-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QfExSLXyR2bcnIXcBQJ2qMvE2DeAmIXjifHu5ostQrkYf3b+Bbv+c6gE5lblTYjP 0/Utdm+tV8B7RvWqCg0P0w== 0000950134-01-001628.txt : 20010224 0000950134-01-001628.hdr.sgml : 20010224 ACCESSION NUMBER: 0000950134-01-001628 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20010205 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSHINE MINING & REFINING CO CENTRAL INDEX KEY: 0000833376 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 752231378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10012 FILM NUMBER: 1550714 BUSINESS ADDRESS: STREET 1: 877 WEST MAIN STREET STREET 2: SUITE 600 CITY: BOISES STATE: ID ZIP: 83702 BUSINESS PHONE: 2083450660 MAIL ADDRESS: STREET 1: 877 W MAIN STREET SUITE 600 CITY: BOISE STATE: ID ZIP: 83702 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE MINING CO /DE DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE HOLDINGS INC DATE OF NAME CHANGE: 19880915 8-K 1 d84396e8-k.txt FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) February 5, 2001 -------------------------------- Sunshine Refining and Mining Company - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-10012 75-2231378 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 5956 Sherry Lane, Suite 1621, Dallas, Texas 75225 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 214-265-1377 ----------------------------- 877 W. Main Street, Suite 600, Boise, Idaho 83720 - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 ITEM 2. CHANGES IN CONTROL OF REGISTRANT. Prior to the August 23, 2000 filing of a voluntary petition in bankruptcy by Sunshine Mining and Refining Company ("Sunshine") and three of its wholly-owned subsidiaries described under Item 3 below, the Liverpool Limited Partnership, Liverpool Associates, Ltd., Westgate International, L.P. and Elliott International Capital Advisors, Inc. (collectively the "Elliott Group") acquired more than a majority of the 8% Senior Exchangeable Notes due 2000 issued by Sunshine Precious Metals, Inc., a Delaware corporation ("Metals") and guaranteed by Sunshine (the "EuroBonds"). In a separate transaction, the Elliott Group acquired a request to "put" the EuroBonds to Sunshine Argentina, Inc. Similarly, Stonehill Institutional Partners, L.P., Stonehill Offshore Partners Limited (together with their affiliates, the "Stonehill Group") have been the principal holders of a series of 10% Notes due November 2, 2002, issued by Sunshine to the Stonehill Group in the original principal amount of $15,000,000 and guaranteed by Sunshine Argentina, Inc. On April 11 and 17, 2000, holders of the "Stonehill Notes" converted $1,000,000 in principal amount for 1,481,480 shares of "Old Common Stock" of Sunshine outstanding prior to August 23, 2000. As the EuroBonds were not retired or refinanced prior to their maturity, pursuant to the terms of the Stonehill Notes, Sunshine was obligated to issue to the holders of the Stonehill Notes additional amounts payable in cash or shares of common stock and in March 2000, Sunshine issued, as partial payment, an additional 698,179 shares of Old Common Stock to the holders of the Stonehill Notes. The Stonehill Group and the Elliott Group were co-proponents with Sunshine of the "Plan" referred to in Item 3 below and, on the Effective Date of the Plan, collectively became the holders of the respective percentages of New Common Stock described in Item 3 below which together aggregate approximately 90% of the New Common Stock. The Stonehill Group and the Elliott Group as of the Effective Date of the Plan also have the right to designate four out of the five members of the Board of Directors of Sunshine. Therefore, by virtue of the percentage of voting securities of Sunshine now beneficially owned directly or indirectly by the Stonehill Group and the Elliott Group, such persons have acquired and/or assumed control of Sunshine. The original amount and source of consideration used by the Stonehill Group and the Elliott Group is not known to Sunshine; the basis of control is the ownership of voting equity securities of Sunshine and the date on which the change of control occurred is the Effective Date of the Plan described in Item 3 below. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. On August 23, 2000 (the "Petition Date"), Sunshine and its wholly- owned subsidiaries, Sunshine Argentina, Inc. ("Argentina"), Metals and Sunshine Exploration, Inc. ("Exploration"), all filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Separate cases and their cause numbers are In Re: Sunshine Mining and Refining Company, Case No. 00-3409 (MWF); In Re: Sunshine Argentina, Inc., Case No. 00-3410 (MWF); In Re: Sunshine Precious Metals, Inc., Case No. 00- 3412 (MWF); and, In Re: Sunshine Exploration, Inc., Case No. 00-3411 (MWF) (all collectively the "Reorganization Cases"). The four separate -2- 3 cases were procedurally (but not substantively) consolidated for joint administration (the "Proceeding"). During the pendency of the Proceeding, Sunshine and its Debtor Subsidiaries filed a Joint Chapter 11 Plan of Reorganization, a Second Amended Joint Chapter 11 Plan of Reorganization, and a Third Amended and Restated Joint Chapter 11 Plan of Reorganization, which was modified on December 5, 2000. The Third Amended and Restated Joint Chapter 11 Plan of Reorganization as modified December 5, 2000, is referred to as the "Plan." The Plan was the subject of an Order Confirming the Third Amended and Restated Joint Chapter 11 Plan of Reorganization of Sunshine and its Debtor Subsidiaries (the "Confirmation Order"). A copy of the Plan and the Confirmation Order are included in this report as exhibits pursuant to Item 7. Under the terms of the Confirmation Order, certain conditions precedent existed to the effectiveness of the Plan set forth in the Plan and the Confirmation Order. As used in the Plan and the Confirmation Order, the term "Effective Date" means the first Business Day after all the conditions to effectiveness contained in the Plan and the Confirmation Order have been met or waived. The Plan Effective Date was February 5, 2001. The conditions precedent to the effectiveness of the Plan and Confirmation Order included designation by certain creditors of four (out of five) Directors (which has occurred), the New Consent Decree with Sunshine and Metals shall have been entered and approved by the United States District Court for the District of Idaho in the case styled United States of America v. Asarco Incorporated, Case Nos. 96-0122-N-EJL and 91-0342-N-EJL, substantially in accordance with an agreement in principal annexed to the Plan and such new consent decree shall have been approved by final order of the Idaho District Court (which occurred on January 18, 2001), and the so-called "Asarco Settlement" shall have been approved by the Bankruptcy Court (which has occurred). Cancellation of Old Common Stock; New Common Stock. Pursuant to the Plan and the Confirmation Order, on the Effective Date, all of the "old common stock" of Sunshine was canceled, retired and eliminated with no consideration paid therefor, and Sunshine was deemed to have issued the "New Mining Stock," which is shares of Common Stock, par value $0.01 per share. Under the Amended and Restated Certificate of Incorporation of Sunshine filed with the Secretary of State of Delaware on February 16, 2001, Sunshine's authorized common stock from and after the Effective Date consists of 200,000,000 shares of Common Stock, par value $0.01 per share. Of that class of stock, approximately 50,000,000 shares of Common Stock, par value $0.01 per share will be issued as the "New Mining Stock" under the terms of the Plan to those designated as recipients therefor under the Plan which generally are certain creditors of Sunshine and others who will in turn gift a portion (approximately 3.4%) of such New Mining Stock to the former common stockholders on a pro-rata basis, but only to accounts holding in excess of 100 shares of "old Common Stock." Sunshine will be distributing certificates representing shares of "New Mining Stock" to holders during February 2001. Certificates representing "old common stock" do not need to be surrendered. The CUSIP number of the "New Mining Stock" is 867833-60-0. Sunshine will announce the record date and distribution date as soon as it is determined. -3- 4 The Plan's treatment mechanism reflects that Sunshine as a holding company whose property consists of equity in its Debtor Subsidiaries has no real value to distribute to its creditors because each Debtor Subsidiary is also insolvent. Therefore, other than through the consensual "redistribution" of value from the creditors who will gift certain items to the former common stockholders, Sunshine would have no value to distribute to its creditors. In order to establish consensual restructuring and to provide for a widely dispersed body of holders of the "New Mining Stock," certain creditors (who are the holders of the Allowed Claims against Sunshine and its Debtor Subsidiaries) have agreed to redistribute certain of their recoveries to other Sunshine creditors. By virtue of this redistribution, holders of allowed claims against Sunshine will receive a portion of the New Mining Stock. Through this arrangement, the various creditor classes will receive the same proportion of New Mining Stock to its Allowed Claim as received by each holder in the other creditor classes, and the "gifting" creditors will retain 89.99% of the New Mining Stock on a fully-diluted basis taking into account all of the distributions afforded to the various holders. Based upon the various creditor classes and the estimates of Allowed Claims, after effectuation of the redistribution of "New Mining Stock" from the holders of certain claims (the "allowed put default claims" and the "Argentina allowed Stonehill notes claims") to the various classes entitled to receive same under the Plan, the following percentages of New Mining Stock will be distributed:
APPROXIMATE NO. OF SHARES BASED UPON PERCENTAGE OF 50,000,000 SHARES CLASS NEW MINING STOCK OUTSTANDING Mining Allowed General 1.05% 525,000 Unsecured Claims - Class Mining 2 Mining Allowed EuroBond 6.27% 3,137,000 Guaranty Claims - Class Mining 3 Mining Allowed Stonehill Note 3.35% 1,673,000 Claims - Class Mining 4 Mining Allowed 9% Notes 0.36% 179,000 Claims - Class Mining 5 Mining Allowed 5% Notes 0.08% 39,000 Claims - Class Mining 6 Mining Old Common Share 3.43% 1,714,000 Interest - Class Mining 8 Allowed Put Default Claims - 42.28% 21,141,000 Class Argentina 1 Allowed Stonehill Notes 35.66% 17,832,000 Guaranty Claims - Class Argentina 2 Metals Allowed General 0.92% 461,000 Unsecured Claims - Class Metals 2 Metals Allowed EuroBond 6.60% 3,300,000 ------- ---------- Claims - Class Metals 3 TOTALS: 100.00% 50,000,000 ======= ==========
-4- 5 New Consent Decree. In addition, the Plan contemplated a settlement between Sunshine and Metals and the United States on behalf of the United States Environmental Protection Agency ("EPA"), the United States Department of the Interior ("DOI") and the United States Department of Agriculture ("Agriculture") (collectively the "Government") and the Coeur d'Alene Tribe (the "Tribe") through a consent decree (the "New Consent Decree") involving Sunshine and Metals in cases numbered CIV96-0122-N-EJL and CIV91-0342-N-EJL pending in the United States District Court for the District of Idaho (the "NRD Actions"). Under the terms of that settlement, the Government and the Tribe will receive upon the Effective Date of the Plan warrants to purchase 9.95% of Sunshine's New Common Stock (i) with a strike price for such Warrants equal to the strike price of any management options provided under the Plan based on an equity value of Sunshine of $33,000,000, (ii) with a cashless exercise feature, (iii) terminating on the tenth anniversary of the Effective Date of the Plan, (iv) that are exempt from initial registration pursuant to 11 U.S.C. Section 1145, (v) that are freely transferable to any other entity at any time, and (vi) that are subject to ordinary terms and conditions, including standard anti-dilution language, of warrants of this nature reasonably acceptable to the proponents of the Plan, the Government and the Tribe. The New Consent Decree, which was approved by the U.S. District Court for the District of Idaho on January 18, 2001, requires Metals to provide for certain royalty payments to the Government and the Tribe on a quarterly basis based on a percentage of the "Net Smelter Returns" from all mining by Metals anywhere in the United States and all mining by any Sunshine entity from the Sunshine Mine or within one mile of the current boundaries of the Sunshine Mine. The royalty adjusts on a sliding scale based upon the average price of silver. No royalty must be paid until the average silver price exceeds $6 per ounce. Silver prices per ounce are presently below $5 per ounce. Asarco Settlement. In connection with the Plan, Sunshine and Asarco Incorporated ("Asarco") entered into a stipulation, the terms of which were included in the Confirmation Order relating to Asarco's claim in the Proceeding. Under the stipulation, Asarco shall be paid $125,000 in cash on the Effective Date of the Plan for an allowed administrative claim, and Asarco shall receive with respect to its allowed general unsecured claim on the Effective Date of the Plan shares of New Common Stock in the amount provided for by the Plan for its Class Mining 2 and Class Metals 2 claims (a total of 324,265 shares), and warrants to purchase 324,265 shares of Sunshine's New Common Stock (i) with a strike price for such warrants equal to the strike price of the management options provided under the Plan based on an equity value of Sunshine of $33,000,000, (ii) with a cashless exercise feature, (iii) that are exempt from initial registration, (iv) that are freely transferable to any other entity at any time, (v) that are subject to ordinary terms and conditions, including standard anti-dilution language of warrants of a similar nature reasonably acceptable to the Plan proponents and Asarco, and (vi) that terminate on the fifth anniversary of the Effective Date of the Plan. Directors. At the time of institution of the Reorganization Cases, the members of the Board of Directors of Sunshine were G. Chris Andersen (a Director since May 1983), V. Dale Babbitt (a Director since December -5- 6 1992), George M. Elvin (a Director since June 1994), Daniel D. Jackson (a Director since May 1983), Oren G. Shaffer (a Director since June 1993), John S. Simko (a Director since December 1992), and Robert B. Smith (a Director since June 1993). On the Effective Date of the Plan, the operational management of Sunshine became the responsibility of the "Reorganized Board of Directors" selected by certain creditors in accordance with the Plan. All of the former Directors ceased to be Directors of Sunshine on the Effective Date of the Plan and were deemed removed (without cause) pursuant to the Confirmation Order. In accordance with the terms of the Plan, four "Creditor Directors" were selected, and one "Management Director" was selected to comprise the Board of Directors of Sunshine from and after the Effective Date. John S. Simko continues as a Director as the "Management Director," and George M. Elvin was designated as one of the "Creditor Directors" by Elliott Group. The other three "Creditor Directors" selected are Arnold Kastenbaum (Designee of Stonehill Group), Keith McCandlish (Designee of Elliott Group), and Charles Reardon (Designee of Stonehill Group). Continued Jurisdiction of Bankruptcy Court. Consistent with the provisions of the Bankruptcy Code, on the Effective Date of the Plan, title to all assets and property of the estates of the "Debtors" passed to and vested in "Reorganized Debtors" (Sunshine and its subsidiaries) free and clear of all claims, allowed interest, liens, charges and other rights of creditors or equity holders arising prior to the Effective Date. From and after the Effective Date, Sunshine and its subsidiaries may operate their respective businesses, and may use, acquire and dispose of property, free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules and the Bankruptcy Court, except as provided in the Confirmation Order. The rights afforded under the Plan and treatment of the Claims and Interests under the Plan have been in exchange for, and in complete satisfaction, discharge and release of all Claims and termination of all interests of any nature whatsoever arising on or before the Effective Date, including any accrued interest on Claims from the Petition Date. The Bankruptcy Court retained exclusive jurisdiction over the Reorganization Cases for various matters to sort out any claims, and to determine any controversies or disputes, as well as all matters set forth in the Confirmation Order. The number of shares of New Common Stock, par value $0.01 per share of Sunshine estimated to be outstanding, the number reserved for future issuance in respect of claims and interest filed and allowed under the Plan, and the aggregate total of such numbers are:
ESTIMATED* NUMBER OF SHARES New Common Stock, par value 50,000,000 $0.01 per share to be outstanding: Reserved for issuance pursuant 4,975,000 to Warrants held by Government and Tribe:
-6- 7
ESTIMATED* NUMBER OF SHARES Reserved for issuance pursuant 324,265 to warrants held by Asarco Reserved for issuance pursuant to options: 2,500,000 ---------- TOTAL: 57,799,265 ==========
