Exhibit 10.1
Termination Agreement
In relation to the Unincorporated
Association Contract ("the Contract," which
expression includes the hereinbelow
mentioned amendments) executed by and
between Minera Santa Rita S. de R. L. de
C.V. ("MSR"), represented by Jack
Veeder Everett and Roger Austin Newell, on
one hand, as the active partner, and
Grupo Minero FG S.A. de C.V. ("FG"),
represented by Samuel Fraijo Flores, on the
other hand, as the silent partner, on
February 23 (twenty three) 2002 (two
thousand and two), as amended on 15
(fifteen) August 2002 (two thousand and
two), 15 (fifteen) January 2003 (two
thousand and three), 23 (twenty-three)
February 2003 (two thousand and three), and
on January 7 (seven), 2004 (two
thousand and four), in regards to the
development of the "El Chanate" project
("the Project"), comprising certain mining
lots, covered by concessions owned or
held by Oro de Altar S.A. de C.V., located
in the Municipality of Altar, Sonora,
MSR and FG agree as follows:
1.
Due to the
fact that no financing was obtained at the latest on
March 31 (thirty-one), 2004 (two thousand and four), for the
execution of Phase IV and, in general, for the development of
the
Project, and, furthermore, due to the fact that FG and MSR have
decided not to make additional contributions, by application of
clauses 5 (five) section (C) and 14 (fourteen) section (A) (8)
of
the Contract, the Contract is deemed terminated and,
consequently,
without any obligatoriness or efficacy, effective precisely as
of
and from March 31 (thirty-one), 2004 (two thousand and four)
("the
Effective Date"), without obligations and responsibilities
other
than the ones expressly stipulated in this agreement.
2.
During the
life of the Contract, FG invested in Phases I and II of
the Project the sum of US$457,455 (four hundred fifty-seven
thousand
four hundred fifty-five dollars of the United States of America).
In
consideration of said investment and in consideration of FG's
acceptance of the hereinbelow called "Participation
Certificate,"
MSR obligates itself to act as follows:
A. At the
latest within 30 (thirty) calendar days following the
Effective Date, MSR shall have the partners who own all of the
portions of interest that represent its capital stock
affirmatively vote these resolutions:
a. An
amendment to the pertinent clauses of the bylaws of
MSR, so that MSR may issue a certificate of
participation ("the Participation Certificate") that,
without representing capital stock, confer these rights
on its owner:
a.1. the right to
receive a 5% (five percent) of the
profits of each fiscal year of MSR with respect to
which the payments of dividends is ordered ("the
Fixed Percentage"),
a.2. the right that
the Fixed Percentage be
non-dilutable by contributions of MSR or of other
persons to the capital stock of MSR or for other
causes or reasons, and that the rights of the
owner of the
<PAGE>
Minera Santa Rita S. de R.L. de C.V.
and
Grupo Minero FG S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 2
Participation Certificate be not modified without
the consent of its owner,
a.3. the right to
abstain from contributing to the
capital stock of MSR and from contributing for the
development of the Project, without this
abstention causing a dilution of the Fixed
Percentage or a modification of the rights of the
owner of the Participation Certificate without the
owner's consent,
a.4. the right to
participate in the meetings of the
partners of MSR, in the sessions of the Board of
Managers of MSR, and
in the sessions of the
Technical Committee if one is formed in regard to
the development and operation of the Project, all
of the above with the right to speak but without
the right to vote. FG shall keep the information
made known to it by reason of its participation in
the above meetings and sessions fully
confidential, unless it must disclose it by final
court or administrative authority order, under
penalty of payment of damages and indemnification
of losses, without prejudice to other legal
remedies that MSR might have in this regard, and
a.5. the right to
name, at its cost and risk, an
auditor commissioned to review MSR financial
statements and to determine whether or not the
Fixed Percentage was calculated correctly. If FG's
auditor fails to formulate and communicate to MSR
objections within the 30 (thirty) calendar days
following the date on which the payment of
dividends has been decreed, the calculation of the
Fixed Percentage carried out by MSR shall be
deemed correct.
