EXHIBIT 10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of February 20, 2003 (this
"Agreement"), is made and entered into by and among Coeur d'Alene Mines
Corporation, an Idaho corporation (the "Company"), and each of the persons
signatory and listed on Annex A hereto (each, a "Purchaser").
RECITALS
WHEREAS, the Company has proposed to create and issue a new series of
convertible debt securities (the "Notes");
WHEREAS, the Company and each Purchaser desire, on the terms and
conditions set forth herein, that each Purchaser shall purchase an amount of
Notes; and
WHEREAS, simultaneously with the execution of this Agreement, the Company
will enter into agreements to sell the Notes to other purchasers pursuant to
agreements identical to this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
SECTION 1. PURCHASE OF NOTES FOR CASH
1.1 Purchase. Subject to the terms and conditions hereof, each Purchaser
agrees severally and not jointly to purchase at the Closing (as defined below)
and the Company agrees to sell and issue to each Purchaser at the Closing the
principal amount of Notes as set forth opposite such Purchaser's name on Annex A
hereto. In consideration for the issuance of the Notes pursuant to this
Agreement, each Purchaser shall pay to the Company at Closing the dollar amount
set forth opposite such Purchaser's name on Annex A hereto. Simultaneously with
the execution of this Agreement, the Company is executing other purchase
agreements identical to this Agreement (the "Other Purchase Agreements") with
other purchasers (the "Other Purchasers" and, together with each Purchaser
hereunder, the "Purchasers"). The aggregate principal amount of the Notes to be
issued to the Purchasers is Thirty-Seven Million One Hundred Eighty-Five
Thousand Dollars ($37,185,000). The aggregate consideration to be paid for the
Notes by the Purchasers is Thirty-Three Million Seven Hundred Eighty-Six
Thousand Two Hundred Ninety-One Dollars ($33,786,291).
1.2 Terms of Notes; Indenture. The Notes will be issued pursuant to an
Indenture (the "Indenture") to be dated as of the Closing Date, in form and
substance reasonably acceptable to the Company and the Purchasers and otherwise
as set forth in Annex C attached hereto, between the Company and The Bank of New
York (or another trustee as agreed by the Company and the Purchasers), as
trustee (the "Trustee"). Such Indenture shall contain terms substantially
similar to the final term sheet for the offering of the Notes, a form of which
is attached hereto as Annex D.
1.3 Registration Rights. The Notes will be subject to the registration
rights set forth in a registration rights agreement among the Company and the
Purchasers signatory hereto, dated as of Closing Date, and in form and substance
reasonably acceptable to the Company and such Purchasers and otherwise as set
forth in Annex E attached hereto (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, the Company will agree, among other
things, to use its best efforts to file with the SEC a shelf registration
statement pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act") relating to the resale of the Notes and the Company's common
stock, par value $1.00 per share (the "Common Stock") issuable upon conversion
of the Notes (the "Shelf Registration Statement") and to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required, in order to permit the prospectus forming part thereof to be usable by
the Purchasers signatory hereto for a period of two years after the Closing Date
or, if earlier, when all of the registrable securities covered by such Shelf
Registration Statement (i) have been sold pursuant to the Shelf Registration
Statement in accordance with the intended method of distribution thereunder,
(ii) become eligible for resale pursuant to Rule 144(k) under the 1933 Act or
(iii) cease to be registrable securities under the Registration Rights
Agreement. The Registration Rights agreement will provide, among other things,
that if the Shelf Registration Statement is not declared effective by the SEC
within 90 days after the Closing Date, then on the 91st day after the Closing
Date, the Company shall make a cash payment to the holders of the Notes equal to
$9.086 for each $1,000 principal amount of the Notes held. If the Shelf
Registration Statement is not declared effective by the SEC within 120 days
after the Closing Date, then on the 121st day after the Closing Date (or the 5th
day after the date on which such Shelf Registration Statement ceases to be
effective or usable by the Purchasers signatory hereto for any reason for any
period other than the mutually agreed blackout periods contemplated by the
Registration Rights Agreement) and on each date which is 30 days after any such
date, the Company shall make a cash payment to the holders of the Notes equal to
$12.1147 for each $1,000 principal amount of the Notes held, until such time as
the Shelf Registration Statement shall be declared effective by the SEC, at
which time the Company's obligation to make such cash payments shall cease.
Except as set forth above or as otherwise provided for in the Indenture or the
Registration Rights Agreement, no additional interest shall be payable on the
Notes due to any delay in having the Shelf Registration Statement declared
effective by the SEC.
SECTION 2. CLOSING.
2.1 Closing. Upon satisfaction of the conditions set forth in Sections 6.1
and 6.2, the closing of the transactions contemplated hereby shall take place at
the offices of Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
CA 90071, on February 28, 2003 (the "Closing Date"), or at such other time and
place as the parties may agree (the "Closing").
2.2 Delivery at the Closing. Deliveries of certificates for the Notes
shall be made at the Closing and payment of the purchase price for the Notes
shall be made by the Purchasers via wire transfer of immediately available funds
contemporaneous with Closing to the Company at Bank of America, Coeur d'Alene,
Idaho, ABA #125000024, Account #67520304, Beneficiary: Coeur d'Alene Mines
Corporation, Reference: New Note Proceeds. Certificates for the Notes shall be
in such denominations as the Purchasers may request in writing prior to the
Closing Time. Each global certificate representing Notes shall be registered in
the name of Cede & Co. pursuant to the Letter of Representations with The
Depository Trust Company ("DTC"). DTC
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will credit the accounts of the Purchasers to reflect their purchase of the
Notes acquired by them hereunder.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Purchaser, as of the date hereof and as of the
Closing Date, except as set forth in any reports required to be filed by it with
the SEC under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof (the foregoing materials being collectively referred to herein as the
"SEC Reports"), as follows:
3.1 SEC Reports. The Company has timely filed all SEC Reports since
January 1, 2000. As of their respective filing dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Reports. None of the SEC Reports as of their respective dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading (except to
the extent corrected, updated, modified or superceded by a subsequently filed
SEC Report).
3.2 Financial Statements. Except as set forth on Schedule 3.2, the
financial statements of the Company included in the SEC Reports (including the
related notes and supporting schedules) (a) complied as of their respective
dates of filing with the SEC in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (b) have been prepared (i) in accordance with generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements, as
permitted by Regulation S-X promulgated by the SEC), (ii) on a consistent basis
for all periods presented (except as may be indicated in the notes thereto), and
(iii) in accordance with the books and records of the Company, (c) are complete
and correct in all material respects, and (d) fairly present in all material
respects the financial condition of the Company as at said dates, and the
results of operations and cash flows for the periods stated (subject, in the
case of unaudited statements, to normal year-end audit adjustments, which are
consistent in magnitude and scope with audit adjustments made in prior audited
periods included in the SEC Reports). As of the date hereof and except as set
forth on Schedule 3.2 or Schedule 3.3 (item 5), the Company is not aware of any
material adjustments to its historical financial statements that will be
required in connection with the audit of the Company's financial statements at
December 31, 2002 or for the three-year period then ended.
