the
Acquisition Agreement.
IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By /s/ John Ivany
John Ivany, Executive Vice
President
Purchaser:
CROWN MERGER CORPORATION
By /s/ John Ivany
John Ivany, Director
Crown:
CROWN RESOURCES CORPORATION
By /s/ Christopher Herald
Christopher Herald, President
and CEO
Signature Page to Second Amendment to Acquisition Agreement and
Agreement and Plan of Merger
THIRD AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS THIRD AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of December 30, 2004, and entered into by
and among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly-owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004 and September 15, 2004 (the "Acquisition
Agreement"), pursuant to which Purchaser will merge with and into Crown and
Crown will become a wholly-owned subsidiary of Parent. The parties wish to amend
the Acquisition Agreement as set forth herein. Defined terms contained in this
Amendment shall have the meaning ascribed to them in the Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
C. Concurrently with this Amendment, Parent proposes to purchase
common stock of Crown as provided in a Stock Purchase Agreement substantially in
the form attached hereto as Exhibit A. Certain of the changes in this Amendment
are made in contemplation of such purchase.
D. In light of the unanticipated delay in implementation of the
Merger, the parties wish to confirm certain matters relating to the
satisfaction, to date, of certain conditions to the obligation of Parent and
Purchaser to consummate the Merger
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SECTION 1.7.1. Section 1.7.1 is amended to read, in
its entirety, as follows:
CONVERSION OF CROWN COMMON STOCK. Each share of Crown Common Stock
(other than Crown Common Stock held by Parent or Purchaser or by a
Dissenter) issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.2911 Kinross Common
Shares (the "Exchange Ratio"). All outstanding shares of Crown Common
Stock as of the Effective Time will automatically be cancelled and
will cease to exist. The certificates formerly representing shares of
Crown Common Stock to be converted into Kinross Common Shares as
described above (each a "Certificate" and, collectively, the
"Certificates") will thereafter represent that number of Kinross Common
Shares determined by the Exchange Ratio. Such certificates held by
Dissenters shall represent the right to pursue such rights as the
Dissenter may have under the Washington Act. Such certificates held by
Parent or Purchaser shall be cancelled and retired and shall cease to
exist and no Kinross Common Shares or other consideration shall be
delivered in exchange therefor.
2. AMENDMENT TO SECTION 8.1.2.1. Section 8.1.2.1 is amended by
replacing the date "December 31, 2004" that currently appears in the Acquisition
Agreement, with the date "May 31, 2005."
3. AMENDMENT TO SECTION 7.1. The introductory paragraph of Section
7.1 is amended by deleting therefrom the language "pursuant to SECTION 7.5".
4. CONFIRMATION AND WAIVER. Pursuant to the introductory paragraph
of Section 7.3, Parent and Purchaser:
(a) waive the conditions expressed in Sections 7.3.5, 7.3.7 and
7.3.8; and
(b) waive the conditions expressed in Sections 7.3.2 and 7.3.3
insofar as such conditions apply as a consequence of an act, event or
condition, of which Parent and Purchaser are currently aware, that
occurred prior to or that exists as of the date of this Amendment.
Parent, Purchaser and Crown represent and warrant as of the date of this
Amendment that they are not aware of any condition in Section 7.3.2 or 7.3.3
that would constitute, individually or in the aggregate a Material Adverse
Effect on the business, properties or prospects of Crown.
5. CONSENT TO SALE OF STOCK. For the purpose of Section 5.1 of the
Acquisition Agreement, Parent consents to the sale of Crown Common Stock as
described in Exhibit A.
6. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Sections 1 through 5 hereof, the parties specifically ratify,
confirm, and adopt as binding and enforceable, all of the terms and conditions
of the Acquisition Agreement.