- ---------- *estimates do not contemplate adjustments for roundings of calculation, forfeitures or claims objection results, all of which may change any or all estimated amounts. Registration Rights Agreement. Under the Plan of Reorganization, Sunshine entered into a Registration Rights Agreement with members of the Stonehill Group and the Elliott Group under which the shares of new common stock issued to them are to be registered under federal securities laws. Such agreement provides for filing of a Registration Statement within a specified period of time covering only the securities issued to the Elliott Group and the Stonehill Group, the effectiveness of such Registration Statement within a certain period of time and other matters. In the event that certain of the commitments under such agreement are not satisfied, each of the holders has a right to provide Sunshine with written notice thereof (a "Put Notice") which would require Sunshine to pay to each such holder (in cash or shares of common stock at the option of the holder) a specified amount of funds and/or in certain instances, to repurchase the securities from the holder for a "Mandatory Repurchase Price" equal to 115% of the Market Price on the date the holder acquires the right require Sunshine to repurchase such shares. Argentina Transaction; Call Option Agreement. Under the terms of the Plan and the Confirmation Order on the Effective Date, the capital stock of Argentina was cancelled and Argentina issued the "New Argentina Stock." Sunshine caused the incorporation and organization of Sunshine International Mining, Inc., a Delaware corporation ("International"), all of the issued and outstanding stock of which is owned by Sunshine. Sunshine contributed to the capital of International all of the New Argentina Stock such that Argentina became a wholly-owned subsidiary of International which in turn is a wholly-owned subsidiary of Sunshine. Simultaneously Sunshine, International and Argentina entered into a Call Option Agreement dated February 2001, with the Elliott Group and the Stonehill Group, pursuant to which International granted (i) a call option to each holder within the Elliott Group and the Stonehill Group to purchase, collectively, up to 100% of the shares of New Argentina Stock and (ii) a first priority perfected security interest in the New Argentina Stock. Such call option(s) was granted to purchase a maximum number of shares of New Argentina Stock at a specified purchase price which option is to be reduced proportionately in the event the Elliott Group holders and/or the Stonehill Group holders sell more than 50% of their shares of New Common Stock of Sunshine received. For example, if the Elliott Group holders were to sell 55% of their shares of Sunshine Common Stock initially received, then the maximum number of New -7- 8 Argentina Stock that the Elliott Group holders could purchase in the aggregate upon exercise of their Call Options would be reduced by a percentage equal to (55% - 50%) x 2, or 10%. The term of each Call Option expires at the time of exercise in full of such Call Option, or if the market capitalization of Sunshine shall exceed $150,000,000 for at least 60 consecutive days or on the tenth anniversary of the Effective Date of the Plan. The Call Option becomes exercisable upon the occurrence of any one or more of nine separate events, including (i) the de-listing of the Sunshine New Common Stock from an "Approved Market," (ii) suspension of the Sunshine New Common Stock from trading on an Approved Market for at least seven consecutive calendar days, (iii) reduction in the overall market capitalization of Sunshine to less than $15,000,000 for at least fifteen consecutive calendar days, (iv) a bankruptcy proceeding occurring with respect to Sunshine or one of its subsidiaries, (v) Sunshine fails to comply with its obligations in the Call Option Agreement, and (vi) other events, including any default under the "Exit Financing Facility." The Call Option, once exercisable, may be exercised at any time by any of the holders thereof. The effect of the Call Option(s) is to potentially allow the Elliott Group holders and the Stonehill Group holders (and certain of their successors and assigns) to acquire Sunshine Argentina which in turns owns the Pirquites Mine and other assets. Should such an event occur, Sunshine's investment of approximately $20,000,000 in the acquisition and evaluation of that property can no longer be an asset of Sunshine, nor would the assigned proven and probable reserves totaling 129.6 million ounces of silver, along with 59,000 tons of tin and 273,000 tons of zinc. The New Argentina Stock has been pledged under the Call Option Agreement under a separate Pledge Agreement to the Elliott Group holders and the Stonehill Group holders and delivered to Wells Fargo Bank Minnesota, N.A. as administrative and pledge agent. Exit Financing Facility. In connection with the Plan and Confirmation Order, Sunshine's only debt instrument is to be the "Exit Financing Facility" from the Proceeding which bears interest at a fixed rate of 15% per annum in the maximum principal amount of $5,000,000 (approximately $2,700,000 of which was outstanding on the Effective Date. The lenders are Highwood Partner, L.P. and Stonehill Capital Management, LLC, affiliates of the Elliott Group and the Stonehill Group. The facility is secured by substantially all of the assets of Sunshine and its subsidiaries, including the Pirquitas Mine. The proceeds of all advances under such facility are to be utilized solely (a) to provide funds necessary to the conduct of the business of Sunshine and its subsidiaries in the ordinary course in accordance with an approved budget, (b) to pay fees and disbursements paid to lenders and their professionals in accordance with the budget, and (c) as otherwise contemplated or permitted by the budget. ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE. Incorporation by reference is made to the description under Item 3 above of the "New Consent Decree" in the case styled United States of America v. Asarco Incorporated, et al., Cases No. 96-0122-N-EJL and 91-0342-N-EJL pending in the United States District Court for the District of Idaho. -8- 9 On the Effective Date of the Plan, Sunshine's principal executive offices were relocated to 5956 Sherry Lane, Suite 621, Dallas, Texas 75225. On February 5, 2001, Sunshine received Notice that the smelter to which the Sunshine Mine shipped concentrates was closing and would no longer accept any deliveries. Management sought alternatives for the production from the Sunshine Mine but has not been successful in securing an economically viable alternate arrangement. As a result, Sunshine notified employees that a mass lay-off of the majority of the Sunshine Mine employees will occur on February 16, 2001, and the mine was placed on a care and maintenance status. On February 7, 2001, the new Board of Directors elected officers of Sunshine. Those officers and their positions with Sunshine are:
NAME OFFICE John S. Simko Chairman of the Board William W. Davis President, Chief Operating Officer and Chief Financial Officer Harry F. Cougher Senior Vice President and General Manager, Sunshine Mine William D. Bond Vice President Exploration M. Michael Owens Vice President, Chief Accounting Officer and Treasurer William J. Pincus Vice President, Latin American Operations Allan R. Young Vice President, Development Mary Jo Williams Secretary
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS. See Item 3 above with respect to the deemed removal (without cause) of the members of the Board of Directors of Registrant pursuant to the Confirmation Order. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following are filed herewith as exhibits or are incorporated by reference as indicated below: -9- 10 EXHIBIT DESIGNATION DESCRIPTION OF EXHIBIT 2.1 Third Amended Joint Chapter 11 Plan of Reorganization dated as of December 4, 2000, bench-filed in the case styled In Re: Sunshine Mining and Refining Company, Chapter 11 Case No. 00-3409 (MWF). 2.2 Order Confirming the Third Amended Joint Chapter 11 Plan of Reorganization of Sunshine Mining and Refining Company and its Debtor Subsidiaries as entered December 5, 2000. 2.3 Partial Consent Decree with Sunshine Mining and Refining Company and Sunshine Precious Metals, Inc. in the case styled United States of America v. Asarco Incorporated, et al., a Consolidated Case Nos. 96-0122-N-EJL and 91-0342-N-EJL in the United States District Court for the District of Idaho. 2.4 Notice of Effective Date of Third Amended Joint Chapter 11 Plan of Reorganization. 3.1 Amended and Restated Certificate of Incorporation of Sunshine Mining and Refining Company as filed with and accepted by the Secretary of State of Delaware on February 16, 2001. 3.2 Amended and Restated Bylaws of Sunshine Mining and Refining Company as adopted February 9, 2001. 10.1 Call Option Agreement dated February 5, 2001, among Sunshine International Mining, Inc., Sunshine Mining and Refining Company, Sunshine Argentina, Inc., Elliott International, L.P., The Liverpool Limited Partnership, Stonehill Institutional Partners, L.P. and Stonehill Offshore Partners Limited. 10.2 Registration Rights Agreement dated February 5, 2001, among Sunshine Mining and Refining Company, Stonehill Partners LP, Stonehill Offshore Partners Limited, Elliott International, L.P. and The Liverpool Limited Partnership. -10- 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated February 19, 2001. SUNSHINE MINING AND REFINING COMPANY By: /s/ William W. Davis ------------------------------------ William W. Davis, President, Chief Operating Officer and Chief Financial Officer 12 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 Third Amended Joint Chapter 11 Plan of Reorganization dated as of December 4, 2000, bench-filed in the case styled In Re: Sunshine Mining and Refining Company, Chapter 11 Case No. 00-3409 (MWF). 2.2 Order Confirming the Third Amended Joint Chapter 11 Plan of Reorganization of Sunshine Mining and Refining Company and its Debtor Subsidiaries as entered December 5, 2000. 2.3 Partial Consent Decree with Sunshine Mining and Refining Company and Sunshine Precious Metals, Inc. in the case styled United States of America v. Asarco Incorporated, et al., a Consolidated Case Nos. 96-0122-N-EJL and 91-0342-N-EJL in the United States District Court for the District of Idaho. 2.4 Notice of Effective Date of Third Amended Joint Chapter 11 Plan of Reorganization. 3.1 Amended and Restated Certificate of Incorporation of Sunshine Mining and Refining Company as filed with and accepted by the Secretary of State of Delaware on February 16, 2001. 3.2 Amended and Restated Bylaws of Sunshine Mining and Refining Company as adopted February 9, 2001. 10.1 Call Option Agreement dated February 5, 2001, among Sunshine International Mining, Inc., Sunshine Mining and Refining Company, Sunshine Argentina, Inc., Elliott International, L.P., The Liverpool Limited Partnership, Stonehill Institutional Partners, L.P. and Stonehill Offshore Partners Limited. 10.2 Registration Rights Agreement dated February 5, 2001, among Sunshine Mining and Refining Company, Stonehill Partners LP, Stonehill Offshore Partners Limited, Elliott International, L.P. and The Liverpool Limited Partnership.
EX-2.1 2 d84396ex2-1.txt 3RD AMENDED JOINT CHAP. 11 PLAN OF REORGANIZATION 1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Bench Filed on 12/5/00 In re: ) ) Chapter 11 Case SUNSHINE MINING AND REFINING ) No. 00-3409 (MFW) COMPANY, ) ) Debtor, ) ) - ------------------------------------ ) In re: ) ) Chapter 11 Case SUNSHINE ARGENTINA, INC., ) No. 00-3410 (MFW) ) ) Debtor, ) ) - ------------------------------------ ) In re: ) ) Chapter 11 Case SUNSHINE PRECIOUS METALS, ) No. 00-3412 (MFW) INC., ) ) Debtor, ) ) - ------------------------------------ ) In re: ) ) Chapter 11 Case SUNSHINE EXPLORATION, INC., ) No. 00-3411 (MFW) ) ) Debtor, ) ) - ------------------------------------ ) THIRD AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION RICHARDS, LAYTON & FINGER, P.A. YOUNG CONAWAY STARGATT Mark D. Collins (Del. Bar #2981) & TAYLOR, LLP Daniel J. DeFranceschi (Del. Bar #2732) Brendan Linehan Shannon (Del. Bar #3136) John H. Knight (Del. Bar #3848) Rodney Square North Margreta M. Sundelin (Del Bar #3873) P.O. Box 39l One Rodney Square Wilmington, Delaware 19899-0391 Wilmington, Delaware 19899 (302) 571-6696 (302) 658-6541 -and- COUNSEL FOR DEBTORS AND KASOWITZ, BENSON, TORRES DEBTORS-IN-POSSESSION & FRIEDMAN LLP David S. Rosner DATED AS OF DECEMBER 4, 2000. Robert M. Novick 1301 Avenue of the Americas New York, New York 10019 (212) 506-1700 CO-COUNSEL FOR THE ELLIOT GROUP KRAMER, LEVIN, NAFTALIS & FRANKEL LLP Thomas Moers Mayer 919 Third Avenue New York, New York 10022 (212) 715-9169 COUNSEL FOR THE STONEHILL GROUP 2 TABLE OF CONTENTS TABLE OF CONTENTS................................................................(ii) JOINT CHAPTER 11 PLAN OF REORGANIZATION.............................................1 ARTICLE I RULES OF CONSTRUCTION........................................................1 ARTICLE II DEFINITIONS..................................................................1 ARTICLE III RULES OF CLASSIFICATION.........................................13 3.1 General Rules of Classification.........................................13 3.2 Undersecured Claims Against any Debtor..................................14 3.3 Separate Classifications................................................14 ARTICLE IV CLASSIFICATION OF CLAIMS AND ALLOWED INTERESTS...................14 4.1 Classification Mechanics................................................14 4.2 Claims and Allowed Interests............................................14 4.3 Mining .................................................................14 4.4 Argentina...............................................................15 4.5 Metals..................................................................15 4.6 Exploration.............................................................16 ARTICLE V IMPAIRMENT OF CLAIMS AND INTERESTS................................16 ARTICLE VI TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS.....................16 6.0 Treatment Mechanics.....................................................16 6.1 Treatment of Class Mining P (Allowed Mining Priority Non-Tax Claims)....17 6.2 Treatment of Class Mining 1 (Mining Secured Claims).....................17
(ii) 3 6.3 Treatment of Class Mining 2 (Mining General Unsecured Claims).................18 6.3.1 Mining Convenience Claim Election...........................................18 6.3.2 Treatment (Mining Allowed General Unsecured Claims).........................18 6.4 Treatment of Class Mining 3 (Mining Allowed Eurobond Guarantee Claims)........18 6.5 Treatment of Class Mining 4 (Mining Allowed Stonehill Note Claims) ...........19 6.6 Treatment of Class Mining 5 (Mining Allowed 9% Note Claims) ..................19 6.7 Treatment of Class Mining 6 (Mining Allowed 5% Note Claims) ..................20 6.8 Treatment of Class Mining 7 (Mining Convenience Claims) ......................20 6.9 Treatment of Class Mining 8 (Mining Old Common Share Interests) ..............21 6.9.1 Treatment of Class Mining 9 (Claims of the Environmental Regulators and the Tribe) ...................21 6.10 Treatment of Class Argentina P (Argentina Allowed Priority Non-Tax Claims) ...............................21 6.11 Treatment of Class Argentina 1 (Argentina Allowed Put Default Claims) ....................................22 6.12 Treatment of Class Argentina 2 (Argentina Allowed Stonehill Notes Guarantee Claims) ......................22 6.13 Treatment of Class Argentina 3 (Argentina Allowed Interests) .............................................22 6.14 Treatment of Class Metals P (Metals Allowed Non-Tax Priority Claims) ..................................22 6.15 Treatment of Class Metals I (Metals Secured Claims) ...................................................23 6.16 Treatment of Class Metals 2 (Metals Allowed General Unsecured Claims) .................................23 6.16.1 Metals Convenience Claim Election..........................................23
(iii) 4 6.16.2 Treatment ........................................................23 6.17 Treatment of Class Metals 3 (Metals Allowed Eurobond Claims) .............................23,24 6.18 Treatment of Class Metals 4 (Metals Convenience Claims) .....................................24 6.19 Treatment of Class Metals 5 (Metals Allowed Interests) ......................................24 6.19.1 Treatment of Class Metals 6 (Claims of the Environmental Regulators and the Tribe) ..........24 6.20. Treatment of Class Exploration P (Exploration Priority Non-Tax Claims) ...........................24 6.21 Treatment of Class Exploration I (Exploration Allowed General Unsecured Claims) ..................25 6.22 Treatment of Class Exploration 2 (Exploration Allowed Put Default Claims) ........................25 6.23 Treatment of Class Exploration 3 (Exploration Allowed Stonehill Notes Guarantee Claims) ..........25 6.24 Treatment of Class Exploration 4 (Exploration Allowed Interests) .................................25 ARTICLE VII TREATMENT OF UNIMPAIRED CLAIMS ..............................26 7.1 Administrative Claims ...............................................26 7.1.1 DIP Claims .........................................................26 7.2 Tax Claims ..........................................................26 7.3 General Bar Date For Administrative Claims ..........................27 Confirmation Order ...........................................................27 Confirmation Order ...........................................................27 7.4 Bar Date for Professional Compensation ..............................27
(iv) 5 ARTICLE VIII ACCEPTANCE OR REJECTION OF THE PLAN ......................................27 8.1 Voting ...........................................................................27 8.2 Classes Entitled to Vote .........................................................27 8.3 Acceptance by Impaired Classes ...................................................28 8.4 Acceptance by Making Convenience Claim Election ..................................28 8.5 Reservation of Right to Withdraw Plan ............................................28 8.6 Cram Down ........................................................................28 8.7 Confirmation as to One or More Debtors ...........................................28 8.8 Acceptance by Classes Mining 9 and Metals 6 ......................................28 ARTICLE IX PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS ................................29 9.1 Objections to Claims; Prosecution of Disputed Claims .............................29 9.2 Estimation of Claims .............................................................29 9.3 Payments and Distribution on Disputed Claims .....................................29 9.4 Reserve for and Issuance of Cash on Disputed Claims ..............................30 9.5 Reserve for and Issuance of Non-Cash Distribution on Disputed Claims .............30 ARTICLE X EXECUTORY CONTRACTS AND UNEXPIRED LEASES ....................................30 10.1 Assumption and Assignment of Executory Contracts and Unexpired Leases ............30 10.2 Payments Related to Assumption of Executory Contracts and Unexpired Leases .......31 10.3 Rejection of Executory Contracts and Unexpired Leases ............................31 10.4 Rejection and Cancellation of Prepetition Financing Obligations ..................31 10.5 Claims Based on Rejection of Executory Contracts or Unexpired Leases .............32 10.6 Indemnification Obligations ......................................................32
(v) 6 10.7 Compensation and Benefit Programs ........................................32 10.8 Retiree Benefits .........................................................33 ARTICLE XI IMPLEMENTATION OF THE PLAN ..........................................33 11.1 Continued Corporate Existence ............................................33 11.2 Withdrawal of the Plan ...................................................33 11.3 Cancellation of Capital Stock ............................................34 11.4 Surrender of Instruments .................................................34 11.5 Close of Ledgers .........................................................34 11.6 Charter ..................................................................35 11.7 Management of the Reorganized Debtors ....................................35 11.8 Issuance of New Securities Stock .........................................35 11.9 Newco Argentina Transaction ..............................................35 11.10 Corporate Action .........................................................35 11.11 Exit Financing Facility ..................................................36 11.12 Agreement of Holders of Certain Argentina Claims .........................36 11.13 Release of Holdings ......................................................36 11.14 Effectuating Documents; Further Transactions; Exemption from Certain Transfer Taxes ...........................................................37 11.15 Performance of Obligations Under the New Consent Decree ..................37 ARTICLE XII DISTRIBUTIONS ......................................................37 12.1 Distribution of New Common Stock .........................................37 12.2 Distribution of Cash .....................................................37