3.3 No Material Adverse Change in Business. Since September 30, 2002,
except as otherwise stated in the SEC Reports, as contemplated therein or as set
forth in Schedule 3.3 attached hereto, there has not been (A) any material
adverse change in the condition, financial or otherwise, or in the revenues,
earnings, business or affairs of the Company and its subsidiaries considered as
a whole, whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) any transaction entered into by the Company or any of its
subsidiaries, other than in the ordinary course of business, that is material to
the Company and its subsidiaries considered as a whole, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on any class or
series of its capital stock other than regular quarterly dividends on the
Company's Common Stock.
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3.4 Due Incorporation and Good Standing of the Company. The Company has
been duly organized and is validly existing as a corporation in good standing
under the laws of the State of Idaho, with all requisite power and authority
under such laws to own, lease and operate its properties, to conduct its
business as now being conducted and to enter into and perform its obligations
under this Agreement, the Indenture, the Notes, the Registration Rights
Agreement; the Company is duly qualified or registered as a foreign corporation
and is in good standing in each jurisdiction in which such qualification or
registration is required, whether by reason of the ownership or leasing of
properties or the conduct of business, except where the failure to so qualify or
register would not have a Material Adverse Effect.
3.5 Due Organization and Good Standing of Significant Subsidiaries. Each
subsidiary of the Company that is a "significant subsidiary" (as defined in
Section 1-02 of Regulation S-X, a "Significant Subsidiary") has been duly
organized and is validly existing as a corporation, limited partnership, limited
liability company or other entity, as the case may be, in good standing under
the laws of its jurisdiction of organization (to the extent the "good standing"
concept is applicable in the case of any jurisdiction outside the United
States), with all requisite power and authority to own, lease and operate its
properties and to conduct its business as being conducted; and each Significant
Subsidiary is duly qualified or registered as a foreign corporation, limited
partnership or limited liability company or other entity, as the case may be, to
transact business and is in good standing in each jurisdiction in which such
qualification or registration is required (to the extent the "good standing"
concept is applicable in the case of any jurisdiction outside the United
States), whether by reason of the ownership or leasing of properties or the
conduct of business, except where the failure to so qualify or register would
not have a Material Adverse Effect.
3.6 Capital Stock Duly Authorized and Validly Issued. All of the issued
and outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and nonassessable; all of the issued and
outstanding capital stock or other equity interests of each Significant
Subsidiary of the Company has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries (except for directors' qualifying shares), free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equitable right
(collectively, "Liens"); and none of the issued and outstanding capital stock or
other equity interests of the Company or any of its Significant Subsidiaries was
issued in violation of any preemptive or similar rights arising by operation of
law, under the charter, bylaws or other organizational documents of the Company
or any of its subsidiaries or under any agreement to which the Company or any of
its subsidiaries is a party.
3.7 Capitalization. The authorized, issued and outstanding capital stock
and long-term indebtedness of the Company is as set forth in Schedule 3.7
attached hereto, as of the dates set forth on such schedule; and there has not
been (A) any subsequent issuance of capital stock of the Company, except for
subsequent issuances, if any, pursuant to any outstanding securities or benefit
or compensation plans described in the SEC Reports or (B) any subsequent
increase exceeding five percent of the amount shown under the heading "Other
long-term liabilities", if any, in the outstanding principal amount of other
long-term liabilities, except as otherwise disclosed in the SEC Reports.
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3.8 Authorization of Agreements. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforcement is limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity) (collectively, the "Enforceability
Exceptions"). Each of the Indenture, the Notes and the Registration Rights
Agreement has been duly authorized, and when executed and delivered by the
Company upon the Closing Date will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent enforceability may be limited by the Enforceability
Exceptions and except that enforcement of rights to indemnification and
contribution contained therein may be limited by applicable federal or state
laws or the public policy underlying such laws.
3.9 Not an Investment Company. The Company and each of its subsidiaries
has conducted, and as of the date hereof intends in the future to conduct, its
affairs in such a manner as to ensure that it is not and will not become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"),
and the Rules and Regulations thereunder.
3.10 Absence of Defaults and Conflicts. Neither the Company nor any of its
Significant Subsidiaries is in violation of its charter, bylaws or other
organizational documents, as the case may be; none of the other subsidiaries of
the Company are in violation of their respective charter, bylaws or other
organizational documents, as the case may be, in any material respect; neither
the Company nor any of its subsidiaries is in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which it is a party or by which it or
any of them may be bound or to which any of their respective properties or
assets is subject (collectively, "Agreements and Instruments"), except for such
defaults under Agreements and Instruments that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement by the Company, the
issuance, sale and delivery of the Notes, the consummation of the transactions
contemplated by this Agreement, the Indenture and the Registration Rights
Agreement, and compliance by the Company with the terms of this Agreement, the
Indenture, the Registration Rights Agreement, the Notes, have been duly
authorized by all necessary corporate action on the part of the Company and do
not and will not, whether with or without the giving of notice or passage of
time or both, violate, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any Lien upon any properties
or assets of the Company or any of its subsidiaries pursuant to, any Agreements
and Instruments, except for such conflicts, breaches, defaults or Liens that,
singularly or in the aggregate, would not result in a Material Adverse Effect
and that would not (i) jeopardize the Company's ability to consummate the
transactions contemplated by this Agreement, the Indenture and the Registration
Rights Agreement or (ii) impair or adversely affect the enforceability of this
Agreement, the Indenture or the Registration Rights Agreement against the
Company, nor will any of the foregoing result in any violation of the provisions
of the charter, bylaws or other organizational documents of the Company or any
of its subsidiaries or any violation by the Company or any of its subsidiaries
of any applicable laws, statutes, rules,
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regulations, judgments, orders, writs or decrees of any government, governmental
authority, agency or instrumentality or court (collectively, "Governmental
Entities").
3.11 Absence of Labor Dispute. Except as set forth on Schedule 3.11, no
labor dispute with the employees of the Company or any subsidiary exists or, to
the knowledge of the Company, has been threatened, and the Company has not
received written notice of any existing or threatened labor disturbance by the
employees of any of its or any subsidiary's principal suppliers, manufacturers,
customers or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
3.12 Absence of Proceedings. There is no action, suit, proceeding, inquiry
or investigation before or brought by any Governmental Entity, now pending, or,
to the knowledge of the Company, threatened, against the Company or any of its
subsidiaries, which is not disclosed in the SEC Reports and which would
reasonably be expected to result in a Material Adverse Effect, or which could
materially and adversely affect the consummation of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement or the performance by the Company of its obligations hereunder,
thereunder or under the Notes; and the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective properties or assets is the subject
which are not described in the SEC Reports, including ordinary routine
litigation incidental to the business, would not reasonably be expected to
result in a Material Adverse Effect.
3.13 Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
Governmental Entity is necessary or required for the execution, delivery or
performance by the Company of its obligations under this Agreement, the
Indenture, the Notes, the Registration Rights Agreement, or the consummation by
the Company of the transactions contemplated by this Agreement, the Indenture or
the Registration Rights Agreement, except as may be required under the
securities laws of the various states and foreign jurisdictions in which the
Notes will be offered and sold or as may be required by the Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.
3.14 Possession of Licenses and Permits. Each of the Company and its
subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
Governmental Entities necessary to conduct the business now conducted by them,
except where the failure to possess any such Governmental License would not
result in a Material Adverse Effect; each of the Company and its subsidiaries is
in compliance with the terms and conditions of all Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate, result in
a Material Adverse Effect; all Governmental Licenses are valid and in full force
and effect, except where the invalidity of Governmental Licenses or the failure
of Governmental Licenses to be in full force and effect would not result in a
Material Adverse Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any Governmental Licenses which would, singly or in the aggregate, result in a
Material Adverse Effect.