2
IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By /s/ Lars-Eric Johansson
Lars-Eric Johansson, Duly
Authorized Officer
Purchaser:
CROWN MERGER CORPORATION
By /s/ Lars-Eric Johansson
Lars-Eric Johansson, Director
Crown:
CROWN RESOURCES CORPORATION
By /s/ Christopher Herald
Christopher Herald, President and
CEO
SIGNATURE PAGE TO THIRD AMENDMENT TO ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
EXHIBIT A
CROWN RESOURCES CORPORATION
STOCK PURCHASE AGREEMENT
(SEE ATTACHED)
CROWN RESOURCES CORPORATION
STOCK PURCHASE AGREEMENT
This agreement is dated as of December 30, 2004 and is by and between
CROWN RESOURCES CORPORATION, a Washington corporation, ("Crown") and KINROSS
GOLD CORPORATION, a corporation existing under the laws of the Province of
Ontario, Canada ("Kinross"). Crown and Kinross are parties to an Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004 and September 15, 2004, (the "Merger
Agreement") pursuant to which a subsidiary of Kinross will merge with and into
Crown and Crown will become a wholly-owned subsidiary of Kinross (the "Merger").
As a result of delays in the implementation of the Merger, Crown has incurred
costs, and expects to continue to incur costs, relating to permitting of its
principal property ("Permitting Activities") that it would have incurred as a
subsidiary of Kinross had the Merger been consummated on the anticipated
schedule. It is currently anticipated that the Merger will be consummated on or
before May 31, 2005. In order to provide Crown with the funds required to
continue Permitting Activities as scheduled, Crown has agreed to sell to Kinross
and Kinross has agreed to purchase from Crown, in each case upon the terms and
subject to the conditions set forth below, newly issued shares of Crown Common
Stock.
NOW, THEREFORE, the parties agree as follows:
1. PURCHASE OF CROWN COMMON STOCK. Crown agrees to sell to Kinross
and Kinross agrees to purchase from Crown 511, 640 newly issued shares of Crown
Common Stock (the "Shares"). The purchase price for the Shares is US$1 million,
payable in cash by wire transfer against delivery of a certificate representing
the Shares. The purchase price has been calculated based on the average closing
price of the Crown Common Stock, as reported by NASDAQ, for the twenty trading
days immediately preceding the date of this Agreement. The purchase of the
Shares shall be consummated on or before January 17, 2005.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CROWN. Crown
represents, warrants and covenants to Kinross as follows:
2.1 ORGANIZATION AND STANDING. Crown is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington.
2.2 AUTHORIZATION AND BINDING OBLIGATION. Crown has the necessary
corporate power and authority to enter into and perform this Agreement and to
issue and sell the Shares to Kinross. Crown's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Crown and constitutes the legal, valid and binding obligation of
Crown, enforceable against Crown in accordance with its terms, except as
enforceability thereof may be
1
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and by the exercise of judicial discretion
in accordance with equitable principles.
2.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. The
execution, delivery and performance of this Agreement by Crown will not violate
any pre-emptive or other contractual or statutory right of any other person
enforceable against Crown and no consent of any person is required as a
condition of Crown's performance under this Agreement.
2.4 BROKERAGE. Crown has not entered into any agreements for
brokerage commissions, finders' fees or similar compensation in connection with
the sale of the Shares.
2.5 USE OF PROCEEDS. Crown intends to use the proceeds from the
issuance of Shares under this Agreement ("Proceeds") to pay governmental fees,
consultant fees and other third party costs incurred with respect to Permitting
Activities. Crown will not: (a) pay any Proceeds, directly or indirectly, to any
shareholder or warrant holder of Crown; or (b) apply the Proceeds to pay any
indebtedness of Crown with respect to which any Crown shareholder or warrant
holder is liable or a guarantor.
2.6 ACCOUNTING FOR USE OF PROCEEDS. Crown will maintain records
adequate to demonstrate that the Proceeds and assets of the Account were used in
the manner permitted by Section 2.5, and will provide copies of such records to
Kinross at Kinross' request.