(vi) 7 12.3 Subsequent Distributions ..................................................37 12.4 Setoffs ...................................................................38 12.5 Distribution of Unclaimed Property ........................................38 12.6 Fractional Interests ......................................................38 ARTICLE XIII CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS OF THE PLAN ..................................................38 13.1 Conditions Precedent to Confirmation ......................................38 13.2 Conditions Precedent to Effectiveness .....................................39 13.3 Effect of Failure of Conditions ...........................................39 ARTICLE XIV EFFECTS OF CONFIRMATION ............................................40 14.1 Title to Assets ...........................................................40 14.2 Discharge .................................................................40 14.3 Injunctions ...............................................................40 14.4 Exculpation and Releases ..................................................41 14.5 Rights of Action ..........................................................42 ARTICLE XV MODIFICATION OF THE PLAN ............................................43 ARTICLE XVI RETENTION OF JURISDICTION ..........................................43 ARTICLE XVII MISCELLANEOUS PROVISIONS ..........................................44 17.1 Payment of Statutory Fees .................................................44 17.2 Committees ................................................................44 17.3 Binding Effect ............................................................45 17.4 Notices ...................................................................45 17.5 Governing Law .............................................................46
(vii) 8 17.6 Saturday, Sunday, or Legal Holiday .......................................46 17.7 Filing of Additional Documents ...........................................46 17.8 Plan Controls ............................................................46 17.9 Reservation of Rights ....................................................46 17.10 Severability of Plan Provisions ARTICLE XVIII THE ENVIRONMENTAL SETTLEMENT .....................................46 18.1 Background of the Environmental Settlement ...............................47 18.2 The Terms of the Environmental Settlement ................................47
(viii) 9 JOINT CHAPTER 11 PLAN OF REORGANIZATION Sunshine Mining and Refining Company ("Mining"), Sunshine Argentina, Inc. ("Argentina"), Sunshine Precious Metals, Inc., ("Metals"), and Sunshine Exploration, Inc. ("Exploration"), the above-captioned debtors and debtors-in-possession (collectively, the "Debtors"); together with The Liverpool Limited Partnership, Liverpool Associates, Ltd., Westgate International, L.P., Elliott International Capital Advisors (collectively, the "Elliott Group"); Stonehill Institutional Partners, L.P., Stonehill Offshore Partners Limited, and Stonehill Advisors LLC (collectively, the "Stonehill Group"), each as "proponents of the plan" within the meaning of section 1129 of title 11 of the United States Code, hereby propose the following Joint Plan of Reorganization for the Debtors pursuant to section 1121(a) of title 11 of the United States Code: ARTICLE I RULES OF CONSTRUCTION 1.1 Unless otherwise provided, the capitalized terms in this Plan shall have the meanings set forth in Article II. 1.2 Any capitalized term used in this Plan that is not defined in Article II of this Plan shall have the meaning ascribed to such term, if any, in the Bankruptcy Code. 1.3 The rules of construction used in section 102 of the Bankruptcy Code (11 U.S.C. 101, et seq.) shall apply to the construction of this Plan. 1.4 For the purposes of this Plan, the meanings below and in the Bankruptcy Code shall apply equally to the singular, plural and possessive forms and masculine, feminine and neuter genders of the defined terms. 1.5 All exhibits are incorporated into and are a part of the Plan as if set forth in full herein; whether or not annexed hereto. Copies of exhibits can be obtained upon written request to Richards, Layton & Finger, P.A., Attn: Daniel J. DeFranceschi, Esq., One Rodney Square, Wilmington, Delaware 19899. 1.6 In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply. 1.7 The words "herein," "hereof," "hereunder," and other words of similar import refer to this Plan as a whole, not to any particular Section, subsection, or clause, unless the context requires otherwise. 1.8 Captions and headings to Articles and Sections of the Plan are inserted for convenience or reference only and are not intended to be a part or to affect the interpretation of the Plan. ARTICLE II DEFINITIONS All of the following definitions are intended to be, and hereby are, part of the substantive provisions of this Plan and have the same force and effect as any other provision of this Plan. 2.1 "Administrative Claim" means any Claim constituting a cost or expense of administration of the Debtors' Chapter 11 cases incurred on or after the Petition Date and allowed by Final Order under section 503(b) of the Bankruptcy Code, including, without limitation: (a) any and all DIP Claims, (b) any actual and 1 10 necessary costs and expenses incurred after the Petition Date of preserving the Estates of the Debtors and operating the businesses of the Debtors, any indebtedness or obligations incurred or assumed by the Debtors in connection with the conduct of their businesses or for the acquisition or lease of property or for the procurement of services, any costs and expenses of the Debtors and/or the Reorganized Debtors for the management, maintenance, preservation, sale or other disposition of any assets, the administration and implementation of the Plan, the administration, prosecution or defense of claims by or Claims against the Debtors and for distributions under the Plan, (c) compensation for legal, financial, advisory, accounting and other services and reimbursement of expenses allowed by the Bankruptcy Court under section 330, 331, or 503(b) of the Bankruptcy Code to the extent incurred prior to the Effective Date, (d) all fees and charges assessed against the Debtors' Estates under section 1930, Chapter 123 of title 28 of the United States Code, (e) the Eurobond Indenture Trustee Fee, (f) the Mining 9% Notes Indenture Trustee Fee, and (g) any costs or expenses to the extent allowed by Final Order. 2.2 "Agreement in Principle" means the Settlement Term Sheet, Agreement in Principle between the Debtors, the Elliott Group, the Stonehill Group, the Environmental Regulators and the Tribe which is attached hereto as Exhibit G. 2.3 "Allowed Administrative Claim" means an Administrative Claim that is or becomes an Allowed Claim. 2.4 "Allowed Claim" means a Claim to the extent such Claim: (a)(i) is either: (A) scheduled by the Debtor pursuant to the Bankruptcy Code and Bankruptcy Rules in a liquidated amount and not listed as contingent, unliquidated or disputed; or (B) proof of which has been timely filed, or deemed timely filed, with the Court pursuant to the Bankruptcy Code, the Bankruptcy Rules and/or any applicable orders of the Court, or late filed with leave of Court; and (ii) not objected to within the period fixed by the Bankruptcy Code, the Bankruptcy Rules and/or applicable orders of the Court; or (b) has otherwise been allowed by a Final Order or pursuant to this Plan. An Allowed Claim: (A) includes a previously Disputed Claim to the extent such Disputed Claim becomes allowed; and (B) shall be net of any setoff amount of any claim that may be asserted by the Debtor against the Holder of such claim, which shall be deemed to have been setoff in accordance with the provisions of this Plan. Without limiting the foregoing, no Claim shall be considered an Allowed Claim before the time that an objection has been or may be filed with regard to such Claim if (x) the amount or classification of the Claim specified in the relevant proof of claim exceeds the amounts of or has a classification different from any corresponding Claim scheduled by the Debtor in its Schedules of Assets and Liabilities; (y) any corresponding Claim scheduled by the Debtor has been scheduled as disputed, contingent or unliquidated; or (z) no corresponding Claim has been scheduled by the Debtor in its Schedules of Assets and Liabilities. 2.5 "Allowed Convenience Claim" means a Convenience Claim that is or becomes an Allowed Claim. 2.6 "Allowed Eurobond Claim" means (i) the Eurobond Claims held by any member of the Elliott Group; and (ii) any other Eurobond Claim that becomes an Allowed Claim. 2.7 "Allowed Eurobond Guarantee Claim" means (i) the Eurobond Claims held by any member of the Elliott Group; and (ii) any other Eurobond Guarantee Claim. 2.8 "Allowed General Unsecured Claim" means a General Unsecured Claim that is or becomes an Allowed Claim. 2.9 "Allowed Interest" means (a) any equity interest in Mining evidenced by Mining's common shares, $.0l par value, (b) any right to acquire an equity interest in Mining based~on (i) the Stonehill Notes, 2 11 (ii) the Eurobonds, (iii) the Mining 5% Notes, or (iv) any other agreement with Mining entered into prior to the Petition Date, (c) any equity interest in the Subsidiary Debtors evidenced by the Subsidiary Debtors' common shares, $0.01 par value or (d) any right to acquire an equity interest in the Subsidiary Debtors. 2.10 "Allowed Priority Non-Tax Claim" means a Priority Non-Tax Claim that is or becomes an Allowed Claim. 2.11 "Allowed Secured Claim" means a Secured Claim that is or becomes an Allowed Claim. 2.12 "Allowed Tax Claim" means a Tax Claim that is or becomes an Allowed Claim. 2.13 "Amended By-Laws" means, collectively, the amended and restated by-laws of Reorganized Mining, the amended and restated by-laws of Reorganized Argentina, and the amended Reorganized and restated by-laws of Reorganized Metals, each as amended and restated pursuant to this Plan. 2.14 "Amended Certificates of Incorporation" means the Certificate of Incorporation of Reorganized Mining, the Certificate of Incorporation of Reorganized Argentina, the Certificate of Incorporation of Reorganized Metals, the Certificate of Incorporation of Reorganized Exploration and the Certificate of Incorporation of Argentina Newco, each as amended and restated pursuant to this Plan and in the form included in the Plan Supplement. 2.15 "Argentina" means Sunshine Argentina, Inc., a Delaware corporation. 2.16 "Argentina Allowed Interest" means an Allowed Interest respecting Argentina. 2.17 "Argentina Allowed Put Default Claims" means, collectively, the claims arising as a result of Argentina's breach of the Put Option Agreement in the aggregate amount of $18,701,344 as of the Petition Date. 2.18 "Argentina Allowed Stonehill Note Guarantee Claim" means a Stonehill Note Guarantee Claim against Argentina. 2.19 "Argentina Newco" means Argentina Newco, Inc., a Delaware Corporation to be organized in accordance with and under the terms of the Plan. 2.20 "Argentina Newco Board of Directors" means the board of directors of Argentina Newco, on and after the Effective Date consisting of five directors, two of whom shall be selected by the Elliott Group, two of whom shall be selected by the Stonehill Group, and one of whom shall be selected by Argentina, in accordance with the provisions of the plan and as identified the Plan Supplement. 2.21 "Argentina Newco Call Option" means the option to acquire an equity interest in Sunshine Argentina under the terms and conditions set forth in the form of Argentina Newco Call Option Agreement included in the Plan Supplement. 2.22 "Argentina Newco Stock" means ten million (10,000,000) shares of common stock, $0.01 par value, authorized by Argentina Newco pursuant to this Plan, representing one hundred percent (100%) of the authorized and issued voting common stock of Argentina Newco on the Effective Date. 2.23 "ASARCO Settlement" shall mean that certain stipulation and order dated as of December 4, 2000, between the Debtors and ASARCO, Inc. 3 12 2.24 "ASARCO Warrants" mean the warrants to be issued by Reorganized Mining to ASARCO, Inc. under the ASARCO Settlement. 2.25 "Ballot" means the form or forms distributed to each Holder of an impaired claim (except with respect to those Holders required to vote by use of a Master Ballot) on which the Holder is to indicate acceptance or rejection of the Plan. 2.26 "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. Section 101, et seq.), as in effect on the Petition Date and as amended after the Petition Date to the extent applicable to the Debtors' Chapter 11 cases. 2.27 "Bankruptcy Court" or "Court" means the United States Bankruptcy Court for the District of Delaware, including the United States Bankruptcy Judge presiding over the Debtors' Chapter 11 cases, and to the extent it is necessary and appropriate for jurisdiction to be exercised by the United States District Court for the District of Delaware, including the United States District Judges, or any other court with jurisdiction over the Debtors' Chapter 11 cases, this definition shall include same. 2.28 "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure as in effect on the Petition Date and as amended after the Petition Date and effective during the Debtors' Chapter 11 cases. 2.29 "Bar Date" means November 30, 2000, which is the date set pursuant to the September 25, 2000 order of the Bankruptcy Court as the last date for filing proofs of claim in these Reorganization Cases, February 19, 2001 for claims of governmental units or such other date as may apply to a particular Claim pursuant to an order of the Court. 2.30 "Business Day" means any day other than a Saturday, Sunday, or "legal holiday" (as defined in Bankruptcy Rule 9006(a)). 2.31 "Certificates of Incorporation" means the respective certificates of incorporation of Mining, Argentina, Exploration, and Metals, as amended or restated prior to the Petition Date. 2.32 "Chapter 11" means Chapter 11 of the Bankruptcy Code (11 U.S.C. Section 1101 et seq.), as in effect on the Petition Date and as amended after the Petition Date and effective during the Debtors' Chapter 11 case. 2.33 "Claim" shall have the meaning set forth in Section 101(5) of the Bankruptcy Code. 2.34 "Class" means a category of Holders of Claims or Allowed Interests as provided for in Articles III and IV of this Plan. 2.35 "Class Gifted Creditor Stock Shares" means the percentage of the aggregate amount of Allowed Claims in a particular Class to the aggregate of all Allowed Claims in Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6 multiplied by the Gifted Creditor Stock. 2.36 "Confirmation" means entry by the Bankruptcy Court or other court of competent jurisdiction of the CONFIRMATION ORDER. 2.37 "Confirmation Date" means the date of entry by the clerk of the Bankruptcy Court of the CONFIRMATION ORDER on the docket of the Bankruptcy Court. 4 13 2.38 "Confirmation Hearing" means the hearing before the Bankruptcy Court respecting Confirmation of this Plan. 2.39 "CONFIRMATION ORDER" means the order entered by the Bankruptcy Court confirming this Plan in accordance with the provisions of Chapter 11. 2.40 "Convenience Claim Election" shall have the meaning set forth in sections 6.3 and 6.16 of the Plan. 2.41 "Creditor Directors" means the members of the Reorganized Boards of Directors appointed by the Elliott Group and the Stonehill Group. 2.42 "Cure Claim" means a Claim against the Debtors, or any of them, arising from an obligation to cure defaults within the meaning of section 365(b) of the Bankruptcy Code. 2.43 "Debtors" means (i) Mining, the debtor and debtor-in-possession in Chapter 11 Case No. 00-3409 (MFW) pending before the Bankruptcy Court, (ii) Argentina, the debtor and debtor-in-possession in Chapter 11 Case No. 00-3410 (MFW) pending before the Bankruptcy Court, (iii) Metals, the debtor and debtor-in-possession in Chapter 11 Case No. 00-3412 (MFW) pending before the Bankruptcy Court, and (iv) Exploration, the debtor and debtor-in-possession in Chapter 11 Case No. 00-3411 (MFW). 2.44 "DIP Claims" means all Claims of DIP Lenders arising under the DIP Facilities. 2.45 "DIP Facilities" or "DIP Facility" means the debtor-in-possession credit agreement and any related agreements between the Debtors and the DIP Lenders. 2.46 "DIP Lenders" means, collectively, Highwood Partners, L.P. and Stonehill Capital Management, LLC, and any other lenders participating in the DIP Facilities. 2.47 "DIP Order" means all Final Orders authorizing, approving or amending the DIP Facilities. 2.48 "Disclosure Statement" means the Joint Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code, either in its present form or as it may be altered, amended or modified from time to time. 2.49 "Disputed Claim" means other than as to Claims allowed under this Plan (a) any Claim listed in any of the Schedules as contingent, unliquidated or disputed; (b) any Claim against any of the Debtors, proof of which is filed designating such Claim in any respect as contingent, unliquidated or disputed; (c) any Claim which, in whole or in part, is the subject of a timely objection interposed by the Debtors; or (d) any Claim which is the subject of litigation as to amount or liability by any of the Debtors; provided however, that the amount of a Disputed Claim shall mean the lesser of(x) the amount listed in the Schedules, (y) the amount stated in a proof of Claim as filed with the Bankruptcy Court or (z) the amount as estimated by the Bankruptcy Court pursuant to section 502(c) of the Bankruptcy Code; and provided, further, however, that, in the event the Bankruptcy Court shall estimate the amount of a Disputed Claim for purposes of allowance pursuant to section 502(c) of the Bankruptcy Code, such estimation shall constitute and represent the maximum amount in which such Claim may ultimately become an Allowed Claim. 2.50 "DOA" means the United States Department of Agriculture. 2.51 "DOI" means the United States Department of Interior. 2.52 "DOJ" means the United States Department of Justice. 5 14 2.53 "Effective Date" means the first Business Day after all of the conditions contained in Section 13.2 of this Plan have been met or have been waived by the Plan Proponents. 2.54 "Elliott Group" means The Liverpool Limited Partnership, Liverpool Associates, Ltd., Westgate International, L.P., Elliott International Capital Advisors. 