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3.15 Title to Property. Each of the Company and its subsidiaries has good
and marketable title to all of their respective real properties owned by them
and good title to their respective personal properties owned by them, in each
case free and clear of all Liens, except (i) as disclosed in the SEC Reports or
(ii) as does not have a Material Adverse Effect and does not interfere in any
material respect with the use made and proposed to be made of such property by
the Company and its subsidiaries considered as a whole; and all of the leases
and subleases material to the business of the Company and its subsidiaries
considered as a whole, and under which the Company or any of its subsidiaries
holds properties, are in full force and effect and neither the Company nor any
of its subsidiaries has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any of its
subsidiaries under any of such leases or subleases, or affecting or questioning
the rights of such entity to the continued possession of the leased or subleased
premises under any such lease or sublease, except where such claims would not
reasonably be expected to result in a Material Adverse Effect.
3.16 Intellectual Property. Each of the Company and its subsidiaries owns
or possesses, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") presently employed
by them in connection with the business now operated by them or reasonably
necessary in order to conduct such business, except where the failure to own,
possess or acquire any such Intellectual Property would not reasonably be
expected to result in a Material Adverse Effect; and neither the Company nor any
of its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy would, singly or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
3.17 No Registration. Subject to the accuracy of the representations of
the Purchasers, and except as otherwise contemplated in the Registration Rights
Agreement, it is not necessary in connection with the offer, sale and delivery
of the Notes to the Purchasers in the manner contemplated by this Agreement (it
being understood that the aforementioned representation shall not cover any
subsequent resales of the Notes) to register the Notes under the Securities Act
or to qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
3.18 Trust Indenture Act. The Indenture complies as to form in all
material respects with the requirements of the 1939 Act and the rules and
regulations of the SEC applicable to an indenture which is qualified thereunder.
3.19 No General Solicitation. None of the Company or any of its
"affiliates" (as such term is defined in Rule 501(b) of Regulation D of the
Securities Act ("Regulation D")), has, directly or through an agent, engaged in
any form of general solicitation or general advertising in connection with the
offering of the Notes under the Securities Act or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act; and
the Company has
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not entered into any contractual arrangement with respect to the distribution of
the Notes, except for this Agreement and the Registration Rights Agreement and
the Company will not enter into any such arrangement.
3.20 No Integration. None of the Company or any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the
Notes.
3.21 Ore Reserve Reports. All of the information provided by the Company
in connection with the preparation of its ore reserve reports was, at the time
provided, and continues to be as of the date hereof, true and correct in all
material respects. The Company believes that all of the assumptions made by its
internal Ore Reserve Committee and/or independent third parties in reaching the
conclusions stated in the ore reserve reports are reasonable and appropriate,
and that the production estimates of the Company which are based on the ore
reserve reports are reasonable and appropriate.
3.22 Mining Rights. The Company or each of its subsidiaries holds freehold
title, mining leases, mining claims or other conventional proprietary interests
or rights recognized in the jurisdiction in which each property described in the
SEC Reports is located, in the ore bodies and mineral inventories described in
the SEC Reports (and all properties respectively relating thereto) under valid,
subsisting and enforceable title documents, contracts, leases, licenses of
occupation, mining concessions, permits, or other recognized and enforceable
instruments and documents, sufficient to permit the Company or each of its
subsidiaries, as the case may be, to explore for, extract, exploit, remove,
process and refine the minerals relating thereto, except where the failure to so
hold such interests or rights would not have a Material Adverse Effect. In
addition, either the Company or each of its subsidiaries has all necessary
surface rights, water rights and rights in water, rights of way, licenses,
easements, ingress, egress and access rights, and all other necessary rights and
interests granting the Company or each of its subsidiaries, as the case may be,
the rights and ability to explore for, mine, extract, and remove the minerals
derived from the ore bodies and mineral inventories described in the SEC Reports
and to transport for refinement or market or distribute the ore and metals
produced, all as referred to in the SEC Reports, with only such exceptions as
are described in the SEC Reports or as do not have a Material Adverse Effect.
Each of the aforementioned interests and rights is currently in good standing
except for those interests and claims which, if not kept in good standing, would
not have a Material Adverse Effect.
3.23 Independent Auditors. Ernst & Young LLP, who has reported upon the
fiscal year 1998 audited financial statements of the Company, and Arthur
Andersen LLP, who has reported upon the fiscal year 1999, fiscal year 2000 and
fiscal year 2001 audited financial statements of the Company, are, and during
the periods covered by the reports were, independent of the Company as defined
under the Securities Act. KPMG LLP, who is expected to report upon the fiscal
year 2002 audited financial statements of the Company, will be, and during the
periods covered by the reports, will have been, independent of the Company as
defined under the Securities Act.
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3.24 Regulation M. The Company has not taken and will not take, directly
or indirectly, any action resulting in a violation of Rule 102 of Regulation M
promulgated under the Exchange Act or designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the distribution of the Notes.
3.25 Environmental Matters. Except as disclosed in the SEC Reports and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (i) neither the Company nor any of its subsidiaries is in violation of
or has liability under any federal, state, local, municipal or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials"), to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, or to the restoration, reclamation of or compensation for
natural resources (collectively, "Environmental Laws"), (ii) the Company and its
subsidiaries have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (iii) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) to the knowledge of the Company,
there are no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials
or any Environmental Laws.
3.26 Common Stock. Except as set forth on Schedule 3.26 attached hereto,
the Company has not received any notice from the New York Stock Exchange
regarding the de-listing of its Common Stock and the board of directors of the
Company has not taken any action to de-list the Company's Common Stock from the
New York Stock Exchange or to effect any stock split, reverse stock split or
similar transaction relating to the Company's Common Stock.
3.27 Authorization of Common Shares. At or prior to the Closing, the
Company will have reserved for issuance the shares of Common Stock issuable upon
conversion of the Notes. Upon their issuance in accordance with the terms of the
Notes, the shares of Common Stock issued upon conversion of the Notes will be
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock free of all preemptive or similar rights.
3.28 Non-public Information. The Company has not disclosed to the
Purchasers, orally or in writing, any information (including information
contained in any schedule to this Agreement) which the Company's directors or
officers are aware, that has not been disclosed to the public in SEC Reports
which the Company considers to be material to the financial
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condition, operating results or assets of the Company or that it considers
material to purchasers and sellers of the Company's Common Stock.
3.29 Other Registration Rights Obligations. Except with respect to the
rights contained in the Registration Rights Agreement and with respect to the
contractual right of Asarco Incorporated to require registration for public
resale of 7,125,000 shares of common stock (as to which Asarco Incorporated has
required such registration), there are no contracts, agreements or other
documents between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned, directly or
indirectly, by such person
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser represents and warrants to the Company that:
4.1 Investment Intent. The Purchaser is acquiring the Notes pursuant to
this Agreement with its own funds or property for its own account and not as a
nominee or agent for the account of any other person. The Purchaser is
purchasing the Notes for investment purposes and not with a view to the sale or
distribution of any Notes in contravention of the Securities Act.