3. REPRESENTATIONS AND WARRANTIES OF KINROSS. Kinross represents
and warrants to Crown as follows:
3.1 ORGANIZATION AND STANDING. Kinross is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario, Canada.
3.2 AUTHORIZATION AND BINDING OBLIGATION. Kinross has the necessary
corporate power and authority to enter into and perform this Agreement and to
purchase the Shares from Crown. Kinross' execution, delivery and performance of
this Agreement has been duly and validly authorized by all necessary action on
its part. This Agreement has been duly executed and delivered by Kinross and
constitutes the legal, valid and binding obligation of Kinross, enforceable
against Kinross in accordance with its terms, except as enforceability thereof
may be limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and by the exercise of judicial discretion
in accordance with equitable principles.
3.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. The
execution, delivery and performance of this Agreement by Kinross will not
violate any pre-emptive or other contractual or statutory right of any other
person enforceable against Kinross and no consent of any person is required as a
condition of Kinross' performance under this Agreement.
3
3.4 BROKERAGE. Kinross has not entered into any agreements for
brokerage commissions, finders' fees or similar compensation in connection with
the sale of the Shares.
3.5 PURCHASE FOR OWN ACCOUNT. Kinross is purchasing the Shares for
investment for its own account and not with a view to distribution or resale.
3.6 KNOWLEDGE AND EXPERIENCE Kinross has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Shares and is able to bear the
economic risks of an investment in the Shares for an indefinite period of time.
3.7 RECEIPT OF INFORMATION. Kinross has met with officers of Crown,
has had an opportunity to ask questions and receive answers concerning Crown and
the terms and conditions of an investment in Crown, and has received all
information that it believes is necessary or desirable in connection with an
investment in the Shares.
3.8 ACKNOWLEDGEMENT OF RESTRICTION. Kinross understands that the
Shares will be "restricted stock" under applicable United States securities
laws, that, as such, the Shares may not be resold in any transaction to which
United States securities laws apply except pursuant to registration or an
applicable exemption therefrom, and that a legend to that affect will be placed
on the certificate representing the Shares.
3.9 NO INCONSISTENT REPRESENTATIONS OR WARRANTIES. Kinross
acknowledges that no representative of Crown has, in contemplation of Kinross'
purchase of the Shares, made any representations or warranties with respect to
the value or performance of Crown or that are inconsistent with the statements
in this Agreement.
4. GOVERNING LAW. This Agreement is governed by and to be construed
in accordance with the laws of Washington, without regard to conflict of law
principles.
5. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
6. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, constitutes the
entire understanding of the parties hereto with respect to the issuance and sale
of the Shares and no amendment, modification or alteration will be binding
unless the same is in writing signed by the party against whom any such
amendment, modification or alteration is sought to be enforced.
3
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement.
KINROSS GOLD CORPORATION CROWN RESOURCES CORPORATION
By: /s/ Lars-Eric Johansson By: /s/ Christopher Herald
Lars-Eric Johansson, Executive Vice Christopher Herald, President and CEO
President
4
FOURTH AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS FOURTH AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of May 31, 2005, and entered into by and
among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004, September 15, 2004, and December 30, 2004 (the
"Acquisition Agreement"), pursuant to which Purchaser will merge with and into
Crown and Crown will become a wholly owned subsidiary of Parent. The parties
wish to amend the Acquisition Agreement as set forth herein. Defined terms
contained in this Amendment shall have the meaning ascribed to them in the
Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
C. On or before June 20, 2005, Parent proposes to cause an
affiliate to purchase from Crown a Convertible Debenture, in the principal
amount of U.S. $10 million, convertible into shares of Crown's common stock,
substantially in the form attached hereto as Exhibit A. Certain of the changes
in this Amendment are made in contemplation of such purchase.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SECTION 1.7.1. Section 1.7.1 is amended to read, in
its entirety, as follows:
CONVERSION OF CROWN COMMON STOCK. Each share of Crown Common Stock
(other than Crown Common Stock held by Parent or Purchaser or by a
Dissenter) issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.34 Kinross Common
Shares (the "Exchange Ratio"). Notwithstanding the foregoing, in the
event that the value for the total number of Kinross Common Shares to be
issued in exchange for, or on exercise or conversion of, all Crown
Common Stock, Warrants, or other instruments or securities convertible
into shares of Crown Common Stock outstanding as of the Closing Date
(including Kinross Common Shares that would
be issued to Dissenters if they had not asserted their right to dissent,
but excluding Kinross Common Shares that would be issued for any Crown
Common Stock held by Parent or Purchaser) shall be less than $77.5
million or more than $110 million, the Exchange Ratio shall be adjusted.