2.55 "Environmental Regulators" means the EPA, the DOI and the DOA. 2.56 "EPA" means the United States Environmental Protection Agency. 2.57 "Estates" means the estates created in the Debtors' Reorganization Cases pursuant to section 541 of the Bankruptcy Code. 2.58 "Eurobond" means the 8% Senior Exchangeable Notes originally due March 23, 2000, as extended, issued by Metals and guaranteed by Mining pursuant to the Eurobond Indenture. 2.59 "Eurobond Claim" means a Claim evidenced by the Eurobonds, including, in respect of the foregoing, interest accrued on such Claims through the Petition Date. 2.60 "Eurobond Indenture" means that certain Trust Deed dated as of March 21, 1996 among Metals, Mining, and the predecessor Eurobond Indenture Trustee. 2.61 "Eurobond Indenture Trustee" means HSBC Bank USA, as successor indenture trustee and every other indenture trustee under the Eurobond Indenture. 2.62 "Eurobond Indenture Trustee Fee" means the reasonable fees and expenses, including, without limitation, attorneys' fees and expenses incurred by the Eurobond Indenture Trustee, whether prior to or after the Petition Date and whether prior to or after consummation of the Plan. The Eurobond Indenture Trustee Fee shall be paid by the Debtors as an Administrative Expense upon presentation of invoices therefor, without the need for application to or approval of any court. 2.63 "Exit Financing Facility" means the financing facility referred to in section 11.11 of the Plan. 2.64 "Exploration" means Sunshine Exploration, Inc., a Delaware Corporation. 2.65 "Exploration Allowed Interest" means an Allowed Interest in Exploration. 2.66 "Exploration Allowed General Unsecured Claims" means an Allowed General Unsecured Claim against Exploration. 2.67 "Exploration Allowed Put Default Claims" means the Claims in the aggregate amount of $18,648,353 arising as a result of Exploration's breach of the Put Option Agreement. 2.68 "Exploration Allowed Stonehill Note Guarantee Claim" means a Stonehill Note Guarantee Claim against Exploration. 2.69 "Facility" means the facility which is the subject of the second amended complaint in the NRD Action: CIV-96-0122-N-ECL 6 15 2.70 "Fee Claim" means a Claim under sections 330(a), 331, 503 or 1103 of the Bankruptcy Code for compensation of a Professional or other entity for services rendered or expenses incurred in the Reorganization Cases. 2.71 "Fee Order" means the Administrative Order, pursuant to section 105 and 331 of the Bankruptcy Code, establishing procedures for interim compensation and reimbursement of expenses of professionals entered by the Bankruptcy Court on or about August 24, 2000. 2.72 "Forfeited Stock" means the New Mining Stock that would have been part of the Gifted Stock and would have been distributed to a Class of Claims under the Plan had such Class voted to approve the Plan by the majorities set forth in section 1126 of the Bankruptcy Code. 2.73 "Final Order" means an order, judgment, ruling, or decree of a court of competent jurisdiction that has not been reversed, stayed, modified or amended, and as to which (a) any appeal that has been taken has been determined finally or dismissed, (b) the time for appeal or petition for rehearing, reargument, and certiorari has expired and no timely appeal or petition for rehearing, reargument or certiorari has been filed, and no motion or similar pleading having the effect of tolling or otherwise extending the time to file an appeal or petition for rehearing, reargument or certiorari has been filed, provided however, that the mere theoretical possibility that a motion under Rules 59 or 60 of the Federal Rules of Civil Procedure or Rules 9023 or 9024 of the Bankruptcy Rules may be filed with respect to such order shall not preclude such order from becoming a Final Order. 2.74 "General Unsecured Claim" means any Claim, including that portion of any Claim that is unsecured in accordance with section 506(a) of the Bankruptcy Code, other than (i) an Administrative Claim, (ii) a Secured Claim, (iii) a Tax Claim, (iv) a Priority Claim, (v) a Convenience Claim, (vi) a Eurobond Claim, (vii) a Stonehill Notes Claim,(viii) a Mining 5% Note Claim, (ix) a Mining 9% Note Claim, (x) a Eurobond Guarantee Claim, (xi) a Stonehill Note Guarantee Claim, (xii) an Exploration Put Default Claim, and (xiii) an Argentina Allowed Put Default Claim. The term "General Unsecured Claim" shall consist of, except as set forth above in this definition, all impaired unsecured claims not otherwise classified that are not cured, paid, released or waived pursuant to the Plan, assumed by a Debtor pursuant to the Plan or agreements incorporated into the Plan, or classified in any other class, including, without limitation, claims (a) for goods sold and/or services rendered, (b) for moneys lent, (c) based upon guarantees of performance or payment of the obligations or duties of any Person, (d) for tort liability, (e) for environmental remediation, (f) of governmental units under any applicable unclaimed property or escheat laws, (g) of governmental units for taxes, assessments, penalties or charges which are not Tax Claims, (h) for contribution, reimbursement or indemnity, (i) for fines, penalties or other assessments, (j) for the portion of any Claim supported directly or indirectly by a letter of credit issued for the account of a Debtor in excess of the amount available under such letter of credit, and (k) representing the undersecured portion of any claim that is otherwise a Secured Claim. 2.75 "Gifted Creditor Stock" means 76.4% of the Gifted Stock. 2.76 "Gifting Creditors" means the Holders of Argentina Allowed Put Default Claims (Class Argentina I) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2). 2.77 "Gifted Equity Stock" means 23.6% of the Gifted Stock. 2.78 "Gifted Stock" means the shares of New Mining Stock contributed by the Gifting Creditors to permit the recoveries in Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, Class Mining 6, and Class Mining 8; provided, that, (1) the amount of the Gifted Stock will be determined upon (i) determination of which Classes voted in favor of the Plan in accordance with 11 U.S.C. Section 1126 and which 7 16 Classes voted to reject the Plan in accordance with 11 U.S.C. Section 1126 (which rejecting Classes, under this Plan, forfeit back to the Gifting Creditors the New Mining Stock that such Classes would otherwise have received under this Plan), and (ii) final determination or estimation of the allowed amount of the Allowed Mining General Unsecured Claims (Class Mining 2) and Allowed Metals General Unsecured Claims (Class Metals 2), (2) if the amount of Gifted Stock is not determined under (1) above at the time of the Effective Date, the maximum amount of Gifted Stock will be reserved and all other New Mining Stock will be distributed (including not less than 89.99% of New Mining Stock to the Gifting Creditors), (3) the amount of the Gifted Stock in the aggregate will be no less than 2.49% and no more than 16.97% of the New Mining Stock, and (4) the amount of the Gifted Stock will equal the amount necessary to provide the Gifting Creditors (i) 89.99% of the New Mining Stock on a fully diluted basis taking into account all of the distributions afforded to the Gifting Creditors on account of all their Allowed Claims at each of Mining, Metals, and Argentina plus (ii) the Forfeited Stock. 2.79 "Holder" means the holder of a Claim or an Allowed Interest on the Confirmation Date. 2.80 "Idaho District Court" means the United States District Court for the District of Idaho. 2.81 "Master Ballot" means the document used in voting on the Plan that must be executed and delivered by a brokerage firm or other nominee holding, in its own name or on behalf of beneficial owners of, (i) Eurobond Claims or (ii) Mining 9% Note Claims, unless such beneficial owner chooses to execute a Ballot. 2.82 "Metals" means Sunshine Precious Metals, Inc., a Delaware corporation. 2.83 "Metals Allowed Convenience Claim" means any Metals Allowed Unsecured Claim (i) in an amount less than, equal to or reduced by the Holder thereof to ten thousand dollars ($10,000) and (ii) as to which the Holder there of elects to become a member of and to receive the treatment accorded to Class Metals 4. 2.84 "Metals Allowed Secured Claim" means an Allowed Secured Claim against Metals. 2.85 "Metals Allowed Eurobond Claims" means an Allowed Eurobond Claim against Metals. 2.86 "Metals Allowed General Unsecured Claim" means an Allowed General Unsecured Claim against Metals. 2.87 "Metals Allowed Interest" means an Allowed Interest in Metals. 2.88 "Metals Proportionate Distribution" means the aggregate amount of Claims in either of Class Metals 2 or Class Metals 3, as appropriate, to the aggregate of all Allowed Claims in both Class Metals 2 and Class Metals 2.89 "Mining" means Sunshine Mining and Refining Company, a Delaware corporation. 2.90 "Mining Allowed Common Share Interest" means a Mining Old Common Share Interest. 2.91 "Mining Allowed Convenience Claim" means any Mining Allowed Unsecured Claim (i) in an amount less than, equal to or reduced by the Holder thereof to ten thousand dollars ($10,000) and (ii) as to which the Holder thereof elects to become a member of and to receive the treatment accorded to Class Mining 7. 8 17 2.92 "Mining Allowed General Unsecured Claim" means an Allowed General Unsecured Claim against Mining. 2.93 "Mining Allowed Eurobond Guarantee Claim" means any Allowed Eurobond Guarantee Claim against Mining. 2.94 "Mining Allowed Stonehill Note Claim" means any Allowed Stonehill Note Claim against Mining. 2.95 "Mining Allowed 9% Note Claim" means a Mining 9% Note Claim that is or becomes an Allowed Claim. 2.96 "Mining Allowed 5% Note Claim" means a Mining 5% Note Claim. 2.97 "Mining Old Common Share Interests" means any equity interest in Mining evidenced by Mining's common shares, $.01 par value. 2.98 "Mining 9% Note Claims" means, collectively, the Claims in the amount, as of the Petition Date, of $1,515,000 plus any interest accrued at applicable non-default rates, but unpaid as of the Petition Date arising under the Mining 9% Notes (originally 8 7/8% but subsequently re-set to 9%). 2.99 "Mining 9% Notes" means the Mining 9% Notes due July 15, 2008 issued by Mining pursuant to the Subordinated Indenture. 2.100 "Mining 9% Notes Indenture" means that certain Indenture, originally dated as of July 15, 1988, and as subsequently supplemented as of August 8, 1988, November 10, 1988, April 10, 1991 and May 22, 1996. 2.101 "Mining 9% Notes Indenture Trustee" means The Chase Manhattan Bank of Texas, in its capacity as Indenture Trustee under the Mining 9% Notes Indenture. 2.102 "Mining 9% Notes Indenture Trustee Fee" means the compensation the Mining 9% Notes Indenture Trustee is entitled to receive pursuant to the Mining 9% Notes Indenture for services rendered including reimbursement for expenses, disbursements and advances incurred or made by the Mining 9% Notes Indenture Trustee, including reasonable compensation and expenses of its agents and counsel, as provided for in Sections 506 and 607 of the Mining 9% Notes Indenture. 2.103 "Mining 5% Notes" means Mining's 5% Convertible Notes issued by Mining in the aggregate principal amount of $6,000,000 and due January 28, 2001. 2.104 "Mining 5% Note Claim" means a Claim evidenced by the Mining 5% Notes, including, in respect of the foregoing, any interest accrued at non-default rates, but unpaid as of the Petition Date arising under the Mining 5% Notes. 2.105 "Mining 5% Note Claims" means, collectively, the Claims in the amount, as of the Petition Date, of $344,053.00, including interest accrued at applicable non-default rates, but unpaid as of the Petition Date arising under the Mining 5% Notes. 2.106 "Negotiated Plan" means the Sunshine Negotiated Pension Plan, a tax qualified defined benefit pension plan covered by Title IV of the Employee Retirement Income Security Act ("ERISA"), as 9 18 amended, 29 U.S.C. sections 1301 et. seq. (1994 & Supp. IV 1998). The Plan Sponsor for the Negotiated Plan is Metals. The Negotiated Plan was established pursuant to a collective bargaining agreement. 2.107 "New Argentina Stock" means the shares of common stock, $0.01 par value, authorized by Reorganized Argentina pursuant to this Plan, representing one hundred percent (100%) of the authorized voting common stock of Reorganized Argentina. 2.108 "New Common Stock" means the Argentina Newco Stock, the New Argentina Stock, the New Mining Stock, the New Exploration Stock and the New Metals Stock. 2.109 "New Consent Decree" means a consent decree substantially incorporating the terms and conditions of the Agreement in Principle to be submitted for approval to the Idaho District Court. 2.110 "New Metals Stock" means the shares of common stock, $0.01 par value, authorized by Reorganized Metals pursuant to this Plan, representing one hundred percent (100%) of the authorized voting common stock of Reorganized Metals. 2.111 "New Mining Stock" means the shares of common stock, $0.01 par value, authorized by Reorganized Mining pursuant to this Plan, representing one hundred percent (100%) of the authorized voting common stock of Reorganized Mining. 2.112 "1994 Consent Decree" means that certain consent decree approved by the Idaho District Court on or about November 17, 1994 between the DOJ and the EPA and other parties including Mining and Metals in Case Number CIV-94-0206-N-HLR. 2.113 "NRD Actions" mean the consolidated actions pending before the Idaho District Court at Case Numbers CIV96-0122-N-EJL and CIV9l-0342-N-EJL. 2.114 "Old Argentina Board of Directors" means board of directors of Argentina that existed as of the Petition Date. 2.115 "Old Exploration Board of Directors" means board of directors of Exploration that existed as of the Petition Date. 2.116 "Old Common Stock" means, collectively, all shares of stock of Mining, Metals, Exploration, and Argentina, authorized as of the Petition Date. 2.117 "Old Metals Board of Directors" means board of directors of Metals that existed as of the Petition Date. 2.118 "Old Mining Board of Directors" means board of directors of Mining that existed as of the Petition Date. 2.119 "Ordinary Course Professionals Order" means that Order authorizing debtors and debtors in possession to retain, employ and pay professionals in the ordinary course of the Debtors' business entered by the Bankruptcy Court on or about September 18, 2000. 2.120 "Person" shall have the meaning set for in section 101(41) of the Bankruptcy Code. 2.121 "Petition Date" means August 23, 2000. 10 19 2.122 "Plan" means this Joint Chapter 11 Plan of Reorganization, including all supplements, appendices, exhibits, and schedules thereto, either in its present form or as it may be altered, amended or modified from time to time. 2.123 "Plan Proponents" means, collectively, the Debtors, the Elliott Group, and the Stonehill Group. When any action or decision is referred to herein as being taken or made by the Plan Proponents, such action or decisions will not be effective, unless taken or made by the Plan Proponents jointly. 2.124 "Plan Supplement" means a separate volume to be filed with the Clerk of the Court, containing, among other things, Forms of Amended By-Laws, Amended Certificates of Incorporation, the Transfer Agreement, and the Argentina Newco Call Option. 2.125 "Prepetition Financing Debt Obligation" means all obligations of the Debtors relating to or arising out of the Stonehill Notes, the Eurobonds, the Mining 5% Notes, or the Mining 9% Notes, and their ancillary documents. 2.126 "Priority Non-Tax Claim" means that portion of a Claim that is entitled to priority under sections 507(a)(2),(3),(4),(5), or (6) of the Bankruptcy Code. 2.127 "Professional" means any professional employed in the Reorganization Cases pursuant to sections 327 or 1103 of the Bankruptcy Code or any professional or other entity seeking compensation or reimbursement of expenses in connection with the Reorganization Cases pursuant to section 503(b)(4) of the Bankruptcy Code. 2.128 "Pro Rata" means: (i) in the case of a Class, the proportion the amount of an Allowed Claim in a particular Class bears to the aggregate amount of all Allowed Claims in such Class and, (ii) in the case of a particular type of Claim, the proportion the amount of an Allowed Claim of a particular type bears to the aggregate amount of all Allowed Claims of such type. 2.129 "Put Option Agreement" means the Put Option Agreement made as of January 28, 1999 between Argentina, Exploration, and Elliott Associates, L.P., and their successors in interest as applicable. 2.130 "Record Date" means the date on which the Disclosure Statement is approved by the Bankruptcy Court. 2.131 "Reinstated" or "Reinstatement" means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim entitles the Holder of such Claim in accordance with section 1124 of the Bankruptcy Code, or (b) if applicable under section 1124 of the Bankruptcy Code: (i) curing all prepetition and postpetition defaults other than defaults relating to the insolvency or financial condition of a Debtor or its status as a debtor under the Bankruptcy Code; (ii) reinstating the maturity date of the Claim; (iii) compensating the Holder of such Claim for damages incurred as a result of its reasonable reliance on a provision allowing the Claim' acceleration; and (iv) not otherwise altering the legal, equitable and contractual rights to which the Claim entitles the Holder thereof. 2.132 "Reorganization Cases" means the cases under Chapter 11 of the Bankruptcy Code which were commenced on the Petition Date with respect to the Debtors. 2.133 "Reorganized Argentina" means Sunshine Argentina, Inc., a Delaware corporation, as reorganized and successor to Argentina, pursuant to this Plan and the CONFIRMATION ORDER. 11 20 2.134 "Reorganized Argentina Board of Directors" means the board of directors of Reorganized Argentina as of the Effective Date consisting of five directors, two of whom shall be selected by the Elliott Group, two of whom shall be selected by the Stonehill Group, and one of whom shall be selected by Argentina, in accordance with the terms and provisions of the Plan, and as identified in the Plan Supplement. 2.135 "Reorganized Boards of Directors" means the Argentina Newco Board of Directors, the Reorganized Argentina Board of Directors, the Reorganized Metals Board of Directors, the Reorganized Exploration Board of Directors and the Reorganized Mining Board of Directors as of the Effective Date. 2.136 "Reorganized Debtors" means Reorganized Mining, Reorganized Argentina, Reorganized Metals, Reorganized Exploration, and, for purposes of this definition, non-debtor Argentina Newco. 2.137 "Reorganized Exploration" means Sunshine Exploration, Inc., a Delaware corporation, as reorganized and successor to Exploration pursuant to the Plan and the CONFIRMATION ORDER. 2.138 "Reorganized Metals" means Sunshine Precious Metals, Inc., a Delaware corporation, as reorganized and successor to Metals pursuant to this Plan and the CONFIRMATION ORDER. 