4.2 No Public Offering. The Purchaser is able to bear the economic risk of
its investment in the Notes. The Purchaser is aware that it must be prepared to
hold the Notes for an indefinite period and that the Notes have not been, and
when issued will not be, registered under the Securities Act or registered or
qualified under any state securities law, on the ground that the Notes are being
issued by the Company without any public offering within the meaning of Section
4(2) of the Securities Act. The Purchaser understands that the Company's
reliance on such exemption is predicated on the Purchaser's representations set
forth herein; provided, however, that by making the representations herein, such
Purchaser does not agree to hold any of the Notes for any minimum or other
specific term and reserves the right to dispose of the Notes at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.
4.3 Receipt of Information. The Purchaser has had an opportunity to
discuss the terms and conditions of the offering of the Notes and the Company's
business, management and financial affairs with the Company's management and to
obtain additional information necessary to verify the accuracy of any
information furnished to the Purchaser or to which the Purchaser had access. The
Purchaser is not subscribing for the Notes as a result of any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or any solicitation of a
subscription by any person not previously known to the Purchaser in connection
with investments in securities generally.
4.4 Securities will be "Restricted Securities". The Purchaser understands
that the Notes, and any shares of Common Stock issued upon any conversion
thereof, will be "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act and, accordingly, that the Notes may not be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. The Purchaser understands and agrees that, except as provided herein
and in the Registration Rights Agreement, the Company is not under any
obligation to register the Notes
10
under the Securities Act. The Purchaser is aware that the Notes (and any common
stock issued on the conversion thereof) may not be sold pursuant to Rule 144
promulgated under the Securities Act unless the conditions of that Rule are met
or such rule is no longer applicable.
4.5 Accredited Purchaser. The Purchaser has been advised or is aware of
the provisions of Regulation D under the Securities Act relating to the
accreditation of Purchasers, and the Purchaser is an "accredited purchaser" as
defined in Rule 501 of Regulation D promulgated under the Securities Act.
4.6 Sophistication of the Purchaser. The Purchaser has such knowledge and
experience in financial and business matters that the Purchaser is capable of
evaluating the merits and risks of the investment contemplated by this Agreement
and has the capacity to protect its own interests. The Purchaser acknowledges
that investment in the Notes is highly speculative and involves a substantial
and high degree of risk of loss of the Purchaser's entire investment. The
Purchaser has adequate means of providing for current and anticipated financial
needs and contingencies, is able to bear the economic risk of the investment for
an indefinite period of time and could afford complete loss of such investment.
4.7 Brokers' Fees. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Purchaser.
4.8 Due Organization and Good Standing of the Purchaser. The Purchaser has
been duly organized and is validly existing as an entity in good standing under
the laws of the state of its organization, with all requisite power and
authority under such laws to enter into and perform its obligations under this
Agreement and the Registration Rights Agreement.
4.9 Authorization of Agreements. This Agreement has been duly authorized,
executed and delivered by the Purchaser and constitutes a valid and legally
binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforcement is limited by the
Enforceability Exceptions. Prior to the Closing, the Registration Rights
Agreement will have been duly authorized, and when executed and delivered by the
Purchaser upon the Closing Date will constitute a valid and legally binding
agreement of the Purchaser, enforceable against the Purchaser in accordance with
its terms, except to the extent enforceability may be limited by the
Enforceability Exceptions and except that enforcement of rights to
indemnification and contribution contained therein may be limited by applicable
federal or state laws or the public policy underlying such laws.
4.10 Absence of Proceedings. There is no action, suit, proceeding, inquiry
or investigation before or brought by any Governmental Entity, now pending, or,
to the knowledge of the Purchaser, threatened, against the Purchaser which could
materially and adversely affect the consummation of the transactions
contemplated by this Agreement or the performance by the Purchaser of its
obligations hereunder.
4.11 Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
Governmental Entity is necessary or required for the execution, delivery or
performance by the Purchaser of its
11
obligations under this Agreement, the Registration Rights Agreement, or the
consummation by the Purchaser of the transactions contemplated by this Agreement
or the Registration Rights Agreement, except as may be required under the
securities laws of the various states and foreign jurisdictions in which the
Notes will be offered and sold or as may be required by the Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.
4.12 Financial Wherewithal. Purchaser has and will have on the Closing
Date sufficient liquidity to pay the cash consideration set forth opposite its
name on Annex A attached hereto.
4.13 Current Ownership of Common Stock. Each Purchaser, individually, is
not the beneficial owner (as determined in accordance with Rule 13d-3 under the
Exchange Act) of more than 6,886,453 shares of Common Stock (including for such
purposes, securities convertible into shares of Common Stock) before giving
effect to the purchase of any Notes under this Agreement.
SECTION 5. COVENANTS.
5.1 Notices of Certain Events. From the date hereof to the Closing Date,
each party shall promptly notify the other party, of:
(i) the receipt by the Company or any of the Purchasers of any notice
or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions
contemplated by this Agreement;
(ii) the receipt by the Company or any of the Purchasers of any notice
or other communication from any governmental entity in connection with the
transactions contemplated by this Agreement;
(iii) the Company or any of the Purchasers obtaining knowledge of any
actions, suits, claims investigations or proceedings commenced or
threatened against, relating to or involving or otherwise affecting the
Company or any of the Purchasers, as the case may be, or any of their
respective subsidiaries which relate to the consummation of the
transactions contemplated by this Agreement; and
(iv) the Company or any of the Purchasers obtaining knowledge of the
occurrence, or failure to occur, of any event which occurrence or failure
to occur will be likely to cause (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect, or (ii) any material failure of any party to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
5.2 Efforts.
(a) The Company shall cooperate and use commercially reasonable
efforts to take, or cause to be taken, all appropriate action required of
the Company, and to make, or cause to be made, all filings required to be
made by the Company necessary, proper or
12
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including,
without limitation, commercially reasonable efforts to (i) obtain, prior
to the Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company required to be obtained by the
Company, and (ii) defend against and respond to any action, suit,
proceeding or investigation against the Company relating to the
transactions contemplated by this Agreement, in each case as are necessary
for consummation of the transactions contemplated by this Agreement and to
fulfill the conditions the Company is required to fulfill with respect to
the transactions contemplated hereby.
(b) Each Purchaser shall cooperate and use commercially reasonable
efforts to take, or cause to be taken, all appropriate action required of
each such Purchaser, and to make, or cause to be made, all filings
required to be made by each such Purchaser necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without
limitation, commercially reasonable efforts to (i) obtain, prior to the
Closing Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to
contracts with each such Purchaser required to be obtained by each such
Purchaser and (ii) defend against and respond to any action, suit,
proceeding or investigation against each such Purchaser relating to the
transactions contemplated by this Agreement, in each case as are necessary
for consummation of the transactions contemplated by this Agreement and to
fulfill the conditions each such Purchaser is required to fulfill with
respect to the transactions contemplated hereby.