In the event that the total value is less than $77.5 million, the
Exchange Ratio shall be increased so that the value of the total number
of Kinross Common Shares issuable shall be equal to $77.5 million. In
the event that the total value is greater than $110 million, the
Exchange Ratio shall be decreased so that the value of the total number
of Kinross Shares issuable shall be equal to $110 million. For purposes
of the foregoing calculations, the value of the Kinross Common Shares
issuable shall be determined based on the weighted average closing price
of the Kinross Common Shares as reported by the New York Stock Exchange
(or such other principal United States trading market as the Kinross
Common Shares may then be traded on) for the 20 trading day period ended
on the day prior to the Closing Date. All outstanding shares of Crown
Common Stock as of the Effective Time will automatically be cancelled
and will cease to exist. The certificates formerly representing shares
of Crown Common Stock to be converted into Kinross Common Shares as
described above (each a "Certificate" and, collectively, the
"Certificates") will thereafter represent that number of Kinross Common
Shares determined by the Exchange Ratio. Such certificates held by
Dissenters shall represent the right to pursue such rights as the
Dissenter may have under the Washington Act. Such certificates held by
Parent or Purchaser shall be cancelled and retired and shall cease to
exist and no Kinross Common Shares or other consideration shall be
delivered in exchange therefor.
2. AMENDMENT TO SECTION 8.1.2.1. Section 8.1.2.1 is amended to
read, in its entirety, as follows:
The consummation of the Merger has not occurred by (i) March 31, 2006,
so long as Kinross has filed audited financial statements for the year
ended December 31, 2004 with the Securities and Exchange Commission by
December 31, 2005, or (ii) December 31, 2005, if such financial
statements have not been filed; provided, in each case, that the party
seeking to terminate this Agreement pursuant to this clause has not
breached in any Material respect its obligations under this Agreement in
any manner that has contributed to the failure of the consummation of
the Merger on or before such date;
3. CONSENT TO SALE OF CONVERTIBLE DEBENTURE. For the purpose of
Section 5.1 of the Acquisition Agreement, Parent consents to the sale of the
Convertible Debenture, and the issuance of Crown Common Stock upon conversion
thereof, as described in Exhibit A.
4. CONSENT TO PAYMENT OF DIVIDEND. For the purposes of Section 5.1
of the Acquisition Agreement, Parent consents to allow the Crown Board, in its
sole discretion, to declare and authorize the payment by Crown of a dividend
(the "Contemplated Dividend") to the holders of Crown Common Stock, in an amount
not to exceed $0.21 per outstanding share of Crown Common Stock, as of the
record date for such dividend, to be paid on or before September 30, 2005.
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5. TAX CONSEQUENCES. Parent and Crown acknowledge that if Crown
declares and pays the Contemplated Dividend, the provisions of the Acquisition
Agreement tax treatment of the Merger, including, without limitation, Sections
6.8, 6.11, and 7.2.4 of the Acquisition Agreement, will not apply. Accordingly,
Sections 6.8, 6.11, and 7.2.4 and any other provisions of the Acquisition
Agreement apply to the originally contemplated tax treatment, shall be of no
further force or effect in the event that the Contemplated Dividend is paid.