2.139 "Reorganized Metals Board of Directors" means the board of directors of Reorganized Metals consisting of five directors, two of whom shall be selected by the Elliott Group, two of whom shall be selected by the Stonehill Group, and one of whom shall be selected by Metals, in accordance with the forms and provisions of the Plan and as identified in the Plan Supplement. 2.140 "Reorganized Mining" means Sunshine Mining and Refining Company, a Delaware corporation, as reorganized and successor to Mining pursuant to the Plan and CONFIRMATION ORDER. 2.141 "Reorganized Mining Board of Directors" means the members of the Board of Directors of Reorganized Mining, consisting of five directors, two of whom shall be selected by the Elliott Group, two of whom shall be selected by the Stonehill Group, and one of whom shall be selected by Mining, in accordance with the terms and provisions of the Plan, and as identified in the Plan Supplement. 2.142 "Reorganized Exploration Board of Directors" means the members of the Board of Directors of Reorganized Exploration, consisting of five directors, two of whom shall be selected by the Elliott Group, two of whom shall be selected by the Stonehill Group, and one of whom shall be selected by Mining, in accordance with the terms and provisions of the Plan, and as identified in the Plan Supplement. 2.143 "Schedules" means the schedules of assets and liabilities, as amended, and the statements of financial affairs, as amended, filed with the Bankruptcy Court by the Debtors. 2.144 "Secured Claim" means, pursuant to section 506 of the Bankruptcy Code, that portion of a Claim that is secured by a valid, perfected and enforceable security interest, lien, mortgage or other encumbrance that is not subject to avoidance under applicable bankruptcy or non-bankruptcy law, in or upon any right, title or interest of the Debtors in and to property of the Estate, to the extent of the value of the Holder's interest in such property as of the relevant determination date. The defined term "Secured Claim" includes any Claim that is: (i) subject to an offset right under applicable law; and (ii) a secured claim against a Debtor pursuant to section 506(a) and 553 of the Bankruptcy Code. 2.145 "Stipulation of Amount and Nature of Claim" means a stipulation or other agreement between the Applicable Debtor or Reorganized Debtor and a Holder of Claim or Interest, or an agreed order of the Bankruptcy Court establishing the amount and nature of a Claim or Interest. 12 21 2.146 "Stonehill Group" means Stonehill Institutional Partners, L.P., Stonehill Offshore Partners Limited, and Stonehill Advisors LLC. 2.147 "Stonehill Notes" means the 10-percent Senior Convertible Promissory Notes issued by Mining in or about November, 1997. 2.148 "Stonehill Note Claims" means the Claims evidenced by the Stonehill Notes in the amount of $14,896,334 including, in respect of the foregoing, interest accrued, but unpaid as of the Petition Date, on such Claims through the Petition Date. 2.149 "Stonehill Note Guarantee Claim" means the claim in the amount of$14,896,334 arising from the Unconditional Guarantee Agreement executed as of November 24, 1997 by Argentina and Exploration as Guarantors, and the Holders of the Senior Convertible Promissory Notes. 2.150 "Subsequent Distribution Date" means the dates beginning six (6) months after the Effective Date and on the same date (or if such date is not a Business Day, then the subsequent Business Day) of each month thereafter. 2.151 "Subsidiary Debtors" means Argentina, Exploration, and Metals. 2.152 "Sunshine Plan" means the Sunshine Pension Plan, a tax qualified defined benefit pension plan covered by Title IV of ERISA, as amended, 29 U.S.C. sections 1301 et. seq. (1994 & Supp. IV 1998). The Plan Sponsor for the Sunshine Plan is Mining. 2.153 "Superfund" means the superfund referred to in the Agreement in Principle. 2.154 "Tax Claim" means that portion of a Claim that is entitled to priority under section 507(a)(8) of the Bankruptcy Code. 2.155 "Tax Code" means the Internal Revenue Code of 1986, as amended. 2.156 "The Tribe" means the Coeur d'Alene Tribe. 2.157 "34 Act" means the Securities Exchange Act of 1934, as amended. 2.158 "Transfer Agreement" means the agreement to distribute and/or transfer New Common Stock, in accordance with the provisions of the Plan, in the form included in the Plan Supplement. 2.159 "Warrants" mean those warrants to be issued to the Environmental Regulators and the Tribe pursuant to the terms of the New Consent Decree. ARTICLE III RULES OF CLASSIFICATION 3.1 GENERAL RULES OF CLASSIFICATION 3.1.1 All Claims and Interests, other than Administrative Claims, Priority Claims, and Tax Claims, if any, have been classified in the Classes set forth below. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Tax Claims are not impaired under the Plan and therefore, in accordance with section 1123(a)(3) of the Bankruptcy Code, have not been classified and thus are excluded from the Classes set forth below. 13 22 3.1.2 A Claim or Interest is classified in a particular Class only to the extent that the Claim or Interest falls within the description of that Class and is classified in other Class(es) to the extent that any remainder of the Claim or Interest falls within the description of such other Class(es). Unless otherwise provided, to the extent a Claim qualifies for inclusion in a more specifically defined class and a more generally defined Class, it shall be included in the more specifically defined Class. 3.1.3 A Claim is also classified in a particular Class for the purpose of receiving Distributions pursuant to the Plan only to the extent that such Claim: (a) is an Allowed Claim in that Class and (b) such Claim has not been paid, released, or otherwise settled prior to the Effective Date. 3.2 UNDERSECURED CLAIMS AGAINST ANY DEBTOR To the extent that the amount of an Allowed Claim is greater than the value of the collateral securing such Claim as of the applicable valuation date, subject to section 1111 (b) of the Bankruptcy Code, such Claim is classified in both a Secured Claim Class for the secured portion of such Claim and a General Unsecured Claim Class for the excess of such Claim over the value of the collateral. 3.3 SEPARATE CLASSIFICATIONS The Claims and Interests against and in each Debtor are separately classified. ARTICLE IV CLASSIFICATION OF CLAIMS AND ALLOWED INTERESTS 4.1 CLASSIFICATION MECHANICS The Plan's classification mechanism reflects each Holder's Claim against each Debtor as provided by the legal, contractual, or equitable basis for such Claim. Accordingly, a Holder that has a Claim against one Debtor that is guaranteed by another Debtor (i.e., Holders of Eurobonds) has both its primary Claim against the primary obligor and its guaranty Claim against the guarantor classified and treated under the Plan. In the example of the Eurobonds, which were issued by Metals and guaranteed by Mining, the primary Claim is classified against Metals in Class Metals 3 (Metals Allowed Eurobond Claims) and the guaranty Claim is classified against Mining in Class Mining 3 (Mining Allowed Eurobond Guarantee Claims). 4.2 CLAIMS AND ALLOWED INTERESTS, other than Administrative Claims, Priority Claims and Tax Claims, are classified into the following Classes pursuant to section 1123(a) of the Bankruptcy Code: 4.3 MINING Class Mining P: Class Mining P consists of all Mining Priority Non-Tax Claims. Class Mining 1: Class Mining 1 consists of all Mining Allowed Secured Claims. Class Mining 2: Class Mining 2 consists of all Mining Allowed General Unsecured Claims. Class Mining 3: Class Mining 3 Consists of all Mining Allowed Eurobond Guarantee Claims. 14 23 Class Mining 4: Class Mining 4 consists of all Mining Allowed Stonehill Note Claims. Class Mining 5: Class Mining 5 consists of all Mining Allowed 9% Note Claims. Class Mining 6: Class Mining 6 consists of all Mining Allowed 5% Notes Claims. Class Mining 7: Class Mining 7 consists of all Mining Allowed Convenience Claims. Class Mining 8: Class Mining 8 consists of all Mining Allowed Interests. Class Mining 9: Class Mining 9 shall consist of the Claims of the Environmental Regulators and the Tribe. 4.4 ARGENTINA Class Argentina P: Class Argentina P consists of a Argentina Non-Tax Priority Claims. Class Argentina 1: Class Argentina 1 consists of all Argentina Allowed Put Default Claims Class Argentina 2: Class Argentina 2 consists of all Argentina Allowed Stonehill Note Guarantee Claims. Class Argentina 3: Class Argentina 3 consists of all Argentina Allowed Interests. 4.5 METALS Class Metals P: Class Metals P consists of all Metals Priority Non-Tax Claims. Class Metals 1: Class Metals 1 consists of all Metals Allowed Secured Claims. Class Metals 2: Class Metals 2 consists of all Metals Allowed General Unsecured Claims. Class Metals 3: Class Metals 3 consists of all Metals Allowed Eurobond Claims. Class Metals 4: Class Metals 4 consists of all Metals Allowed Convenience Claims. Class Metals 5: Class Metals 5 consists of all Metals Allowed Interests. Class Metals 6: Class Metals 6 shall consist of the Claims of the Environmental Regulators and the Tribe. 15 24 4.6 EXPLORATION Class Exploration P: Class Exploration P consists of all Exploration Priority Non-Tax Claims. Class Exploration 1: Class Exploration 1 consists of all Exploration Allowed General Unsecured Claims. Class Exploration 2: Class Exploration 2 consists of all Exploration Allowed Put Default Claims. Class Exploration 3: Class Exploration 3 consists of all Exploration Allowed Stonehill Note Guarantee Claims. Class Exploration 4: Class Exploration 4 consists of all Exploration Allowed interests. ARTICLE V IMPAIRMENT OF CLAIMS AND INTERESTS 5.1 All Classes of Claims and Allowed Interests are impaired under the provisions of this Plan except Priority Non-Tax Claims (Classes Mining F, Argentina P, Metals P, Exploration P), Exploration Allowed General Unsecured Claims (Class Exploration I), and Exploration Allowed Interests (Class Exploration 4). The Debtors are soliciting acceptances to the Plan from the Claimants in Classes Mining 1, Mining 2, Mining 3, Mining 4, Mining 5, Mining 6, Argentina 1, Argentina 2, Metals 1, Metals 2, Metals 3, Exploration 2, and Exploration 3. The Debtors are not soliciting acceptances from the Holders of Allowed Interests in Classes Mining 8, Argentina 3 and Metals 5 because those classes are presumed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. The Debtors are not soliciting acceptances from the Holders of Claims in Classes Mining 7 and Metals 4 because Holders of such Claims are deemed to have accepted the Plan by making the Convenience Claim Election. Notwithstanding that certain Stipulation by Debtors, the United States, and Coeur d'Alene Tribe Temporarily Allowing Claims for Voting Purposes Only dated October 31, 2000, pursuant to the terms of the Agreement in Principle, claims of the Environmental Regulators and the Tribe shall be separately classified and treated as set forth herein, and the Environmental Regulators and the Tribe shall be deemed to have accepted the Plan. ARTICLE VT TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS 6.0 TREATMENT MECHANICS The Plan's treatment mechanism reflects that Mining, as a holding company whose property consists exclusively of the equity in its subsidiaries, Argentina, Metals, and Exploration, has no value to distribute to its creditors because each Debtor-subsidiary is insolvent. Accordingly, other than through the consensual re-distribution of value from the Gifting Creditors, Mining would have no value to distribute to its creditors. In order to establish a consensual restructuring and to provide for a dispersed body of Holders of New Mining Stock, the Gifting Creditors (who are the Holders of Allowed Claims against Argentina) have agreed to re-distribute certain of their recoveries to Mining creditors. By virtue of this redistribution, Holders of Allowed Claims against Mining will receive a portion of the "Gifted Stock," which is the New Mining Stock consensually re-distributed by the Gifting Creditors. The treatment mechanic is that the Gifting Creditors will receive their distributions based upon their Claims against, in the case of the Elliott Group, Mining, Metals, and Argentina, and, in the case of the Stonehill Group, Mining and Argentina, and then "gift" or redistribute to the Holders of Allowed Claims in Class Mining 2, Class Mining 3, Class Mining 4, 16 25 Class Mining 5, Class Mining 6, and Class Mining 8 an amount of New Mining Stock that (1) enables each Holder in all such creditor Classes that accept the Plan to receive the same proportion of New Mining Stock to its Allowed Claim as received by each Holder in the other reference creditor Classes, and (2) enables the Gifting Creditors to retain (i) 89.99% of the New Mining Stock on a fully diluted basis taking into account all of the distributions afforded to the Gifting Creditors on account of all of their Allowed Claims at each of Mining, Metals, and Argentina plus (ii) all Forfeited Stock. The Plan Proponents know the amount of Allowed Claims in each Class other than Class Mining 2 (Mining Allowed General Unsecured Claims) and Class Metals 2 (Metals Allowed General Unsecured Claims). However, based upon current estimates, the Plan Proponents estimate that Class Mining 2 (Mining Allowed General Unsecured Claims) will consist of Allowed Claims aggregating $2,598.887, and Class Metals 2 (Metals Allowed General Unsecured Claims) will consist of Allowed Claims aggregating $1,822,545. Based on these estimates, the Plan Proponents believe that (1) Class Mining 2 (Mining Allowed General Unsecured Claims) will receive in the aggregate 0.67% of the New Mining Stock to be distributed Pro Rata to the Holders of Allowed Claims in such Class, and (2) Class Metals 2 (Metals Allowed General Unsecured Claims) will receive in the aggregate 0.46% of the New Mining Stock to be distributed Pro Rata to the Holders of Allowed Claims in such Class. In all cases, the treatment guiding principles are that (1) each Holder in all such of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6 Classes that accept the Plan will receive the same proportion of New Mining Stock to its Allowed Claim as received by each Holder in all of the other reference creditor Classes, and (2) the Gifting Creditors will retain (i) 89.99% of the New Mining Stock on a fully diluted basis taking into account all of the distributions afforded to the Gifting Creditors on account of all of their Allowed Claims at each of Mining, Metals, and Argentina plus (ii) the Forfeited Stock. 6.1 TREATMENT OF CLASS MINING P (ALLOWED MINING PRIORITY NON-TAX CLAIMS) In full satisfaction, payment and discharge of its Priority Non-Tax Claim, and in accordance with section 1129(a)(9) of the Bankruptcy Code, each Holder of an Allowed Mining Priority Non-Tax Claim shall receive (i) payment in full in cash on the Effective Date, or (ii) such other treatment as will render such Allowed Mining Priority Non-Tax Claim unimpaired. Class Mining P is impaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Mining P. 6.2 TREATMENT OF CLASS MINING 1 (MINING SECURED CLAIMS) In full satisfaction, payment and discharge of their Mining Allowed Secured Claims, all Holders of Allowed Secured Claims in Class Mining 1 (i) shall retain their liens to the extent of the allowed amount of their Allowed Secured Claims and shall receive deferred cash payments totaling, and of a value as of the Effective Date of, at least the allowed amount of their Allowed Secured Claims or (ii) shall receive payment on such other terms as mutually agreed to by the Holder of a Mining Allowed Secured Claim and the Plan Proponents. Class Mining 1 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 1. 17 26 6.3 TREATMENT OF CLASS MINING 2 (MINING GENERAL UNSECURED CLAIMS) 6.3.1 MINING CONVENIENCE CLAIM ELECTION Any Holder of a Mining Allowed General Unsecured Claim in an amount less than, equal to or reduced by the Holder thereof to ten thousand dollars ($10,000) may elect, by appropriately marking their Ballot, to be the Holder of a Mining Allowed Convenience Claim and shall receive the treatment provided for in Class Mining 7. 6.3.2 TREATMENT (MINING ALLOWED GENERAL UNSECURED CLAIMS) (a) If Class Mining 2 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Mining Allowed Unsecured Claims who have not made the Mining Convenience Claim Election, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 2 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 2 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. (b) To provide the distribution afforded by subsection (a) above, if Class Mining 2 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 2 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 2 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 2 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Mining Allowed General Unsecured Claims will receive no distribution under this Plan in respect of such claim. Class Mining 2 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 2. 6.4 TREATMENT OF CLASS MINING 3 (MINING ALLOWED EUROBOND GUARANTEE CLAIMS) (a) If Class Mining 3 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Mining Allowed Eurobond Guarantee Claims, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 3 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 3 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. (b) To provide the distribution afforded by subsection (a) above, if Class Mining 3 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New 18 27 Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 3 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 3 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 3 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Mining Allowed Eurobond Guarantee Claims will receive no distribution under this Plan in respect of such claim. Class Mining 3 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 3. 6.5 TREATMENT OF CLASS MINING 4 (MINING ALLOWED STONEHILL NOTE CLAIMS) (a) If Class Mining 4 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Mining Allowed Stonehill Note Claims, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 4 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 4 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. (b) To provide the distribution afforded by subsection (a) above, if Class Mining 4 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 2 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 4 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 4 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Mining Allowed Stonehill Note Claims will receive no distribution under this Plan in respect of such claim. Class Mining 4 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 4. 6.6 TREATMENT OF CLASS MINING 5 (MINING ALLOWED 9% NOTE CLAIMS) (a) If Class Mining 5 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Allowed Mining 9% Notes Claims, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 5 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 5 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. 