5.3 Expenses. The Company shall be responsible for all of its expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and delivery to the Purchasers of this Agreement,
the Indenture, the Registration Rights Agreement and such other documents as may
be required in connection with the offering, purchase, sale and delivery of the
Notes, (ii) the preparation, issuance and delivery of the certificates for the
Notes to each Purchaser, (iii) the fees and disbursements of the Company's
counsel, accountants and other advisors, (iv) any rating agency fees and (v) the
fees and expenses of the Trustee appointed under the Indenture, including the
fees and disbursements of counsel for the Trustee. In addition, the Company
agrees to promptly reimburse each Purchaser for the reasonable fees and expenses
of Latham & Watkins LLP, counsel for the Purchasers, in connection with the
transactions contemplated hereby, including work done prior to the date hereof
with respect to earlier financing proposals (including the reasonable fees and
expenses incurred in the preparation of any 13D/13G filing which any Purchaser
is required to make as a result of the transactions contemplated herein) upon
submission of reasonable invoices for the services of Latham & Watkins LLP
(subject to maintenance of the attorney-client privilege between Latham &
Watkins LLP and each Purchaser).
5.4 Voting Agreements.
(a) Voting. If any Purchaser converts the Notes into shares of Common
Stock, then such Purchaser agrees until the date which is eighteen (18)
months after the Closing Date that it will, at any meeting of the
stockholders of the Company, however
13
called, or in connection with any written consent of the stockholders
of the Company, vote (or cause to be voted) the shares of Common Stock so
issued upon such conversion and held of record and beneficially by such
party in a manner consistent, if at all, with the Other Stockholders' Vote
(as defined below) on each and every matter proposed for approval by the
stockholders of the Company (other than any proposal to effectuate a
reverse stock split of the Common Stock). In addition, each Purchaser
agrees until the date which is eighteen (18) months after the Closing Date
to vote any shares of Common Stock acquired by it and held beneficially by
such party, if any, on or about the Closing Date, upon conversion of
certain of the Company's debt securities, consistent with the foregoing
provisions, if at all. The term "Other Stockholders' Vote" shall mean the
results of voting on such matter that shall result from the votes cast by
all other stockholders (other than stockholders who are officers of the
Company) prior to the casting of votes by the Purchaser on such matter.
(b) Until the date which is eighteen (18) months after the Closing
Date, each Purchaser agrees that it will cause (i) any Affiliate (as
defined below) or (ii) any other party with whom it has an agreement
regarding the voting of Common Stock, who has acquired shares of Common
Stock or Notes subject to the provisions of Section 5.4(a) from the
Purchaser, to agree for the benefit of the Company to cast their votes in
accordance with Section 5.4(a). "Affiliate" shall mean (w) any person that
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with the Purchaser; (x) any
person who, from time to time, is a spouse or immediate relative of the
Purchaser; (y) any person who, from time to time, is an officer, director
or manager of the Purchaser; or (z) any person who, directly or
indirectly, is the beneficial owner of 50% or more of any class of equity
securities or other ownership interests of the Purchaser, or of which the
Purchaser is directly or indirectly the owner of 50% or more of any class
of equity securities or other ownership interests.
(c) Survival: Specific Performance. The obligations of each Purchaser
under this Section 5.4 shall survive the Closing. The parties hereto agree
that damages would be an inadequate remedy for the Company in the event of
breach or threatened breach of this Section 5.4 and thus, in any such
event, the Company may, either with or without pursuing any potential
damage remedies, immediately obtain and enforce an injunction prohibiting
any Purchaser from violating this Section 5.4. For the avoidance of doubt,
the Company acknowledges that the restrictions contained in this Section
5.4 shall not apply to any transferee of the Notes which is not a person
referred to in clauses 5.4(b)(i) or (ii) above.
5.5 Listing of Common Stock. The Company shall cause all shares of Common
Stock issuable upon conversion of the Notes to be listed on the New York Stock
Exchange.
5.6 Use of Proceeds. The Company shall use the proceeds from the offering
of the Notes pursuant to this Agreement solely (a) with respect to the first
$10,000,000 of such proceeds, for general working capital purposes and (b) with
respect to the remainder, to use all such remaining amounts to repurchase or
redeem a portion of the Company's outstanding 6 3/8% Convertible Subordinated
Notes due 2004 (the "2004 Notes") (such amount to be irrevocably deposited with
the trustee for the 2004 Notes within 35 days of the Closing). Within 5 days of
14
the Closing, the Company will deliver the notice of redemption contemplated in
Section 3.03 of the indenture governing the 2004 Notes.
SECTION 6. CONDITIONS TO CLOSING.
6.1 Conditions to the Purchasers' Obligations to Close. The obligations of
each Purchaser to effect the transactions contemplated hereby are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
(a) Representations and Warranties; Performance. The representations
and warranties of the Company contained in Section 3 shall be true and
correct when made and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of
the Closing, except to the extent of changes caused by transactions
contemplated herein (it being understood and agreed by the Purchasers
that, in the case of any representation and warranty of the Company
contained herein which is not hereinabove qualified by application thereto
of a materiality standard (including for this purpose Material Adverse
Effect), such representation and warranty need be true and correct only in
all material respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of
this Section 6.1(a)). The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed by it or
with which it is required to have complied with on or before the Closing.
(b) Consents, Permits and Waivers. The Company shall have obtained any
and all material consents, approvals, licenses, permits, orders,
authorizations, waivers and the like required to be obtained by the
Company necessary for consummation of the transactions contemplated by
this Agreement.
(c) Absence of Litigation. No proceeding challenging this Agreement or
the transactions contemplated hereby or thereby, or seeking to obtain
damages or prohibit, alter, prevent or delay the Closing, shall have been
instituted against the Company before any Governmental Entity and shall be
pending.
(d) Compliance Certificate. The Company shall deliver to the
Purchasers at the Closing a certificate signed by an executive officer of
the Company stating that the Company has complied with or satisfied each
of the conditions to the Purchasers' obligation to consummate the Closing
set forth in Sections 6.1(a), (b) and (c), unless waived in writing by the
Purchasers.
(e) Registration Rights Agreement. The Registration Rights Agreement
shall be in form and substance reasonably satisfactory to the Purchasers
and shall have been executed by the Company on or prior to such Closing.
(f) Indenture and Notes. The Indenture and the Notes shall be in form
and substance reasonably satisfactory to the Purchasers and shall have
been executed by the Company on or prior to such Closing.
15
(g) Opinion of Counsel. The Company shall deliver to the Purchasers at
the Closing opinions of Gibson, Dunn & Crutcher LLP and other counsel for
the Company reasonably acceptable to Purchasers in the form as set forth
on Annex B.
(h) Legal Prohibition. The transactions contemplated hereby shall not
be prohibited by any law or governmental order or regulation.
(i) Listing of Common Stock. The Company shall have caused all shares
of Common Stock issuable upon conversion of the Notes to be listed on the
New York Stock Exchange.
6.2 Conditions to the Company's Obligations to Close. The obligations of
the Company to effect the transactions contemplated hereby are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
(a) Representations and Warranties; Performance. The representations
and warranties of each Purchaser contained in Section 4 hereof shall be
true and correct on and as of the Closing (it being understood and agreed
by the Company that, in the case of any representation and warranty of any
Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard (including for this purpose
Material Adverse Effect), such representation and warranty need be true
and correct only in all material respects in order to satisfy as to such
representation or warranty the condition precedent set forth in the
foregoing provisions of this Section 6.2(a). Each Purchaser shall have
performed and complied in all material respects with all agreements,
obligations, and conditions contained in the Agreement that are required
to be performed by it or with which it are required to have complied with
on or before the Closing.