The amendment to the bylaws set forth in this section
(A) shall also provide as follows in regard to the
Participation Certificate:
a.6. only one person
may be entitled to own it,
a.7. it shall be
indivisible, that is, the rights
derived from it may not be separated from its
ownership and also may not be separated among
themselves,
a.8. its owner shall
not enjoy the right of withdrawal,
redemption, reimbursement, amortization or any
other that implies the obligation to pay its value
by MSR or any of its members, unless MSR or the
said members agree to do it,
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<PAGE>
Minera Santa Rita S. de R.L. de C.V.
and
Grupo Minero FG S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 3
a.9. it shall be
governed by clause 8th (eighth) of the
bylaws of MSR; consequently, among other
consequences of the application of the said
clause, the members of MSR shall enjoy the right
of first refusal to purchase the Participation
Certificate,
a.10. it shall not give its owner any rights on MSR's
assets, goods, rights, or privileges nor on the
Project,
a.11. it shall not impose on its owner the obligation to
be responsible for the losses of the Project or
else for the losses of MSR, in any percentage,
a.12. it shall not give its owner any participation in
the development of the Project nor in the
operation or administration of the mine other than
the participation expressly set forth in
subsections (a.4) and (a.5) of section (A) of this
clause 2 (two),
a.13. it shall give its owner no assurance or guaranty
that the Project and the mine shall ultimately
turn out to be profitable or that they shall
generate profits or dividends, given the
unpredictable nature of all mining businesses, and
a.14. it shall not give its owner the right that the
Project gets actually executed or carried out or
executed or carried out in any of its Phases nor
the right that the mine be exploited or operated,
for whether or not that will be done will
ultimately depend on market, financial, and other
circumstances that are not within the MSR's
control.
For the purposes of subsection (a.1) section (A) of this
clause 2 (two), "profits" shall mean those determined
pursuant to generally accepted Mexican accounting
principles and those MSR's members ordered paid as
dividends pursuant to MSR's bylaws, and, in any event,
those resulting after payment of taxes, after payment of
the employees' share in the business' profits (PTU),
after payments of the amounts due by MSR or its
affiliates pursuant to an Stock Purchase Option
Agreement entered into between AngloGold (Jerritt
Canyon) Corp. and AngloGold North America Inc., of the
one part, and Leadville Mining & Milling Corporation and
Leadville Mining & Milling Holding Corporation, of the
other part, on December 15 (fifteen), 2000 (two
thousand), of which an authentic copy was attached to
the Contract, and after payment of the amounts owing by
MSR to whomever finances the development or execution of
the Project, if that is the case. This agreement does
not affect
or modify any of
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<PAGE>
Minera Santa Rita S. de R.L. de C.V.
and
Grupo Minero FG S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 4
AngloGold (Jerritt Canyon) Corp.'s and AngloGold North
America Inc.'s rights under the above Stock Purchase
Option Agreement.
b. Within
the 5 (five) calendar days following the approval
of the hereinbefore mentioned bylaws amendment, MSR
shall issue and deliver the Participation Certificate to
FG and shall have the issuance and delivery entered on
the company's corporate books.
B. At the
latest within 30 (thirty) calendar days following the
Effective Date, MSR shall have Capital Gold Corporation
("CGC") shall issue for the benefit of and deliver to FG
2,000,000 (two million) shares of its capital stock ("the CGC
Shares"), non transferable before the lapse of 1 (one) year,
from the date they are delivered to FG, and subject to the
regulations of the Securities and Exchange Commission of the
United States of America. In order for that issuance and
delivery to be possible and lawful pursuant to the laws and
provisions that govern the CGC Shares, FG shall expeditiously
sign and deliver to CGC or to the said Securities and Exchange
Commission, such documents and information as may be required
from it. In addition, with respect to the acquisition of the
CGC Shares, FG makes the representations and warranties set
forth in the attached Exhibit hereto.
C. MSR
shall give FG the right of first refusal to carry out the
works and render the construction services called for by the
construction of the Project, on equal terms in relation to
other bidders regarding prices, times, qualities, guaranties,
and other conditions, as specified by MSR in its requests for
bids. This rule may suffer exceptions if whoever finances the
development or execution of the Project determines that the
above construction works or services be carried out or
rendered by company or companies other than FG. The
construction of the said works and the rendering of those
construction services by FG, to be carried out pursuant to
contracts hereinafter called "the Works Contracts," shall not
turn FG into an industrial partner of MSR or of the Project,
or of both. MSR shall not disclose to other bidders FG's bids
or offers, unless it must disclose them by final court or
administrative authority order, under penalty of payment of
damages and