19 28 (b) To provide the distribution afforded by subsection (a) above, if Class Mining 5 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 4 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 5 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Mining Allowed 9% Note Claims will receive no distribution under this Plan in respect of such claim. Class Mining 5 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 5. 6.7 TREATMENT OF CLASS MINING 6 (MINING ALLOWED 5% NOTE CLAIMS) (a) If Class Mining 6 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Allowed Mining 5% Notes Claims, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 6 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 6 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. (b) To provide the distribution afforded by subsection (a) above, if Class Mining 6 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 2 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 4 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 6 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Allowed Mining 5% Notes Claims will receive no distribution under this Plan in respect of such claim. Class Mining 6 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 6. 6.8 TREATMENT OF CLASS MINING 7 (MINING CONVENIENCE CLAIMS) In full satisfaction, payment and discharge of their Convenience Claims, all Holders of Mining Allowed Convenience Claims shall receive ten percent (10%) of the allowed amount of their Allowed 20 29 Convenience Claims in cash on the Effective Date subject to an absolute maximum cash recovery of one thousand dollars ($1,000) per Claimant. Class Mining 7 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 7. 6.9 TREATMENT OF CLASS MINING 8 (MINING OLD COMMON SHARE INTERESTS) In full satisfaction of their Mining Old Common Share Interests, Holders of Mining Old Common Share Interests shall receive no distribution in respect of their Mining Old Common Share Interests, which shall be deemed canceled, retired, and eliminated as of the Effective Date, in accordance with section 11.3 of the Plan. Under section 11.12.1 of this Plan, Holders of Mining Old Common Share Interests eliminated under this Plan shall receive a Pro Rata distribution of the Gifted Equity Stock except that no New Common Stock will be distributed to any account holding fewer than 100 shares of Old Common Stock of Mining. Class Mining 8 is impaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Mining 8, which class is deemed to have rejected the Plan. 6.9.1 TREATMENT OF CLASS MINING 9 (CLAIMS OF THE ENVIRONMENTAL REGULATORS AND THE TRIBE) In full satisfaction of their Claims against the Debtors, the Environmental Regulators and the Tribe shall be treated in accordance with the terms of the New Consent Decree, as described in section Article XVIII hereof, and in the Agreement in Principle attached hereto as Exhibit G. Notwithstanding any other provision of this Plan or the Disclosure Statement, the Environmental Regulators and the Tribe shall not participate in any of the distributions to any of the other Classes of Claims or Interests under this Plan, but shall instead be treated in accordance with the treatment provided for in the New Consent Decree, as described in the Agreement in Principle attached as Exhibit G. Class Mining 9 is impaired under the provisions of the Plan. The members of Class Mining 9 have accepted the Plan. 6.10 TREATMENT OF CLASS ARGENTINA P (ARGENTINA ALLOWED PRIORITY NON-TAX CLAIMS) In full satisfaction, payment and discharge of its Priority Non-Tax Claim, and in accordance with section 1129(a)(9) of the Bankruptcy Code, each Holder of an Allowed Argentina Priority Non-Tax Claim shall receive (i) payment in full in cash on the Effective Date, or (ii) such other treatment as will render such Allowed Argentina Priority Non-Tax Claim unimpaired Class Argentina P is unimpaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Argentina P. 21 30 6.11 TREATMENT OF CLASS ARGENTINA I (ARGENTINA ALLOWED PUT DEFAULT CLAIMS) In full satisfaction, payment and discharge of their Argentina Allowed Put Default Claims, all Holders of Argentina Allowed Put Default Claims shall receive on the Effective Date 55.7% percent of the New Argentina Stock issued pursuant to this Plan; provided, however, that immediately upon receiving such New Argentina Stock on the Effective Date, each such Holder shall be deemed to tender such New Argentina Stock to Reorganized Mining in exchange for a Pro Rata interest (relative to the other Holders of Argentina Allowed Put Default Claims) in: (i) 51.54% of the outstanding shares of New Mining Stock, and (ii) the Argentina Newco Call Option. Class Argentina 1 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Argentina 1. 6.12 TREATMENT OF CLASS ARGENTINA 2 (ARGENTINA ALLOWED STONEHILL NOTES GUARANTEE CLAIMS) In full satisfaction, payment and discharge of their Argentina Allowed Stonehill Notes Guarantee Claims, all Holders of Argentina Allowed Stonehill Notes Guarantee Claims shall receive on the Effective Date 44.3% percent of the New Argentina Stock issued pursuant to this Plan; provided, however, that immediately upon receiving such New Argentina Stock on the Effective Date, each such Holder shall be deemed to tender such New Argentina Stock to Reorganized Mining in exchange for a Pro Rata interest (relative to the other Holders of Argentina Allowed Stonehill Notes Guarantee Claims) in: (i) 40.94% of the outstanding shares of New Mining Stock, and (ii) the Argentina Newco Call Option. Class Argentina 2 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Argentina 2. 6.13 TREATMENT OF CLASS ARGENTINA 3 (ARGENTINA ALLOWED INTERESTS) In full satisfaction of their Argentina Allowed Interests, Holders of Argentina Allowed Interests shall receive no distribution on account of their Argentina Allowed Interests, which shall be deemed canceled, retired, and eliminated on the Effective Date in accordance with section 11.3 of the Plan. Class Argentina 3 is impaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Argentina 3, which class is deemed to have rejected the Plan. 6.14 TREATMENT OF CLASS METALS P (METALS ALLOWED NON-TAX PRIORITY CLAIMS) In full satisfaction, payment and discharge of its Priority Non-Tax Claim, and in accordance with section 1129(a)(9) of the Bankruptcy Code, each Holder of an Allowed Metals Priority Non-Tax Claim shall receive (i) payment in full in cash on the Effective Date, or (ii) such other treatment as will render such Allowed Metals Priority Non-Tax Claim unimpaired. Class Metals P is unimpaired under the provisions of the Plan. 22 31 The Debtors are not soliciting acceptances from the Holders of Claims in Class Metals P. 6.15 TREATMENT OF CLASS METALS 1 (METALS SECURED CLAIMS) In full satisfaction, payment and discharge of their Metals Allowed Secured Claims, all Holders of Allowed Secured Claims in Class Metals 1 (i) shall retain their liens to the extent of the allowed amount of their Allowed Secured Claims and shall receive deferred cash payments totaling, and of a value as of the Effective Date of, at least the allowed amount of their Allowed Secured Claims or (ii) shall receive payment on such other terms as mutually agreed to by the Holder of a Metals Allowed Secured Claim and the plan proponents. Class Metals 1 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Metals 1. 6.16 TREATMENT OF CLASS METALS 2 (METALS ALLOWED GENERAL UNSECURED CLAIMS) 6.16.1 Metals Convenience Claim Election Any Holder of a Metals Allowed General Unsecured Claim in an amount less than, equal to or reduced by the Holder thereof to ten thousand dollars ($10,000) may elect, by appropriately marking their Ballot, to be the Holder of a Metals Allowed Convenience Claim and shall receive the treatment provided for in Class Metals 4. 6.16.2 TREATMENT All Holders of Metals Allowed General Unsecured Claims, in full satisfaction, payment and discharge of their Claims, shall receive on the Effective Date a Metals Proportionate Distribution of the New Metals Stock issued pursuant to this Plan; provided, however, that immediately upon receiving such New Metals Stock on the Effective Date, each such Holder shall be deemed to tender such New Metals Stock to Reorganized Mining in exchange for a Pro Rata share (relative to the other Holders of Metals Allowed General Unsecured Claims) of New Mining Stock on an exchange basis exchanging 100% of the New Metals Stock for 7.52% of the New Mining Stock. Class Metals 2 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Metals 2. 6.17 TREATMENT OF CLASS METALS 3 (METALS ALLOWED EUROBOND CLAIMS) All Holders of Metals Allowed Eurobond Claims, in full satisfaction, payment and discharge of their Claims, shall receive on the Effective Date a Metals Proportionate Distribution of the New Metals Stock issued pursuant to this Plan; provided, however, that immediately upon receiving such New Metals Stock on the Effective Date, each such Holder shall be deemed to tender such New Metals Stock to Reorganized Mining in exchange for a Pro Rata share (relative to the other Holders of Metals Allowed Eurobond Claims) of New Mining Stock on an exchange basis exchanging 100% of the New Metals Stock for 7.52% of the New Mining Stock. 23 32 Class Metals is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Metals 3. 6.18 TREATMENT OF CLASS METALS 4 (METALS CONVENIENCE CLAIMS) In full satisfaction, payment and discharge of their Convenience Claims, all Holders of Metals Allowed Convenience Claims shall receive ten percent (10%) of the allowed amount of their Allowed Convenience Claims in cash on the Effective Date subject to an absolute maximum cash recovery of one thousand dollars ($1000) per Claimant. Class Metals 4 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Metals 4. 6.19 TREATMENT OF CLASS METALS 5 (METALS ALLOWED INTERESTS). In full satisfaction of their Metals Allowed Interests, Holders of Metals Allowed Interests shall receive no distribution in respect of their Metals Allowed Interests, which shall be deemed canceled, retired, expunged, and eliminated on the Effective Date in accordance with section 11.3 of the Plan. Class Metals 5 is impaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Metals 5, which class is deemed to have rejected the Plan. 6.19.1 TREATMENT OF CLASS METALS 6 (CLAIMS OF THE ENVIRONMENTAL REGULATORS AND THE TRIBE) In full satisfaction of their Claims against the Debtors, the Environmental Regulators and the Tribe shall be treated in accordance with the terms of the New Consent Decree, as described in section Article XVIII hereof, and in the Agreement in Principle attached hereto as Exhibit G. Notwithstanding any other provision of this Plan or the Disclosure Statement, the Environmental Regulators and the Tribe shall not participate in any of the distributions to any of the other Classes of Claims or Interests under this Plan, but shall instead be treated in accordance with the treatment provided for in the New Consent Decree, as described in the Agreement in Principle attached as Exhibit G. Class Metals 6 is impaired under the provisions of the Plan. The members of Class Metals 6 have accepted the Plan. 6.20 TREATMENT OF CLASS EXPLORATION P (EXPLORATION PRIORITY NON-TAX CLAIMS) In full satisfaction, payment and discharge of its Priority Non-Tax Claim, and in accordance with section 1129(a)(9) of the Bankruptcy Code, each Holder of an Allowed Exploration Priority Non-Tax Claim shall receive (i) payment in full in cash on the Effective Date, or (ii) such other treatment as will render such Allowed Exploration Priority Non-Tax Claim unimpaired. Class Exploration P is unimpaired under the provisions of the Plan. 24 33 The Debtors are not soliciting acceptances from the Holders of Claims in Class Exploration P. 6.21 TREATMENT OF CLASS EXPLORATION 1 (EXPLORATION ALLOWED GENERAL UNSECURED CLAIMS) All Holders of Exploration Allowed General Unsecured Claims, in full satisfaction, payment end discharge of their Claims, shall receive payment in full in cash on the later of the Effective Date or the date such Claim becomes an Allowed Claim, or such other treatment as will render such Exploration Allowed General Unsecured Claims unimpaired. Class Exploration 1 is unimpaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holders of Claims in Class Exploration 1. 6.22 TREATMENT OF CLASS EXPLORATION 2 (EXPLORATION ALLOWED PUT DEFAULT CLAIMS) In full satisfaction, payment and discharge of their Exploration Allowed Put Default Claims, Holders of Exploration Allowed Put Default Claims shall receive no distribution from Exploration nor retain any legal, equitable, or contractual rights with respect to their Exploration Allowed Put Default Claims against Exploration. Class Exploration 2 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Exploration 2. 6.23 TREATMENT OF CLASS EXPLORATION 3 (EXPLORATION ALLOWED STONEHILL NOTES GUARANTEE CLAIMS) In full satisfaction, payment and discharge of their Exploration Allowed Stonehill Notes Guarantee Claims, Holders of Exploration Allowed Stonehill Notes Guarantee Claims shall receive no distribution from Exploration nor retain any legal, equitable, or contractual rights with respect to their Exploration Allowed Stonehill Notes Guarantee Claims against Exploration. Class Exploration 3 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Exploration 3. 6.24 TREATMENT OF CLASS EXPLORATION 4 (EXPLORATION ALLOWED INTERESTS) In full satisfaction of their Exploration Allowed Interests, the Holder of the Exploration Allowed Interest shall receive 100% of the shares of New Exploration Stock. Class Exploration 4 is unimpaired under the provisions of the Plan. The Debtors are not soliciting acceptances from the Holder of Claims in Class Exploration 4. 25 34 ARTICLE VII TREATMENT OF UNIMPAIRED CLAIMS 7.1 ADMINISTRATIVE CLAIMS Administrative Claims are not classified under the Plan. In accordance with section 1129(a)(9) of the Bankruptcy Code, each Holder of an Allowed Administrative Claim shall receive the full amount of its unpaid Allowed Administrative Claim (i) in cash on the Effective Date or (ii) on such other terms as mutually agreed to by the Holder of an Allowed Administrative Claim and the Plan Proponents; provided however, that Allowed Administrative Claims representing (a) post-Petition Date liabilities incurred in the ordinary course of business, or (b) post-Petition Date liabilities arising under loans or advances to any Debtor(s) whether or not incurred in the ordinary course of business, shall be paid in accordance with the terms and conditions of the particular transactions relating to such liabilities and any agreements relating thereto; provided, further, however, that Administrative Claims of the United States Trustee for fees pursuant to 29 U.S.C. Section 1930(a)(6) shall be paid in accordance with the applicable schedule for payment of such fees, provided, further, however, that interim and/or final payment of Allowed Administrative Claims approved by the Bankruptcy Court shall be paid in accordance with such Bankruptcy Court approval; provided, further, however, that notwithstanding any other provision contained in this section, DIP Claims shall be paid in full in cash on the Effective Date. The Eurobond Indenture Trustee Fee and Mining 9% Notes Indenture Trustee fee will be paid by the Debtors without the need for filing of a claim with the Court or a Court order. 7.1.1 DIP CLAIMS DIP Claims shall be paid in full in cash on the Effective Date, giving due regard and fully enforcing all priorities, "superpriorities," and liens granted in favor of the DIP Lenders. Upon payment in full of the DIP Claims, the DIP Lenders shall release any and all liens against and security interests in the Debtors' and the Estates' property, the DIP Facility shall be deemed terminated, and the Debtors' and Reorganized Debtors' obligations thereunder shall be canceled. 7.2 TAX CLAIMS Pursuant to Section 1129(a)(9)(c) of the Bankruptcy Code, unless otherwise agreed by the Holder of a Tax Claim and the applicable Debtor or Reorganized Debtor, each Holder of an Allowed Tax Claim will receive, in full satisfaction of its Tax Claim, deferred cash payments over a period not exceeding six years from the date of assessment of such Tax Claim. Payments will be made in equal annual installments of principal, plus simple interest accruing from the Effective Date at 7% per annum on the unpaid portion of each Allowed Tax Claim (or upon such other terms determined by the Bankruptcy Court to provide the Holders of an Allowed Tax Claim through deferred cash payments having a value, as of the Effective Date, equal to the Allowed amount of such Tax Claim). Unless otherwise agreed by a Holder of a Tax Claim and the Applicable Debtor or Reorganized Debtor, the first payment on account of such Tax Claim will be payable one year after the Effective Date or, if the Tax Claim is not allowed within one year after the Effective Date, the first Subsequent Distribution Date after the date on which (i) an Order allowing such Tax Claim becomes a Final Order or, (ii) a Stipulation of Amount and Nature of Claim is executed by the applicable Reorganized Debtor and the Holder of the Tax Claim; provided, however, that the Reorganized Debtors will have the right to pay any Allowed Tax Claim, or any remaining balance of any Tax Claim, in full any time on or after the Effective Date, without premium or penalty. Notwithstanding the above provisions of this section of the Plan, the Holder of an Allowed Tax Claim will not be entitled to receive any payment on account of any penalty arising with respect to or in connection with the Allowed Tax Claim. Any such Claim or demand for any such penalty (i) will be subject 26 35 to treatment as a General Unsecured Claim and (ii) the Holder of an Allowed Tax Claim will not assess or attempt to collect any such penalty from the Reorganized Debtors or their property. 7.3 GENERAL BAR DATE FOR ADMINISTRATIVE CLAIMS Except as otherwise provided herein, unless previously filed, requests for payment of Administrative Claims must be filed and served on the Reorganized Debtors, pursuant to the procedure specified in the CONFIRMATION ORDER and the Notice of Entry of the CONFIRMATION ORDER not later than 30 days after the Effective Date. Holders of Administrative Claims that are required to file and serve a request for payment of such Administrative Claims and that do not file or serve such a request by the applicable bar date will be forever barred from asserting Administrative Claims against the Debtors, the Reorganized Debtors or their respective property and such Administrative Claims will be deemed discharged as of Effective Date. Objections to such requests must be filed and served on the Reorganized Debtors and the requesting party by the latter of(a) 120 days after the Effective Date or (b) 60 days after the filing of the applicable request for payment of Administrative Claims. Unless a dispute exists with respect to the Eurobond Indenture Trustee Fee or the Mining 9% Notes Indenture Trustee Fee no request for payment of Administrative Claims need be filed by the Eurobond Indenture Trustee or the Mining 9% Notes Indenture Trustee. 