(b) Consents, Permits and Waivers. Each Purchaser shall have obtained
any and all material consents, approvals, licenses, permits, orders,
authorizations, waivers and the like required to be obtained by such
Purchaser necessary for consummation of the transactions contemplated by
this Agreement.
(c) Absence of Litigation. No proceeding challenging this Agreement or
the transactions contemplated hereby or thereby, or seeking to prohibit,
alter, prevent or delay the Closing, shall have been instituted against
any Purchaser before any Governmental Entity and shall be pending.
(d) Legal Prohibition. The transactions contemplated hereby shall not
be prohibited by any law or governmental order or regulation.
(e) Tax Deliveries. Each Purchaser shall have executed and delivered
to the Company, if required by applicable law, a Form W-9 or Form W-8, as
applicable, and a FIRPTA certificate.
(f) Registration Rights Agreement. The Registration Rights Agreement
shall be in form and substance reasonably satisfactory to the Company and
shall have been executed by the Purchasers on or prior to such Closing.
16
(g) Indenture and Notes. The Indenture and the Notes shall be in form
and substance reasonably satisfactory to the Company.
SECTION 7. TERMINATION OF AGREEMENT.
7.1 Termination. This Agreement may be terminated (except for provisions
that expressly contemplate performance after termination) and the transactions
contemplated hereunder abandoned at any time prior to the Closing only as
follows:
(a) by the Purchasers hereunder, upon notice to the Company, if the
conditions set forth in Section 6.1 shall not have been satisfied on or
prior to February 28, 2003;
(b) by the Company, upon notice to the Purchasers hereunder, if the
conditions set forth in Section 6.2 shall not have been satisfied on or
prior to February 28, 2003; or
(c) at any time by mutual agreement of the Company and the Purchasers
hereunder.
7.2 Liability. Except as otherwise provided herein, any termination
pursuant to this Section 7 shall be without liability on the part of any party,
unless such termination is the result of a material breach of this Agreement by
a party to this Agreement (which is not cured as permitted under Section 7.1(d)
or 7.1(e)) in which case such breaching party shall remain liable for such
breach notwithstanding any termination of this Agreement.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
8.1 Indemnification.
(a) The Company (the "Indemnifying Party") hereby agrees to indemnify
each Purchaser and its agents and affiliates (collectively, the
"Indemnified Parties") against, and hold them harmless from, all losses,
claims, damages, liabilities, costs (including the costs of preparation
and reasonable attorneys' fees and expenses) (collectively, "Losses")
incurred by them and arising out of or related to the transactions
contemplated by this Agreement as a result of (i) any breach of any
representation, warranty, agreement or covenant of the Company contained
herein, (ii) any allegations, claims or investigations by shareholders or
Governmental Entities of a breach of fiduciary duty or other misconduct by
the Company's officers or directors, (iii) any other shareholder
derivative actions (it being understood that Losses shall exclude any
monetary loss resulting from the resale, or other decline in value, of any
Notes or Common Stock issued upon conversion thereof and provided that
such exclusion shall not prevent the Indemnified Parties from seeking
indemnification or damages from the Indemnifying Party under any other
applicable provision of this Agreement), other than to the extent, and
only to the extent, that any Losses directly result from action on the
part of any Indemnified Party which is finally judicially determined to
constitute either gross negligence or willful misconduct. The Indemnifying
Party agrees to reimburse any Indemnified Party for all such Losses
promptly after such Losses are finally judicially
17
determined to by subject to indemnification hereunder. The obligations of
the Indemnifying Party to each Indemnified Party hereunder shall be
separate obligations and the Indemnifying Party's liability to any such
Indemnified Party hereunder shall not be extinguished solely because any
other Indemnified Party is not entitled to indemnity hereunder.
(b) The obligations of the Indemnifying Party under this Section 8.1
shall survive the termination of this Agreement; provided that the
warranties and representations of the Company and each Purchaser contained
in or made pursuant to this Agreement shall expire and terminate on the
date that is eighteen (18) months following the Closing; provided further
that such representations and warranties shall survive for the duration of
a claim, if any, for indemnification alleging a breach of such
representations or warranties that is made during such eighteen (18)
months following the Closing.
(c) In case any action shall be brought against any Indemnified Party
with respect to which indemnity may be sought against the Indemnifying
Party hereunder, such Indemnified Party shall promptly notify the
Indemnifying Party in writing and the Indemnifying Party shall, if it so
desires, assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Party and payment of all
reasonable fees and expenses. The failure to so notify the Indemnifying
Party shall not affect any obligation the Indemnifying Party may have to
any Indemnified Party under this Agreement or otherwise unless the
Indemnifying Party is materially adversely affected by such failure. Each
Indemnified Party shall have the right to employ separate counsel in such
action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified Party unless:
(i) the Indemnifying Party has agreed in writing (other than pursuant to
this Agreement) to pay such expenses; or (ii) the Indemnifying Party,
after timely notice of such claim, has failed to assume the defense and
employ counsel or (iii) the named parties to any such action (including
any impleaded parties) include any Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been reasonably advised by
outside counsel that there may be one or more legal defenses available to
it which are inconsistent with or additional to those available to the
Indemnifying Party, provided that, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel in
the circumstances described in clauses (i), (ii) or (iii) above, the
Indemnifying Party shall not have the right to assume the defense of such
action or proceeding; provided, however, that the Indemnifying Party shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be responsible hereunder for the fees and expenses of more than one such
firm of separate counsel (in addition to any necessary local counsel),
which counsel shall be designated by such Indemnified Party. The
Indemnifying Party shall not be liable for any settlement of any such
action effected without its written consent (which shall not be
unreasonably withheld). The Indemnifying Party agrees that it will not,
without the Indemnified Parties' prior written consent (which shall not be
unreasonably withheld) settle or compromise any pending or threatened
claim, action or suit in respect of which indemnification or contribution
may be sought hereunder unless the foregoing contains
18
an unconditional release of the Indemnified Parties from all liability and
obligation arising therefrom.
8.2 Contribution.
If the indemnification provided for in Section 8.1 is unavailable to any
Indemnified Party in respect of any Losses referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall have
an obligation to contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party, its subsidiaries and/or any other
entity or person (other than the Purchasers and the other Indemnified Parties)
and such Indemnified Party in connection with the actions which resulted in such
Losses as well as any other relevant equitable considerations. The amount paid
or payable as a result of the Losses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8.1, any legal or other
fees or expenses reasonably incurred by such Indemnified Party in connection
with any investigation, lawsuit or legal or administrative action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.2 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any party
who was not guilty of such fraudulent misrepresentation.
SECTION 9. MISCELLANEOUS.
9.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to any Purchaser shall be
directed to the name and address of such Purchaser as set forth on Annex A
attached hereto, with a copy to Latham & Watkins LLP, 633 West Fifth Street,
Suite 4000, Los Angeles, CA 90071, Attention: Thomas C. Sadler, Esq., and
notices to the Company shall be directed to Coeur d'Alene Mines Corporation, 505
Front Avenue, P.O. Box I, Coeur d'Alene, Idaho 83816-0316, Attention: General
Counsel, with a copy to Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los
Angeles, California 90071, Attention: Andrew E. Bogen, Esq.