6. PAYMENT OF THIRD-PARTY PERMITTING COSTS. If the Contemplated
Dividend is paid, Parent agrees to pay for all third-party permitting costs
pertaining to the permitting of the Buckhorn Mountain project, including
invoices for past permitting costs, received by Crown after June 1, 2005.
7. TOLL MILLING AGREEMENT. The parties confirm that, in the event
that the merger (as contemplated in the Acquisition Agreement) has not closed
prior to March 31, 2006, or such later date as may be mutually agreed to by the
parties, the Toll Milling Agreement between Crown and Echo Bay Minerals Company,
a wholly-owned subsidiary of Parent, dated November 11, 2003, shall not
terminate solely as a result of the merger not being consummated (although,
depending on the circumstances, the parties may have the right to terminate the
agreement, all as otherwise provided in the Toll Milling Agreement) and that the
Toll Milling Agreement will remain in full force and effect, subject to the
terms thereof.
8. DIRECTORS' FEES AND EXECUTIVE OFFICER COMPENSATION. Parent
acknowledges and consents to the matters set forth in the Crown Board Consent
Resolution dated May 3, 2005, that has previously been provided to Parent
pertaining to 2005 Crown Board fees and Executive Officer compensation.
9. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Sections 1 through 8 hereof, the parties specifically ratify,
confirm, and adopt as binding and enforceable, all of the terms and conditions
of the Acquisition Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By /s/ John Ivany
John Ivany, Duly Authorized
Officer
Purchaser:
CROWN MERGER CORPORATION
By /s/ John Ivany
John Ivany, Director
Crown:
CROWN RESOURCES CORPORATION
By /s/ Christopher Herald
Christopher Herald, President and
CEO
SIGNATURE PAGE TO FOURTH AMENDMENT TO ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
EXHIBIT A
CROWN RESOURCES CORPORATION
CONVERTIBLE DEBENTURE
(SEE ATTACHED)
UNLESS PERMITTED UNDER SECURITIES LEGISLATION,
THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
SECURITY BEFORE OCTOBER 21, 2005.
THE LEGEND ABOVE MAY BE REMOVED AT THE REQUEST OF
THE HOLDER OF THIS SECURITY AFTER OCTOBER 21, 2005
CONVERTIBLE DEBENTURE
U.S. $10,000,000 Dated: June 20, 2005
The undersigned, CROWN RESOURCES CORPORATION, a Washington corporation
("Borrower"), promises to pay to KINROSS GOLD CORPORATION, a corporation
existing under the laws of the Province of Ontario (hereinafter, together with
any subsequent holder of this Debenture, referred to as "Lender"), at 52nd Floor
Scotia Plaza, 40 King Street West, Toronto, Ontario Canada M5H 3Y2, or at such
other place as Lender may designate, in lawful money of the United States, the
principal sum of TEN MILLION DOLLARS AND NO/100 ($10,000,000), together with
interest from the date hereof on the unpaid principal represented by this
Debenture, payable as hereinafter provided.
1. Borrower shall pay to Lender the principal amount of this
Debenture five (5) years from the date hereof (the "Repayment Date"). On the
Repayment Date, the entire then-remaining unpaid principal balance, plus any
accrued and unpaid interest and all other fees and amounts required by this
Debenture, shall be due and payable in full.
2. The outstanding principal balance of this Debenture shall bear
interest for each day from the date hereof, including the date such principal
and interest accrued thereon is repaid in full, or converted as provided in
Section 3 below, at a rate per annum equal to four percent (4%). Interest shall
accrue based upon a year of 360 days. Interest shall be payable on the unpaid
principal balance of this Debenture yearly on the anniversary dates of the date
hereof, beginning one year from the date hereof, and continuing on each
successive anniversary date of the date hereof until the Repayment Date.
