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EXHIBIT 10.4
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT is dated as of the 22nd day of
August, 2008
BETWEEN:
Corporación Amermín S.A. de C.V., a corporation
existing under the laws of Mexico (the " Seller ")
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Paramount Gold de México S.A. de C.V., a corporation
existing under the laws of Mexico (the " Buyer ")
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Paramount Gold and Silver Corp., a corporation existing under
the laws of Delaware (" Paramount ")
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Tara Gold Resources Corp. a corporation existing under the laws
of Nevada (" Tara Gold ")
CONTEXT:
A.
The Buyer and Seller are parties to a Joint
Venture Agreement dated as of February 7, 2007 (the " Joint
Venture Agreement ") with respect to exploration, development
and exploitation of mineral deposits located in certain mining
concessions in Mexico (the " Joint Venture ").
B.
The Buyer holds a 70% interest in the Joint
Venture and the underlying mining concessions; the Seller holds a
30% interest in the Joint Venture and the underlying mining
concessions. Notwithstanding the foregoing, with respect to the
mining concessions known as the La Blanca Group (4 concessions) and
Elyca (1 concession), the Buyer holds a 90% interest and the Seller
holds a 10% interest.
C.
The Seller wishes to sell, and the Buyer wishes
to buy, the Seller’s entire interest in the Joint Venture,
the underlying mining concessions, and the other assets referred to
at Schedule A, subject to the terms of this Agreement.
D.
The Seller is a wholly owned subsidiary of Tara
Gold.
E.
The Buyer is a wholly owned subsidiary of
Paramount.
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FOR GOOD AND VALUABLE CONSIDERATION , the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1
Agreement of Purchase and Sale
Subject to the terms and conditions of this
Agreement, the closing of this transaction will occur forthwith,
and in any event within 5 business days, upon the satisfaction of
the conditions precedent set out in Section 2.3, (the " Closing
Date ") whereupon the Seller will sell and the Buyer will
purchase all of the rights, title, assets, privileges, benefits and
property of the Seller listed in Schedule A hereto (the "
Interest ") including without limitation all of the
Seller’s rights, title, benefits, privileges in the Joint
Venture (the " JV Transfer ") and the Seller’s
interest in the mining concessions (the " Concessions ")
listed in subparagraphs (a) through (t) on Schedule "A". For
greater certainty, the JV Transfer shall refer to the sale of all
rights, title, assets, benefits, privileges and property of the
Seller listed in Schedule "A" hereto save and except for the
Concessions.
1.2
Transfer of Concessions
The Buyer and Seller shall enter into an
agreement in the form of the agreement set out in Schedule "C"
hereto, whereby the Seller shall convey on the Closing Date to the
Buyer all of its right, title and interest in the Concessions (the
" Concession Transfer Agreement ").
1.3
Transfer of JV Interest
The Buyer and Seller shall enter into an
agreement in the form of the agreement set out in Schedule "F"
hereto, whereby the Seller shall convey its interest in the Joint
Venture Agreement to the Buyer and upon such transfer the parties
agree that the Joint Venture Agreement shall be terminated (the "
JV Transfer and Termination Agreement ").
1.4
Other Documents to be Delivered in Escrow
The following documents (collectively, the "
Ancillary Documents ") shall be executed and delivered to
Jeffrey Klein, Esq. (the " Escrow Agent "):
(a)
the escrow agreement (the " Escrow
Agreement ") substantially in the form set out in Schedule "G"
hereto, together with the irrevocable stock power attached as
Exhibit "A" to that agreement;
(b)
the stock ownership agreement substantially in
the form set out in Schedule "D" hereto, together with the
irrevocable proxy attached as Exhibit "A" to that agreement
(collectively, the " Ownership Agreement and Proxy ");
and
(c)
the mutual full and final release (the "
Release ") substantially in the form set out in Schedule "B"
hereto,
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to be held in escrow by the Escrow Agent
pursuant to the Escrow Agreement.
ARTICLE 2
PURCHASE PRICE
2.1
Amount of Consideration
The Seller shall transfer the Interest to the
Buyer, including, without limitation, all of the Seller’s
rights, title, benefits, privileges in the Joint Venture and the
Seller’s interest in the Concessions listed in subparagraphs
(a) through (t) on Schedule "A," with clear title, to the Buyer, in
consideration of $8,334.34 MXN per concession for an aggregate of
$100,000 MXN (the " Purchase Price "), plus the value added
tax on said amounts at the rate of 15%, all of the above against
delivery of a Mexican tax invoice of the Seller.
In consideration of Tara Gold’s entering
into this Agreement and providing the representations, warranties,
covenants and agreements herein and also in consideration of Tara
Gold’s making Amermin enter into this Agreement and bind
itself pursuant to its terms, Paramount shall pay Tara Gold an
amount equal to 7,350,000 times the average closing price per share
of Paramount’s common shares as reported by the American
Stock Exchange (" AMEX ") for the 20 consecutive trading
days ending August 21, 2008, being US$ 8,724,450
(the " Tara Consideration ").
Concurrent with the execution and delivery of
this Agreement certified resolutions of the Board of Directors of
Buyer and Paramount and of Seller and Tara Gold approving
transactions contemplated by this Agreement including in the case
of Paramount, the issuance of the Tara Shares and the Consultant
Shares and in the case of Tara Gold the transfer of the Interest,
shall be executed and delivered.
2.2
Payment of Consideration
Paramount will issue to Tara Gold
7,350,000 common shares in the capital stock of Paramount
(the " Tara Shares ") registered in the name of Tara Gold.