9.2 Assignment. Neither the Company nor any Purchaser may assign or
delegate (whether by contract or operation of law, it being agreed that a merger
(other than a merger that does not constitute a "Change of Control" as defined
in the Indenture) shall be deemed to constitute an assignment) its rights,
duties or obligations under this Agreement without the prior written consent of
the other party hereto. Any attempted or purported assignment or delegation in
violation of the preceding sentence shall be void.
9.3 Amendment. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and each of the Purchasers.
19
9.4 Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, and
signature pages may be delivered by facsimile, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CONFLICTS OR
CHOICE OF LAW, OF THE STATE OF NEW YORK.
9.6 Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
9.7 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, such provision
shall be replaced with a provision that accomplishes, to the extent possible,
the original business purpose of such provision in a valid and enforceable
manner, and the balance of the Agreement shall be interpreted as if such
provision were so modified and shall be enforceable in accordance with its
terms.
9.8 Confidentiality. No disclosure shall be made by the Company to any
person or entity of (i) the fact that this Agreement has been entered into or
(ii) the identity of any Purchaser, without the prior written consent of such
Purchaser, except on a need to know basis to directors, officers, employees,
agents and/or representatives of the Company who have agreed to the limitations
on use imposed by this Agreement, unless in the opinion of counsel for the
Company, disclosure is required to be made under applicable law, provided that,
if the Company proposes to make any disclosure based upon the opinion of its
counsel as aforesaid, the Company will advise and consult with each Purchaser
prior to such disclosure concerning the information it proposes to disclose.
Notwithstanding the foregoing, it is understood and agreed to by each Purchaser
that the Company intends to file a form of this Agreement, excluding from such
form the identity of any of the Purchasers, as an exhibit to a Form 8-K filing
promptly after the date hereof and that the Company shall not be obligated to
advise and consult with each Purchaser prior to such disclosure (such
disclosures to also not include the identity of any of the Purchasers) or any
other similar disclosure required pursuant to the rules and regulations of the
SEC.
[Signature page follows]
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date above first written.
COEUR D'ALENE MINES CORPORATION
By: ...........................
Name:
Title:
S-1
[NAME OF PURCHASER]
By: ...........................
Name:
Title:
S-2
ANNEX A
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT OF NOTES PURCHASE PRICE
- ----------------------------- ------------------------- --------------
$
Annex A
ANNEX B
FORM OF OPINION OF COMPANY COUNSEL
(a) The Purchasers shall have received the opinion of Gibson, Dunn &
Crutcher LLP, counsel for the Company (or other counsel reasonably acceptable to
the Purchasers), dated the Closing Date addressed to the Purchasers to the
effect that (subject to customary assumptions, qualifications and limitations):
(i) Assuming the due authorization, execution and delivery of
this Agreement, it constitutes a legal, valid and binding agreement
of the Company enforceable against the Company in accordance with
its terms;
(ii) Assuming the due authorization, execution and delivery of
the Registration Rights Agreement, it constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms;
(iii) Assuming the due authorization, execution and delivery
of the Indenture, it constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms;
(iv) The Notes are in the form contemplated by the Indenture,
have been duly authorized, executed and delivered by the Company
and, assuming that the Notes have been duly authenticated by the
Trustee in the manner described in the authentication order
delivered to the Trustee by the Company on the date hereof upon
payment therefor, the Notes have been duly issued and delivered by
the Company and constitute legally valid and binding obligations of
the Company, enforceable against the Company in accordance with
their terms and will be entitled to the benefits of the Indenture;
(v) The Company is not, and after giving effect to the
transactions contemplated by this Agreement, will not be, directly
or indirectly "controlled" by an "investment company," as such terms
are defined in the 1940 Act;
(vi) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Registration Rights Agreement, the Indenture and the Notes, and
the consummation of the transactions contemplated in this Agreement
will not, to such counsel's knowledge, result in a material breach
or violation of any of the terms and provisions of, or constitute a
default under, any applicable U.S. federal or New York statute, rule
or regulation known to such counsel to be applicable to the Company,
or, to such counsel's knowledge, any order, writ or decree of any
U.S. federal or New York court, government or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or over any of their properties or operations (the opinion will also
state that our opinion in this paragraph is based upon our
consideration of only those statutes, rules and regulations which,
in our experience, are normally applicable to offerings of debt
ANNEX B - PAGE 1
securities and we will express no opinion as to compliance by any of
the parties to the above referenced agreements with any state or
federal laws or regulations applicable to the subject transaction
because of the nature or extent of their business);
(vii) To our knowledge, no consent, approval, authorization,
permit or order of or qualification with any U.S. federal or New
York court, government or governmental or body having jurisdiction
over the Company or any of its subsidiaries, or over any of their
properties or operations, is necessary in connection with the
consummation by the Company of its obligations under this Agreement,
the Registration Rights Agreement and the Indenture (the opinion
will also state that our opinion in this paragraph is based upon our
consideration of only those statutes, rules and regulations which,
in our experience, are normally applicable to offerings of debt
securities and we will express no opinion as to compliance by any of
the parties to the above referenced agreements with any state or
federal laws or regulations applicable to the subject transaction
because of the nature or extent of their business);
(viii) Assuming the accuracy of the representations and
warranties made by each of the Purchasers, it is not necessary in
connection with the issuance and delivery of the Notes to the
Purchasers pursuant to the terms of this Agreement to register such
Notes under the Securities Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended (the "1939 Act"); and
(ix) the Indenture complies as to form in all material
respects with the requirements of the 1939 Act, and the rules and
regulations of the SEC applicable to an indenture which is qualified
thereunder.
(b) The Purchasers shall have received the opinion of William Boyd,
counsel for the Company, dated the Closing Date, addressed to the Purchasers to
the effect that (subject to customary assumptions, qualifications and
limitations):
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
state of Idaho;
(ii) The Company has the requisite corporate power and
authority to enter into this Agreement, the Registration Rights
Agreement and the Indenture;
(iii) This Agreement, the performance by the Company of its
obligations hereunder and the issuance and delivery by the Company
of the Notes have been duly authorized by all necessary corporate
action on the part of the Company; and this Agreement has been duly
executed and delivered by the Company;
(iv) The Registration Rights Agreement and the performance by
the Company of its obligations thereunder have been duly authorized
by all necessary corporate action on the part of the Company; and
the Registration Rights Agreement has been duly executed and
delivered by the Company;
ANNEX B - PAGE 2
(v) The Indenture and the performance by the Company of its
obligations thereunder have been duly authorized by all necessary
corporate action on the part of the Company; and the Indenture has
been duly executed and delivered by the Company;
(vi) The Common Stock issuable upon conversion of the Notes
has been duly authorized and reserved for issuance and delivery and
when issued in accordance with the terms of the Notes, will be
validly issued, fully paid and non-assessable, and the issuance of
such Common Stock is not subject to any preemptive or similar rights
under the Company's certificate of incorporation or bylaws or the
Idaho Business Corporation Act;
(vii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Registration Rights Agreement, the Indenture and the Notes and
the consummation of the transactions contemplated in this Agreement
will not, to such counsel's knowledge, result in any violation of
the Company's charter or bylaws or any contract, indenture, mortgage
deed of trust, loan or credit agreement, note, lease or any other
agreement or investment to which the Company is a party.