Notwithstanding the foregoing, however, Borrower may defer the required interest
payments hereunder due on the first and second anniversaries of the date hereof,
and in such case, all accrued and unpaid interest due for the first three years
under this Debenture shall be due and payable on the date that is three years
from the date hereof.
3. The outstanding principal balance hereof, plus any accrued and
unpaid interest thereon (the "Conversion Value"), or any portion thereof, shall
be convertible into shares of common stock of Borrower (the "Common Stock"), on
the basis of one share of Common Stock per each 1.72414 dollars ($1.72414) of
the Conversion Value, at any time subsequent to September 30, 2005, at the sole
option of the Lender. Notwithstanding the foregoing, the outstanding principal
balance hereof, plus any accrued and unpaid interest thereon shall be
automatically converted into the Common Stock as of the day immediately prior to
the closing of the transactions contemplated by that certain Acquisition
Agreement and Agreement and Plan of Merger, dated as of November 20, 2003, as
amended, entered into by, among others, the Lender and the Borrower (the "Merger
Agreement"). In the event the Merger Agreement is terminated other than on the
default of Borrower, and provided Borrower is not in default hereunder, Borrower
shall have the right to cause the conversion of this Debenture to common stock
of Borrower on the terms set forth above by delivering 30 days prior written
notice to Lender.
4. The number and character of Borrower's common shares issuable
upon conversion of this Debenture shall be adjusted upon the occurrence of any
of the following events: (i) in the event that Borrower shall fix a record date
for the determination of holders of securities affected by any stock split,
stock dividend, stock consolidation, reclassification, recapitalization or other
similar event that will affect the number of outstanding shares of Borrower's
capital stock without additional amounts being paid to Borrower, then, and in
each such case, Lender, upon conversion of this Debenture at any time after such
record date for such event, shall receive that number of shares of Borrower's
common stock (or other securities into which the common stock may have been
converted) to which Lender would have been entitled if it had converted this
Debenture immediately prior to such record date; and (ii) in the event that
Borrower, after the date hereof, shall reorganize, consolidate with, or merge
into another entity or convey all or substantially all of its assets to another
entity, then Lender, upon the conversion of this Debenture at any time after the
consummation of such transaction, shall be entitled to receive, in lieu of the
securities and property receivable upon the conversion of this Debenture prior
to such consummation, the stock or other securities or property to which Lender
would have been entitled to receive upon the consummation of such transaction if
it had converted this Debenture immediately prior thereto, and the successor or
purchasing corporation in such transaction shall duly execute and deliver to
Lender an acknowledgement of its obligations hereunder.
5. Each payment under this Debenture shall be applied first to the
payment of Lender's costs, fees and expenses as provided herein, second, to
accrued but unpaid interest due under this Debenture, and third, to the
reduction of unpaid principal owing under this Debenture.
6. Lender is purchasing the Debenture for its own account and not
with a view to distribution or resale. Until the termination or consummation of
the Merger Agreement, Lender agrees not to transfer this Debenture or the shares
of common stock issuable on conversion of the Debenture to any person other than
an entity controlled by, controlling or under common control with Lender.
7. If one or more of the following events (each an "Event of
Default") shall have occurred and be continuing:
(a) Borrower shall fail to pay any principal of this
Debenture when due, or interest thereon or any fees or any other amounts
payable hereunder within 10 days after the due date thereof;
(b) Borrower shall fail to pay its debts generally as they
become due, or shall file a petition, proceeding, case or action for
relief under any bankruptcy, reorganization, insolvency or moratorium
law, rule, regulation, statute or ordinance (each a "Law"), or any other
Law for the relief of, or related to, debtors; or
(c) Any involuntary petition is filed under any bankruptcy
or similar Law against Borrower, or a receiver, trustee, liquidator,
assignee, custodian, sequestrator or other similar official is appointed
to take possession of any of the assets or properties of Borrower;
then, and in every such event, without notice to Borrower or any other act by
Lender, the entire unpaid principal balance hereunder, together with all accrued
but unpaid interest and all fees and charges required by this Debenture, shall,
at the option of Lender, at once become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby waived by
Borrower (time being the essence hereof). The failure of Lender to exercise any
right or remedy upon the occurrence or
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continuance of an Event of Default shall not constitute or be construed to
constitute a waiver of any right or remedy of Lender.