For greater certainty, the number of shares to be issued as Tara
Shares shall not fluctuate based on any change in the value of the
common shares of Paramount on or prior to the Closing Date.
The Buyer will satisfy the Purchase Price in
immediately negotiable funds on the Closing Date.
Each of the Tara Shares and the Purchase Price
shall be deliverable to the Escrow Agent on the Closing Date or as
soon thereafter as is reasonably possible and shall be held by the
Escrow Agent in accordance with the terms of the Escrow
Agreement.
2.3
Conditions Precedent
The parties acknowledge and agree that the
closing of the transfer of the Interest is conditional upon the
following:
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(a)
the parties shall have executed the Concession
Transfer Agreement and application has been made to the Bureau of
Mines in Mexico to transfer of the Seller’s interest in the
Concessions;
(b)
the Toronto Stock Exchange (" TSX ") and
the American Stock Exchange (" AMEX ") (the TSX and AMEX are
collectively, the " Exchanges ") shall have approved the
issuance of the Tara Shares and the Consultant Shares (such
approval being, collectively, the " Exchange Approvals ");
and
(c)
the Seller and Tara Gold shall promptly provide
Paramount with such documents, information, forms, including
personal information forms, as may be required by the Exchanges in
order to obtain the Exchanges’ approval for the purchase and
sale of the Interest and the issuance of the Tara Shares; and
(d)
the parties and all additional signatories shall
have executed the Concession Transfer Agreement, the JV Transfer
and Termination Agreement, the Ancillary Agreements and any other
documentation reasonably required by either party to complete the
matters contemplated herein.
The parties hereto hereby agree to act in good
faith and to use their commercially reasonable best efforts to
satisfy these conditions by September 10, 2008 or as soon as
possible thereafter.
It is noted that listing fees (the " Listing
Fees ") payable to the Exchanges for the Tara Shares and for
the Consultant Shares shall be entirely for the account of and paid
by Paramount provided that, in the event that the Initial
Registration (defined below) is not completed by February 28, 2009
or such later date as the Buyer permits from time to time, the
Seller shall reimburse Paramount for fifty percent (50%) of the
Listing Fees on the later of March 14, 2009 or on the day that is
14 calendar days after such later date as the Buyer may permit
pursuant to this Agreement.
The parties acknowledge that as of the date
hereof, the Buyer has delivered invoices to the Seller with respect
to exploration activities undertaken by the Buyer on behalf of the
Joint Venture (all such invoices and any such invoices delivered
pursuant to the Joint Venture Agreement after the date hereof,
being the " Invoices "). The parties agree that, upon the
completion of the Initial Registration, the Invoices shall be
cancelled as of the Closing Date and neither Tara Gold nor the
Seller shall have any liabilities or obligations whatsoever to the
Buyer or Paramount in respect of the Invoices. Pending the
completion of the Initial Registration, all rights and obligations
of the parties under the Joint Venture Agreement shall remain in
effect, in accordance with the terms of the Joint Venture Agreement
with the exception that the Seller shall not have any rights under
the Joint Venture Agreement and shall not be required to remit
payment for the Invoices after the date of this Agreement without
diluting the Seller’s interests in the Joint Venture and the
Concessions or prejudicing any rights that the Seller may have
under the Joint Venture Agreement to dispute Invoices delivered
after the date of this Agreement. Notwithstanding the foregoing or
any provisions of this Agreement to the contrary, in the event that
the Initial Registration is not completed by February 28, 2009 or
such later date as the Buyer permits from time to time, Tara Gold
and/or the Seller shall remit payment for the Invoices without set
off, abatement or deduction at 5:00 p.m. (Eastern) on the later of
(i) March 14, 2009 or (ii) on the day
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that is 14 calendar days after such later date
(the " Invoice Payment Date "). In the event that
payment is not made by the Invoice Payment Date, the provisions
relating to such non-payment in the Joint Venture Agreement shall
immediately apply, including without limitation the dilution of the
Seller’s interest therein.
2.4
Conditions Subsequent
Notwithstanding any terms of this Agreement to
the contrary, the parties acknowledge and agree that until:
(a)
the Concessions and the Seller’s interest
in the Concessions provided for in the Concession Transfer
Agreement, other than the Santa Cruz mining concession, have been
registered (the " Initial Registration ") in the Bureau of
Mines in Mexico in the name of the Buyer, free of liens, charges,
and defects of title, the completion of the transactions
contemplated herein shall be held in escrow and all of the closing
documents including the 7,000,000 Tara Shares issued on the Closing
Date shall be held in escrow by the Escrow Agent; and
(b)
the Initial Registration has occurred and the
Santa Cruz mining concession has been registered (the " Santa
Cruz Transfer ") in the Bureau of Mines in Mexico in the name
of the Buyer, free of liens, charges, and defects of title, 350,000
of the Tara Shares issued on the Closing Date shall be held in
escrow by the Escrow Agent.
All parties agree to act in good faith and to
use their commercially reasonable best efforts to accomplish these
transfers and registrations as soon as possible. The Seller and
Tara Gold shall jointly be responsible to resolve at their cost the
litigation concerning the Santa Cruz concession and to transfer
good title of same to the Buyer free and clear of encumbrances or
rights of others. Neither the Buyer nor Paramount shall be
responsible to resolve the litigation or complete the transfer of
the Santa Cruz concession. Subject to the receipt by the Escrow
Agent on the Closing Date of all duly signed Ancillary Documents
and subject to the terms of the Escrow Agreement, two share
certificates representing 7,000,000 Tara Shares, in the aggregate,
shall be delivered to Tara Gold within 10 business days of the
Initial Registration and
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