7.4 BAR DATE FOR PROFESSIONAL COMPENSATION Professionals or other entities asserting a Fee Claim for services rendered before the Effective Date must file with the Court and serve on Counsel for the Reorganized Debtors, the Elliott Group, the Stonehill Group, and such other entities who are designated by the Bankruptcy Rules, the CONFIRMATION ORDER, the Fee Order or other of the Bankruptcy Court an application for final allowance of such Fee Claim no later than 60 days after the Effective Date; provided, however, that any professional who may receive compensation or reimbursement of expenses pursuant to the Ordinary Course Professionals Order may continue to receive such compensation and reimbursement of expenses for services rendered before the Effective Date, without further Bankruptcy Court review or approval, pursuant to the Ordinary Course Professionals Order. Objections to any Fee Claim must be filed and served on the Reorganized Debtors and the requesting party by the later of(i) 90 days after the Effective Date or (ii) 30 days after the filing of the applicable request for payment of the Fee Claim. To the extent necessary, the CONFIRMATION ORDER will amend and supercede any previously entered Order of the Bankruptcy Court including the Fee Order, regarding the payment of Fee Claims. ARTICLE VIII ACCEPTANCE OR REJECTION OF THE PLAN 8.1 VOTING Acceptance of the Plan by a Claimant shall be deemed to be a consent to all provisions of the Plan and to the treatment thereunder to such Holder and to all other Claimants. 8.2 CLASSES ENTITLED TO VOTE Only Holders of Claims, which are Allowed Claims as of the Confirmation Date, in impaired Classes receiving distributions under the Plan, are entitled to vote on the Plan. Accordingly, each Claimant in Classes Mining 1, Mining 2, Mining 3, Mining 4, Mining 5, Mining 6, Argentina 1, Argentina 2, Metals 1, Metals 2, Metals 3, Metals 4, Exploration 2, and Exploration 3 shall be entitled to vote to accept or reject the Plan. All Claimants entitled to vote to accept or to reject the Plan shall vote by appropriately executing a Ballot, or in the case of a brokerage firm or other nominee holding Claims in its own name on behalf of a 27 36 beneficial Holder, a Master Ballot, in accordance with the voting procedures described in the Disclosure Statement. 8.3 ACCEPTANCE BY IMPAIRED CLASSES An impaired Class of Claims shall have accepted the Plan if the Holders of at least two-thirds (2/3) in amount, and more than one-half (1/2) in number, of the Allowed Claims actually voting in such Class have voted to accept the Plan. 8.4 ACCEPTANCE BY MAKING CONVENIENCE CLAIM ELECTION Any Holder of an Allowed General Unsecured Claim that makes the Convenience Claim Election, but fails to vote to accept or reject the Plan, shall be deemed to have accepted the Plan, with such vote being counted as part of the applicable General Unsecured Claim Class. 8.5 RESERVATION OF RIGHT TO WITHDRAW PLAN Subject to section 11. below, the Plan Proponents reserve the right to modify or revoke and withdraw the Plan at any time before the Confirmation Date or, if the Debtors are for any reason unable to consummate the Plan after the Confirmation Date, at any time until the Effective Date. 8.6 CRAM DOWN This Plan shall be confirmed pursuant to sections 1129(b)(l) and (2)(C) of the Bankruptcy Code notwithstanding the deemed rejection by Classes Mining 8, Argentina 3, Metals 5 and Exploration 4. If any Class of Claims votes to reject this Plan, this Plan shall be confirmed pursuant to sections 1129(b)(l) and (2)(A) or (2)(B) notwithstanding such rejection. The Plan as currently constituted may be confirmed as set forth above so long as at least one impaired class of Claims votes to accept the Plan. The Plan Proponents believe that not less than nine (9) voting classes will vote to accept the Plan. The Plan Proponents also reserve the right to make modifications, if necessary or appropriate, to effectuate confirmation as set forth above. 8.7 CONFIRMATION AS TO ONE OR MORE DEBTORS Upon the consent of the Plan Proponents, this Plan may be confirmed as to any one or all of the Subsidiary Debtors. Should the Plan Proponents determine to seek Confirmation of this Plan as to less than all of the Subsidiary Debtors, the Subsidiary Debtors as to which Confirmation is not sought, and all terms and provision of this Plan relative to such Subsidiary Debtors shall be deemed deleted from the Plan ab initio and the rights of all parties in interest in such Subsidiary Debtors Reorganization Cases are and shall be reserved in full. 8.8 ACCEPTANCE BY CLASSES MINING 9 AND METALS 6 Pursuant to the terms of the Agreement in Principle, the Environmental Regulators and the Tribe, and Classes Mining 9 and Metals 6, shall be deemed to have accepted the Plan. 28 37 ARTICLE IX PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS 9.1 OBJECTIONS TO CLAIMS: PROSECUTION OF DISPUTED CLAIMS' 9.1.1 The Debtors or Reorganized Debtors reserve the right to object to the allowance of Claims (other than Claims allowed under this Plan), including those listed in the Schedules or filed with the Bankruptcy Court with respect to which it disputes liability or allowance in whole or in part, or the characterization of a Claim as secured or unsecured. Objections to Claims must be, except as otherwise set forth herein, filed and served on the appropriate claimant on or before 120 days after the Effective Date or such later date as may be established by the Court. All objections shall be litigated to Final Order; provided, however, that, with the consent of the other Plan Proponents, the Debtors or Reorganized Debtors may compromise, settle, withdraw or resolve by any other method approved by the Bankruptcy Court, any such objections to Claims. 9.1.2 Consistent with Bankruptcy Rule 3003(c), the Reorganized Debtors shall recognize a Proof of Claim filed by (i) the Mining 9% Notes Indenture Trustee in respect of the Mining 9% Notes Claims, and (ii) the Eurobond Indenture Trustee in respect of the Eurobond Claims. Accordingly, any Claim, proof of which is filed by the direct, indirect, or beneficial Holder of a Mining 9% Note Claim shall be disallowed as duplicative of the Claims of the 9% Note Indenture Trustee, and any Claim, proof of which is filed by the direct, indirect, or beneficial Holder of a Eurobond Claim, may be disallowed as duplicative of the Claim of the Eurobond Indenture Trustee, each without need for any further action or Bankruptcy Court order. Notwithstanding such disallowance, the Debtors may rely upon proofs of claim filed by beneficial holders for the purpose of making distributions directly to such beneficial holders. However, disallowance of any claims as duplicative pursuant to this section shall not constitute a waiver or admission with respect to the Debtors' or the Reorganized Debtors' rights to object to any Claims which are not disallowed purely on the basis of being duplicative pursuant to this subsection. 9.2 ESTIMATION OF CLAIMS A Debtor or a Reorganized Debtor may, at any time, request that the Bankruptcy Court estimate any contingent or unliquidated Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether a Debtor or Reorganized Debtor has previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such contingent or unliquidated Claim at any time during litigation concerning any objection to any Claim, including dining the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount shall constitute either the amount of such Claim or a maximum limitation on the amount of such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors or the Reorganized Debtors may elect to pursue any supplemental proceedings to object to any ultimate payment or distribution on such Claim. All of the aforementioned Claims objection, estimation, and resolution procedures are cumulative and are not necessarily exclusive of one another. Claims may be estimated and thereafter resolved by any permitted mechanism. 9.3 PAYMENTS AND DISTRIBUTION ON DISPUTED CLAIMS Notwithstanding any provision in the Plan to the contrary, no partial payments and no partial distributions shall be made with respect to a Disputed Claim until the resolution of such dispute by Final Order or by compromise, settlement, withdrawal or resolution by any other method approved by the Bankruptcy Court. On the first Subsequent Distribution Date that occurs not less than ten (10) days after a 29 38 Disputed Claim becomes an Allowed Claim, the Holder of such Allowed Claim shall receive all payments and/or distributions to which such Holder is then entitled under the Plan. 9.4 RESERVE FOR AND ISSUANCE OF CASH ON DISPUTED CLAIMS If Disputed Claims exist in any Classes receiving cash under the Plan, each of the Reorganized Debtors shall separately hold for the benefit of each Holder of a Disputed Claim against such reorganized Debtor, cash in an amount equal to the cash payments which would have been made to the Holder of such Disputed Claim if it were an Allowed Claim in an amount equal to the lesser of (i) the amount listed in the Schedules, (ii) the amount filed with the Bankruptcy Court, and (iii) the amount as estimated by the Bankruptcy Court pursuant to section 502(c) of the Bankruptcy Code; provided that notwithstanding the existence of Disputed Claims on the Effective Date, the Debtors shall distribute not less than 89.99% of the New Mining Stock to such Gifting Creditors. Such amount so reserved shall constitute and represent the maximum amount in which a Disputed Claim may ultimately become an Allowed Claim. Cash, if any, reserved by each of the Reorganized Debtors on account of Disputed Claims shall be set aside, segregated and, to the extent practicable, held in such investments as shall be consistent with section 345 of the Bankruptcy Code, until Disputed Claims become Allowed Claims. Any cash previously reserved for Allowed Claims in a Class after all Allowed Claims in such Class have received the distributions to which they are entitled under the Plan shall revert to the Reorganized Debtors. 9.5 RESERVE FOR AND ISSUANCE OF NON-CASH DISTRIBUTION ON DISPUTED CLAIMS If Disputed Claims exist in any Classes receiving a non-cash distribution under the Plan, the Debtor that will be charged with making distributions to the Allowed Claims in the Class to which the Disputed Claim belongs (whether the Debtor is making such non-cash distribution as Debtor qua Debtor or on behalf of another party), such Debtor shall reserve an amount of the distributable securities in an amount equal to the distribution which would have been made to the Holder of such Disputed Claim if it were an Allowed Claim, in an amount equal to the lesser of (i) the amount listed in the Schedules, (ii) the amount filed with the Bankruptcy Court or (iii) the amount as estimated by the Bankruptcy Court pursuant to section 502(c) of the Bankruptcy Code. Such amount so reserved shall constitute and represent the maximum amount in which a Disputed Claim may ultimately become an Allowed Claim. ARTICLE X EXECUTORY CONTRACTS AND UNEXPIRED LEASES 10.1 ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS UNEXPIRED LEASES Except as otherwise provided in the Plan, on the Effective Date, in accordance with the provisions of sections 365 and 1123 of the Bankruptcy Code, the Debtor shall assume all executory contracts or unexpired leases which are identified to be assumed on a Schedule of Executory Contracts and Unexpired Leases to be Assumed that is to be filed by the Debtors with the Bankruptcy Court on or before the Confirmation Date. Notwithstanding the foregoing, the foregoing contracts, licenses and leases shall be assumed only to the extent that they constitute executory contracts or unexpired leases and nothing contained herein shall constitute an admission by the Debtors or the Reorganized Debtors that such contracts, licenses or leases are executory contracts or that any of the Reorganized Debtors have any liability thereunder. Nothing contained herein shall obligate any of the Debtors or the Reorganized Debtors to file a Schedule of Executory Contracts and Unexpired Leases. As of the Effective Date, any executory contract, license, or unexpired lease to be held by any Debtor or another surviving, resulting or acquiring corporation pursuant to this Plan, will be deemed to be assigned to the applicable entity, pursuant to section 365 of the Bankruptcy Code. Entry of the CONFIRMATION ORDER will constitute an order of the Bankruptcy Court approving the assumptions and assignments described in this Article X of the Plan, pursuant to section 365 of the 30 39 Bankruptcy Code, as of the Effective Date. An order of the Bankruptcy Court entered on or prior to the Confirmation Date will specify the procedures for providing notice to each party whose executory contract or lease is being assumed or assumed and assigned pursuant to the Plan of: (a) the contract or lease being assumed or assumed and assigned; (b) the Cure Claim, if any, that the applicable Debtor believes it would be obligated to pay in connection with such assumption; and (c) the procedures for such party to object to the assumption or the assumption and assignment of the applicable contract or lease of the proposed amount of the proposed Cure Claim. 10.2 PAYMENTS RELATED TO ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES To the extent that such Claims constitute monetary defaults, the Cure Claims associated with each executory contract and unexpired lease to be assumed pursuant to the Plan would be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, at the option of the Debtor, assuming such contract or lease or the assignee of such Debtor, if any: (1) by payment of the Cure Claim in cash on the Effective Date or (2) on such other terms as are agreed to by the parties to such executory contract or unexpired lease. If there is a dispute regarding (l) the amount of any Cure Claim, (2) the ability of the applicable Reorganized Debtor or any assignee to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed or (3) any other matter pertaining to assumption or assumption or assignment of such contract or lease, the payment of any Cure Claim required by section 365(b)(l) of the Bankruptcy Code will be made following the entry of a Final Order resolving the dispute and approving the assumption. For assumptions of those executory contracts or unexpired leases between Debtors, the Reorganized Debtors assuming such contract may cure any monetary default (1) by treating such amount as either a direct or indirect contribution to capital or distribution (as appropriate) or (2) through an intercompany account balance in lieu of payment in cash. 10.3 REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES On the Effective Date, all executory contracts or unexpired leases of any of the Debtors and/or the Reorganized Debtors shall be deemed rejected in accordance with the provisions of sections 365 and 1123 of the Bankruptcy Code except those executory contracts and unexpired leases that (i) have been assumed by Final Order of the Bankruptcy Court, (ii) are the subject of a motion to assume pending on the Effective Date, (iii) are identified to be assumed on a list that maybe filed with the Bankruptcy Court on or before the Confirmation Date, or (iv) are assumed pursuant to the terms of the Plan. Entry of the CONFIRMATION ORDER by the Bankruptcy Court shall constitute approval of such deemed rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Nothing contained herein shall constitute an admission by any of the Debtors or the Reorganized Debtors that such contacts, licenses or leases are executory contracts or unexpired leases or that any of the Debtors or the Reorganized Debtors have any liability thereunder. Nothing contained herein shall obligate any of the Debtors or the Reorganized Debtors to file any list of assumed or rejected executory contracts or unexpired leases. 10.4 REJECTION AND CANCELLATION OF PREPETITION FINANCING OBLIGATIONS 10.4.1. On the Effective Date, the Prepetition Financing Obligations, to the extent such obligations, or any of them, are executory contracts within the meaning of section 365 of the Bankruptcy Code, shall be deemed rejected in accordance with the provisions of sections 365 and 1123 of the Bankruptcy Code. To the extent the Prepetition Financing Obligations are not executory contracts subject to rejection under section 365 of the Bankruptcy Code, they shall be canceled and deemed terminated pursuant to section 1123(a)(5)(F) of the Bankruptcy Code. Any and all obligations of the Debtors under the Prepetition Financing Obligations, without exception, are and shall forever be extinguished. Entry of the CONFIRMATION ORDER by the Bankruptcy Court shall constitute approval of such deemed rejection and/or cancellation pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Notwithstanding the rejection and/or 31 40 cancellation of the Prepetition Financing Obligations, Holders of Allowed Claims shall receive distributions on account of their Claims in accordance with the provisions of the Plan and shall not have any other or additional Claims against the Debtors, the Reorganized Debtors and/or the Estates on account of any such rejection, cancellation or deemed termination. 10.4.2 Notwithstanding the rejection and/or cancellation of the Prepetition Financing Obligations, the Mining 9% Notes Indenture and the Eurobond Indenture shall remain in effect as to the Mining 9% Notes Indenture Trustee and the Eurobond Indenture Trustee, respectively, to the extent necessary to allow the Mining 9% Notes Indenture Trustee and the Eurobond Trustee to make the distributions to Holders of Allowed Claims in accordance with the provisions of the Plan and the CONFIRMATION ORDER. Any actions taken by the Mining 9% Notes Indenture Trustee and the Eurobond Indenture other than as provided for in the Plan in respect of distributions shall be null and void as to the Debtors and the Reorganized Debtors, none of which shall be liable for any fees, costs or charges associated with unauthorized actions by the Mining 9% Notes Indenture Trustee and the Eurobond Indenture Trustee. The Mining 9% Notes Indenture Trustee and the Eurobond Indenture Trustee shall be relieved of all obligations under the Mining 9% Notes Indenture and the Eurobond Indenture after their performance of their obligations to make the distributions under the Plan and the CONFIRMATION ORDER. 10.5 CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES. All proofs of Claim with respect to Claims arising from the rejection of executory contracts or unexpired leases must be filed with the Bankruptcy Court by the later of (i) thirty (30) days after the date of entry of an order of the Bankruptcy Court approving the rejection of such contracts or leases and (ii) the Confirmation Date. Any such Claims, proofs of which are not filed timely, shall be barred forever from assertion against the Debtors, the Reorganized Debtors, their Estates and/or their assets or property. Unless otherwise ordered by the Bankruptcy Court, all such properly filed Claims, upon allowance thereof, shall be, and shall be treated as, General Unsecured Claims. 