8. Notwithstanding any other provision contained in this Debenture
or in any agreement, document or instrument related to the transaction of which
this Debenture is a part: (a) the rates of interest and charges and the payments
provided for herein and therein shall in no event exceed the rates and charges
and the payments which would result in interest being charged at a rate equaling
the maximum allowed by law; and (b) if, for any reason whatsoever, Lender ever
receives as interest (or as a charge in the nature of interest) in connection
with the transaction of which this Debenture is a part an amount which would
result in interest being charged at a rate exceeding the maximum allowed by law,
such amount or portion thereof as would otherwise be excessive interest shall
automatically be applied toward reduction of the unpaid principal balance then
outstanding hereunder. Any such amount shall not be applied toward payment of
interest (or toward payment of a charge in the nature of interest).
9. In the event that (a) any payment under this Debenture is not
made at the time and in the manner required hereunder, (b) Lender incurs any
costs of collection or other costs reasonably necessary for the protection of
the interest of Lender with respect to this Debenture, or (c) Lender exercises
its right to accelerate the maturity of the obligations hereunder, Borrower
agrees to pay any and all costs and expenses (regardless of the particular
nature thereof and whether incurred before or after the initiation of suit or
before or after judgment) which may be incurred by Lender in connection with the
enforcement of any of its rights under this Debenture, including court costs and
attorneys' fees.
10. The undersigned hereby waives presentment for payment and notice
or dishonor of this Debenture.
11. Subject to the restrictions of Section 6 hereof, Lender may
assign this Debenture and/or any interest therein without the approval, consent
or permission of Borrower.
12. Except as expressly set forth to the contrary in this Debenture,
all notices, requests, or consents provided for or permitted to be given under
this Debenture must be in writing and shall be deemed delivered: (i) upon
delivery if delivered in person or by telecopy with confirmation of receipt;
(ii) three business days after deposit in the United States or Canadian mail,
addressed to the recipient, postage prepaid, and registered or certified with
return receipt requested; or (iii) one business day after deposit with a
national overnight courier. Such notices, demands, and other communications
shall be sent to each party at the address or telecopy number indicated below:
If to Lender:
Kinross Gold Corporation
52nd Floor Scotia Plaza
40 King Street West
Toronto, Ontario Canada M5H 3Y2
Telephone: (416) 365-5123
Facsimile: (416) 363-6622
with a copy to:
Keith L. Pope
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111-1537
Telephone: (801) 531-7840
Facsimile: (801) 532-7750
If to Borrower:
Crown Resources Corporation
4251 Kipling Street, Suite 390
Wheat Ridge, Colorado 80033
Telephone: (303) 534-1030
Facsimile: (303) 534-1809
with a copy to:
John J. Halle
Stoel Rives LLP
900 S.W. Fifth Avenue, Suite 2600
Portland, Oregon 97204-1268
Telephone: (503) 224-3380
Facsimile: (503) 220-2480
or to such other address or telecopy number of such other person as the
recipient party has specified by prior written notice to the sending party.
13. Except for matters governed by federal law, all other issues and
questions concerning the construction, validity, enforcement and interpretation
of this Debenture and the exhibits and schedules hereto shall be governed by,
and construed in accordance with, the laws of the State of Washington, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Washington or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Washington.
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IN WITNESS WHEREOF, Borrower has caused this Debenture to be signed in
its name as of the date first above written.