(viii) The authorized, issued and outstanding capital
stock of the Company is as set forth in Section 3.7 of this
Agreement;
(ix) To such counsel's knowledge, after due inquiry, the
Company has not failed to obtain any license, claim, permit,
franchise or other administrative or governmental authorization
necessary to the ownership or lease of its properties and assets or
to the conduct of its business as it is presently conducted, which
failure to obtain would, individually or in the aggregate, have a
Material Adverse Effect, or which might, if determined adversely to
the company, materially and adversely affect the execution, delivery
or performance by the Company of this Agreement and, all such
licenses, claims, permits, franchises or other administrative or
governmental authorizations which are so required are valid and
subsisting and in good standing;
(x) To such counsel's knowledge, after due inquiry, the
Company and each of Coeur Rochester Inc., Coeur Silver Valley Inc.,
and Coeur Alaska Inc. (each a "Domestic Subsidiary" and together,
the "Domestic Subsidiaries") holds freehold title, mining leases,
mining claims or other conventional proprietary interests or rights
recognized in the relevant jurisdiction in which each property
described in the SEC Reports is located, in the ore bodies and
mineral inventories described in the SEC Reports (and all properties
respectively relating thereto) under valid, subsisting and
enforceable title documents, contracts, leases, licenses of
occupation, mining concessions, permits, or other recognized and
enforceable instruments and documents, sufficient to permit the
Company or each of its subsidiaries, as the case may be, to explore
for, extract, exploit, remove, process and refine the minerals
relating thereto, except where the failure to so hold such
ANNEX B - PAGE 3
interests or rights would not have a Material Adverse Effect. In
addition, to such counsel's knowledge, after due inquiry, either the
Company or each of its subsidiaries has all necessary surface
rights, water rights and rights in water, rights of way, licenses,
easement, ingress, egress and access rights, and all other necessary
rights and interests granting the Company or any of its
subsidiaries, as the case may be, the rights and ability to explore
for, mine, extract, and remove the minerals derived from the ore
bodies and mineral inventories described in the SEC Reports and to
transport for refinement or market or distribute the ore and metals
produced, all as referred to in the SEC Reports, with only such
exceptions as are described in the SEC Reports or as do not have a
Material Adverse Effect, and each of the aforementioned interests
and rights is currently in good standing except for those interests
and claims which, if not kept in good standing, would not have a
Material Adverse Effect;
(xi) Each of the Company's Domestic Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and
has the corporate power to own, lease and operate its properties and
to conduct its business as described in the SEC Reports, and is
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction, if any, in which the ownership and
leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified or
be in good standing would not have a Material Adverse Effect; and
(xii) All issued and outstanding shares of capital stock of
each of the Company's Domestic Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable
and, to such counsel's knowledge, have not been issued in violation
of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right and, except as
disclosed in the SEC Reports, are owned by the Company directly or
indirectly through one or more subsidiaries of the Company, free and
clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest (other than such preemptive rights or other
rights to subscribe for or purchase securities as were fully
complied with or expressly waived or with respect to the violation
of which the right to make a claim is barred by the applicable
statute of limitations).
(c) The Purchasers shall have received opinions substantially, in the form
below for each of CDE Fachinal Ltd., Compania Minera CDE Petorca, and Empressa
Minera Manquirie S.R.L. (each a "Foreign Subsidiary" and together, the "Foreign
Subsidiaries"), opinions customary to such foreign jurisdiction of incorporation
of each Foreign Subsidiary of foreign counsel that is satisfactory to the
Purchasers, addressed to the Purchasers and to the effect that (subject to
customary assumptions, qualifications and limitations):
(i) Each of the Company's Foreign Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and
has the corporate power to own, lease and operate its properties and
to conduct its business as described in the SEC
ANNEX B - PAGE 4
Reports, and is qualified to do business as a foreign corporation
and is in good standing in each jurisdiction, if any, in which the
ownership and leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified or be in good standing would not have a Material
Adverse Effect;
(ii) All issued and outstanding shares of capital stock of
each of the Company's Foreign Subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable and, to such
counsel's knowledge, have not been issued in violation of or subject
to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right and, except as disclosed in the
SEC Reports are owned by the Company directly or indirectly through
one or more subsidiaries of the Company, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable
interest (other than such preemptive rights or other rights to
subscribe for or purchase securities as were fully complied with or
expressly waived or with respect to the violation of which the right
to make a claim is barred by the applicable statute of limitations);
(iii) To such counsel's knowledge, after due inquiry, each of
the Company's Foreign Subsidiaries has not failed to obtain any
license, claim, permit, franchise or other administrative or
governmental authorization necessary to the ownership or lease of
its properties and assets or to the conduct of its business as it is
presently conducted, which failure to obtain would, individually or
in the aggregate, have a Material Adverse Effect, or which might, if
determined adversely to the Company, materially and adversely affect
the execution, delivery or performance by the Company of this
Agreement and, all such licenses, claims, permits, franchises or
other administrative or governmental authorizations which are so
required are valid and subsisting and in good standing; and
(iv) To such counsel's knowledge, after due inquiry, the
Company and each of its Foreign Subsidiaries holds freehold title,
mining leases, mining claims or other conventional proprietary
interests or rights recognized in the relevant jurisdiction in which
each property described in the SEC Reports is located, in the ore
bodies and mineral inventories described in the SEC Reports (and all
properties respectively relating thereto) under valid, subsisting
and enforceable title documents, contracts, leases, licenses of
occupation, mining concessions, permits, or other recognized and
enforceable instruments and documents, sufficient to permit the
Company or each of its subsidiaries, as the case may be, to explore
for, extract, exploit, remove, process and refine the minerals
relating thereto, except where the failure to so hold such interests
or rights would not have a Material Adverse Effect. In addition, to
such counsel's knowledge, after due inquiry, each of the Company's
Foreign Subsidiaries has all necessary surface rights, water rights
and rights in water, rights of way, licenses, easement, ingress,
egress and access rights, and all other necessary rights and
interests granting the relevant Foreign Subsidiary, as the case may
be, the right and ability to explore for, mine, extract, and remove
the minerals derived from the ore bodies and mineral inventories
described in the SEC Reports and to transport for refinement
ANNEX B - PAGE 5
or market or distribute the ore and metals produced, all as referred
to in the SEC Reports, with only such exceptions as are described in
the SEC Reports or as do not have a Material Adverse Effect, and
each of the aforementioned interests and rights is currently in good
standing except for those interests and claims which, if not kept in
good standing, would not have a Material Adverse Effect.
The opinions set forth above that any document is valid, binding or
enforceable according to its terms are qualified as to:
(i) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium or
other similar laws relating to or affecting the rights and remedies
of creditors generally;
(ii) rights to indemnification and contribution which may
be limited by applicable law or equitable principles; and
(iii) general principles of equity, including, without
limitation, the possible unavailability of specific performance or
injunctive relief, and limitations or rights of acceleration,
regardless of whether enforceability is considered in a proceeding
at law or in equity.
(d) Counsel rendering the foregoing opinions may rely as to questions of
law not involving the laws of the United States of America or the applicable
state law, upon opinions of local counsel, and as to questions of fact upon
representations or certifications of officers of the Company, and of government
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to the
Purchasers and to their counsel, Latham & Watkins.
ANNEX B - PAGE 6