"BORROWER"
CROWN RESOURCES CORPORATION
a Washington corporation
By: /s/ Christopher E. Herald
-------------------------
Name: Christopher E. Herald
---------------------
Its: President and CEO
-----------------
FIFTH AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS FIFTH AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of February 24, 2006, and entered into by
and among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004, September 15, 2004, December 30, 2004, and May
31, 2005 (the "Acquisition Agreement"), pursuant to which Purchaser will merge
with and into Crown and Crown will become a wholly owned subsidiary of Parent.
The parties wish to amend the Acquisition Agreement as set forth herein. Defined
terms contained in this Amendment shall have the meaning ascribed to them in the
Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SECTION 1.7.1. Section 1.7.1 is amended to read, in
its entirety, as follows:
CONVERSION OF CROWN COMMON STOCK. Each share of Crown Common Stock
(other than Crown Common Stock held by Parent or Purchaser or by a
Dissenter) issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.32 Kinross Common
Shares (the "Exchange Ratio"). All outstanding shares of Crown Common
Stock as of the Effective Time will automatically be cancelled and will
cease to exist. The certificates formerly representing shares of Crown
Common Stock to be converted into Kinross Common Shares as described
above (each a "Certificate" and, collectively, the "Certificates") will
thereafter represent that number of Kinross Common Shares determined by
the Exchange Ratio. Such certificates held by Dissenters shall represent
the right to pursue such rights as the Dissenter may have under the
Washington Act. Such certificates held by Parent or Purchaser shall be
cancelled and retired and shall cease to exist and no Kinross Common
Shares or other consideration shall be delivered in exchange therefor.
2. AMENDMENT TO THE BACKGROUND SECTION AND TO SECTION 1.8.
The amount 0.2911 is changed to 0.32 in the first paragraph under
Background and in Section 1.8 of the Agreement
3. AMENDMENT TO SECTION 8.1.2.1. Section 8.1.2.1 is amended to
read, in its entirety, as follows:
The consummation of the Merger has not occurred by December 31, 2006,
provided that the party seeking to terminate this Agreement pursuant to
this clause has not breached in any Material respect its obligations
under this Agreement in any manner that has contributed to the failure
of the consummation of the Merger on or before such date;
4. ROYALTY OBLIGATION. Crown has a royalty obligation payable to
Newmont Mining Corporation ("Newmont") with respect to the Buckhorn Mountain
Project that can be satisfied in full by the payment of $2 million (the "Buy Out
Amount") to Newmont at any time prior to July 23, 2006. In the event that the
transaction contemplated by this Acquisition Agreement is not closed prior to
July 1, 2006, Crown agrees to pay the Buy Out Amount to Newmont if it determines
that it is appropriate to do so, or if it is requested by Kinross to do so. In
either such event, Kinross will, at the request of Crown, loan up to $2 million
to Crown in order to permit it to pay the Buy Out Amount to Newmont prior to
July 23, 2006. Any such loan would bear interest at the prime rate published for
major U.S. financial institutions in the WALL STREET JOURNAL on the day
preceding the loan, plus 3%. Interest would be paid quarterly in arrears and the
principal, plus any other unpaid amounts, would be due 3 years subsequent to the
date of the loan.
5. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Sections 1 through 4 hereof, the parties specifically ratify,
confirm, and adopt as binding and enforceable, all of the terms and conditions
of the Acquisition Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By /s/ Hugh A. Agro
----------------
Hugh A. Agro, Sr. Vice-President
Purchaser:
CROWN MERGER CORPORATION
By /s/ Lars-Eric Johansson
-----------------------
Lars-Eric Johansson, Authorized
Officer
Crown:
CROWN RESOURCES CORPORATION
By /s/ Christopher Herald
----------------------
Christopher Herald, President and
CEO
EXHIBIT B
CONVERTIBLE DEBENTURE
See Exhibit A to the Fourth Amendment to Acquisition Agreement and Agreement
and Plan of Merger, which is included in Exhibit A attached hereto