10.6 INDEMNIFICATION OBLIGATIONS For purposes of the Plan, the obligations of the Debtors to indemnify their respective present and former directors or officers, and/or employees in such capacity or as plan administrators or trustees to any employee benefit plan, or any Person serving at the request of any of the Debtors as a director or officer of any other entity pursuant to the Debtors' certificates of incorporation or by-laws or pursuant to applicable state law or specific agreement, or any combination of the foregoing, shall be deemed to be executory contracts, shall be assumed by the Debtors or the Reorganized Debtors, effective as of the Effective Date, in accordance with the provisions of sections 365 and 1123 of the Bankruptcy Code and shall survive confirmation of the Plan, remain unaffected thereby, shall not be discharged, and shall pass unaltered to the Reorganized Debtors irrespective of whether such indemnification is owed in connection with an event occurring before, on, or after the Petition Date. 10.7 COMPENSATION AND BENEFIT PROGRAMS All employment and severance policies, and all compensation and benefit plans, policies, and programs of the Debtors, in effect as of the Confirmation Date and applicable generally to the respective active officers and/or employees of the Debtors, including, without limitation, all then-effective retirement plans, health care plans, sick-pay and disability plans, severance benefit plans, incentive plans, and life, accidental death, and dismemberment insurance plans, vacation and holiday pay policies, are treated as executory contracts under the Plan and, as of and on the Effective Date, shall be assumed pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code, unless previously terminated, modified or rejected in accordance with the Bankruptcy Code, subject to a pending motion or application before the 32 41 Bankruptcy Court to terminate, modify or reject or identified to be rejected on a list that is filed with the Bankruptcy Court on or before the Confirmation Date. Metals agrees that it is and will continue to be the plan sponsor of the Negotiated Plan, as defined under 29 U.S.C. section 1301(a)(13) and 29 C.F.R. section 4001.2. As the plan sponsor, Metals intends to fund the Negotiated Plan in accordance with the minimum funding standards under ERISA, 29 U.S.C. section 1082, pay all required Pension Benefit Guaranty Corporation ("PBGC") insurance premiums, 29 U.S.C. section 1307 and comply with all requirements of the Negotiated Plan and ERISA. The Negotiated Plan is subject to the minimum funding requirements of ERISA and section 412 of the Internal Revenue Code. No provision of or proceeding within the Chapter 11 Cases, the Plan (including but not limited to section 14.4 of the Plan) or the CONFIRMATION ORDER shall in any way be construed as discharging, releasing or relieving Metals, Reorganized Metals, or any other party in any capacity, from any liability with respect to the Negotiated Plan. PBGC and the Negotiated Plan shall not be enjoined or precluded from enforcing such liability as a result of any of the provisions of the Plan or confirmation of the Plan, including those providing for satisfaction, release and discharge of claims. Mining agrees that it is and will continue to be the plan sponsor of the Sunshine Plan, as defined under 29 U.S.C. section 1301(a)(13) and 29 C.F.R. section 4001.2. As the plan sponsor, Mining intends to fund the Sunshine Plan in accordance with the minimum funding standards under ERISA, 29 U.S.C. section 1082, pay all required PBGC insurance premiums, 29 U.S.C. section 1307 and comply with all requirements of the Sunshine Plan and ERISA. The Sunshine Plan is subject to the minimum funding requirements of ERISA and section 412 of the Internal Revenue Code. No provision of or proceeding within the Chapter II Cases, the Plan (including but not limited to section 14.4 of the Plan) or the CONFIRMATION ORDER shall or shall in any way be construed as discharging, releasing or relieving Mining, Reorganized Mining, or any other party in any capacity, from any liability with respect to the Sunshine Plan. The PBGC and the Sunshine Plan shall not be enjoined or precluded from enforcing such liability as a result of any of the provisions of the Plan or confirmation of the Plan, including those providing for satisfaction, release and discharge of claims. 10.8 RETIREE BENEFITS From and after the Effective Date, the Reorganized Debtors will be obligated to pay retiree benefits (as defined in section 1114(a) of the Bankruptcy Code) and any similar health, disability or death benefits in accordance with the terms of the retiree benefit plans or other agreements governing the payments of such benefits, subject to any rights to amend, modify or terminate such benefits under the terms of the applicable retiree benefits plan, other agreement or applicable bankruptcy law. ARTICLE XI IMPLEMENTATION OF THE PLAN 11.1 CONTINUED CORPORATE EXISTENCE Except to the extent otherwise provided herein, each Debtor will, as Reorganized Debtor, continue to exist after the Effective Date as a separate corporate entity, with all the powers of a corporation under applicable law and without prejudice to any right to alter or terminate such existence (whether by merger, dissolution or otherwise) under applicable state law. 11.2 WITHDRAWAL OF THE PLAN Each Debtor may only alter, amend, modify, revoke or withdraw this Plan as the plan of reorganization for such Debtor's bankruptcy case and the bankruptcy cases of its subsidiaries with the 33 42 express written consent of all Plan Proponents. If, with such consent, a Debtor revokes or withdraws from this Plan: (a) nothing contained herein shall be deemed to constitute a waiver or release of any Claims by or against such Debtor, or any other claim of one Debtor against another Debtor, or to prejudice in any manner the rights of such Debtor or any Persons in any further proceedings involving such Debtor, and all such rights of or against such Debtor shall exist as though this Plan had not been filed an no actions taken to effectuate it. 11.3 CANCELLATION OF CAPITAL STOCK As of the Effective Date, by virtue of the Plan and in all events without any action on the part of the Holders thereof, each share of Old Common Stock, whether issued and outstanding or held in treasury, shall be deemed canceled and retired and no consideration will be paid or delivered to the Holders of such Old Common Stock with respect thereto. Under section 11.12.1 of this Plan, Holders of Mining Old Common Share Interests eliminated under this Plan shall receive a Pro Rata distribution of the Gifted Equity Stock. 11.4 SURRENDER OF INSTRUMENTS As a condition precedent to receiving any distribution pursuant to this Plan on account of an Allowed Claim, each Holder of a promissory note, document or other instrument evidencing a Claim shall surrender such note, document or instrument to the Reorganized Debtors (or such depository agent or other entity as the Reorganized Debtors designates), and the Reorganized Debtors shall distribute or shall cause to be distributed to the Holders thereof the appropriate distribution of property hereunder; provided, however, that distributions in respect of Mining Allowed 9% Notes Claims evidenced by Mining 9% Notes shall be made to the Mining 9% Notes Indenture Trustee for further distribution to the beneficial Holders of Mining Allowed 9% Notes Claims in accordance with the provisions of the Mining 9% Notes Indenture, and further provided that distributions in respect of Metals Allowed Eurobond Claims shall be made to the Eurobond Indenture Trustee for further distribution to the beneficial Holders of Allowed Eurobond Claims in accordance with the provisions of the Eurobond Indenture. No distribution of property hereunder shall be made to or on behalf of any Holders of Claims unless and until such promissory note, document or other instrument is received by the Reorganized Debtors (or such transfer agent, depository agent or other entity as a Reorganized Debtor designates) or the Mining 9% Indenture Trustee, or the Eurobond Indenture Trustee, as the case may be, or the unavailability of such note, document or instrument is reasonably established to the satisfaction of the Reorganized Debtor (or such transfer agent, depository agent or other entity as the Reorganized Debtor designates). Any such Holder that fails to surrender or cause to be surrendered such note, document or other instrument or to execute and deliver an affidavit of loss and indemnity reasonably satisfactory to the Reorganized Debtor (or such transfer agent, depository agent or other entity as a Reorganized Debtor designates) or the Mining 9% Notes Indenture Trustee or the Eurobond Indenture Trustee, as the case may be, and in the event that the Reorganized Debtors shall so request, fails to furnish a bond in form and substance (including, without limitation, with respect to amount) reasonably satisfactory to the Reorganized Debtors (or such transfer agent, depository agent or other entity as the Reorganized Debtors designates) or the Mining 9% Note Indenture Trustee or the Eurobond Indenture Trustee as the case may be, within two(2) years after the Effective Date, shall be deemed to have forfeited all rights, Claims, and Interests related thereto and shall not participate in any distribution hereunder and all property in respect of such forfeited distribution, including interest or dividends accrued thereon, if any, shall revert to the Reorganized Debtors. 11.5 CLOSE OF LEDGERS The Debtors and the Reorganized Debtors shall be entitled to recognize and to acknowledge for any and all purposes of the Plan, except as to actual distributions thereunder, only those record Holders of Prepetition Financing Debt Obligations as of the close of business on the Record Date. 34 43 11.6 CHARTER On the Effective Date, the certificate of incorporation and the by-laws of each of the Reorganized Debtors will be substantially in the forms attached to the Plan Supplement. On the Effective Date, or as soon thereafter as practicable, the Reorganized Debtors shall each file its respective Amended Certificate of Incorporation. Among other things, the Amended Certificates of Incorporation shall: (a) prohibit the issuance of non-voting equity securities to the extent required by section 1123(a) of the Bankruptcy Code; (b) provide for the authorization of the New Common Stock in amounts not less that the amounts necessary to permit distributions thereof required or contemplated by the Plan; and (c) and shall comply with section 1 123(a)(6) of the Bankruptcy Code. After the Effective Date, the Reorganized Debtors may amend and restate their certificates of incorporation or by-laws as permitted by the Delaware General Corporation Law, subject to the terms and conditions of such constituent documents. 11.7 MANAGEMENT OF THE REORGANIZED DEBTORS On the Effective Date, the operation of the Reorganized Debtors shall become the general responsibility of the Reorganized Boards of Directors, which shall, thereafter, continue to have the responsibility for the management, control, and operation of the Reorganized Debtors. The Reorganized Boards of Directors shall be selected in accordance with the Amended By-Laws. The officers of the Reorganized Debtors shall consist of those individuals referred to in the Disclosure Statement and set forth in the Plan Supplement. All existing directors and officers who become officers or directors of Reorganized Debtors shall be deemed re-elected. Creditor Directors shall be deemed newly elected pursuant to the CONFIRMATION ORDER. Those officers and directors not continuing in office, if any, shall be deemed removed therefrom (without cause) pursuant to the CONFIRMATION ORDER. 11.8 ISSUANCE OF NEW SECURITIES STOCK On the Effective Date, in accordance with the Plan, the Amended Certificates of Incorporation, and the Amended By-Laws: (i) Reorganized Mining shall issue the New Mining Stock, (ii) Reorganized Argentina shall issue the New Argentina Stock, (iii) Argentina Newco shall issue the Argentina Newco Stock, and (iv) Reorganized Metals shall issue the New Metals Stock and Reorganized Exploration shall issue the New Exploration Stock, each in an amount sufficient to permit the distributions thereof required or contemplated by the Plan. In accordance with the Agreement in Principle, Reorganized Mining shall issue the Warrants. In accordance with the ASARCO Settlement, Reorganized Mining shall issue the ASARCO Warrants. Each of the foregoing new securities issued by the Reorganized Debtors shall be provided with the exemption and protection set forth in section 1145 of the Bankruptcy Code. 11.9 NEWCO ARGENTINA TRANSACTION On the Effective Date, Reorganized Mining shall transfer to Newco Argentina all shares of New Argentina Stock (which Reorganized Mining shall have acquired from the Holders of Argentina Allowed Put Default Claims and Argentina Allowed Stonehill Notes Guarantee Claims pursuant to Section 11.12 of the Plan), in exchange for all shares of Argentina Newco Stock. Upon the completion of the Newco Argentina Transaction, Reorganized Mining will own 100% of the Argentina Newco Stock, and Argentina Newco will own 100% of the New Argentina Stock. 11.10 CORPORATE ACTION On the Effective Date, the authorization of the New Common Stock, the occurrence of the Newco Argentina Transaction, the election of directors and officers, the adoption of the Amended Certificate of Incorporation, the Amended By-Laws, and any and all other matters provided for under the Plan involving 35 44 the corporate structure of the Reorganized Debtors, or involving corporate action by the directors and/or stockholders of the Reorganized Debtors, shall be deemed to have occurred and shall be in effect from and after the Effective Date pursuant to section 303 of the Delaware General Corporation Law, section 422A of the Tax Code, the rules and regulations issued thereunder, section 16 of the 34 Act, the rules and regulations issued thereunder and any other applicable law, without any requirement of further action by the stockholders and/or directors of the Debtors or the Reorganized Debtors. On the Effective Date, all agreements entered into pursuant to the Plan shall be valid, binding and in full force and effect. 11.11 EXIT FINANCING FACILITY On the Effective Date, the Reorganized Debtors are authorized to execute and deliver those documents necessary or appropriate to obtain the Exit Financing Facility. All cash necessary for the Reorganized Debtors to make payments to the Plan will be obtained from the Reorganized Debtors' cash balances and operations and/or the Exit Financing Facility. 11.12 AGREEMENT OF HOLDERS OF CERTAIN ARGENTINA CLAIMS 11.12.1 As a condition precedent to this Plan becoming effective, the Holders of Argentina Allowed Put Default Claims and of Argentina Allowed Stonehill Notes Guarantee Claims (collectively, the "Argentina Agreeing Creditors") shall have agreed to have authorized Reorganized Mining to transfer and distribute the Gifted Equity Stock, from the distribution of the Argentina Agreeing Creditors to the Holders of Class Mining 8 Allowed Interests. The agreement set forth in this Section of the Plan shall be evidenced by an agreement substantially in the form of the Transfer Agreement included in the Plan Supplement. 11.12.2 The Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that their distributions of New Mining Stock shall be reduced by the Gifted Creditor Stock in an amount sufficient to provide for the distributions of New Mining Stock that the Holders of Claims in Classes Mining 2, 3, 4, 5 and 6 shall receive in accordance with section VI of the Plan if their respective Class(es) vote to accept the Plan; and (ii) authorize the distribution of such New Mining Stock to the Holders of Claims in those Classes of Classes Mining 2, Mining 3, Mining 4, Mining 5, and Mining 6 that vote to accept the Plan, in accordance with Section VI of the Plan. 11.12.3 Notwithstanding any other provision of the Plan, and without regard to whether any Holders of Allowed Claims in Classes Mining 2, 3, 4, 5 and 6 receive distributions of New Mining Stock, the aggregate amount of New Mining Stock distributed to the Elliott Group and the Stonehill Group shall be distributed so as to be received by them (i) in the aggregate amount of (a) 89.99% of the New Mining Stock plus (b) the Forfeited Stock and (ii) in the following proportion: 56.65% to the Elliott Group and 43.35% to the Stonehill Group. 11.13 RELEASE OF HOLDINGS Except as otherwise provided in the Plan or in any contract, instrument, release or other agreement or document entered into or delivered in connection with the Plan on the Effective Date and concurrently with the applicable distributions made pursuant to Article VI of the Plan, or mortgages, deeds of trust, liens or other security interests against the property of any Estate will be fully released and discharged, and all of the right, title and interests of any Holder of such mortgages, deeds of trust, liens or other security interests, including any rights to any collateral thereunder, will revert to the applicable Reorganized Debtor and its successors and assigns. 36 45 11.14 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS; EXEMPTION FROM CERTAIN TRANSFER TAXES TAXES The Chairman of the Board, Chief Executive Officer, President, Executive Vice President, Chief Financial Officer, of each Debtor or Reorganized Debtor will be authorized to execute, deliver, file or record such contracts, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and implement the provisions of the Plan. The Secretary or any Assistant Secretary of each Debtor or the Reorganized Debtor will be authorized to certify or attest to any of the foregoing actions. Pursuant to section 1146(c) of the Bankruptcy Code, the following will not be subject to any state, tax, real estate transfer tax or similar tax: (a) issuance, transfer or exchange of (i) New Mining Stock or (ii) Argentina New Stock; (b) the creation of any mortgage, deed of trust, lien or other security interests; (c) the making or assignment of any lease or sublease; (d) the execution and delivery of the Exit Financing Facility; (e) effectuating any of the transfers and transactions required by the provisions of this Plan; or (f) the making or delivery of any deed or other instrument of transfer under, in furtherance or in connection with the Plan. 11.15 PERFORMANCE OF OBLIGATIONS UNDER THE NEW CONSENT DECREE The Debtors and the Reorganized Debtors will take such actions as are necessary and proper to comply with their obligations under the New Consent Decree. ARTICLE XII DISTRIBUTIONS 12.1 DISTRIBUTION OF NEW COMMON STOCK Distributions and transfers of New Common Stock called for under this Plan shall be made on the Effective Date, except that with respect to Claims that are Disputed Claims on the Effective Date, the provisions of Section 9.3 and 9.5 will apply. 12.2 DISTRIBUTION OF CASH Distributions and transfers of cash called for under this Plan shall be made on the Effective Date, except that with respect to Claims that are Disputed Claims on the Effective Date, the provisions of Section 9.3 and 9.5 will apply. All distributions of cash under the Plan may be made either by check or by wire transfer, at the option of the Reorganized Debtors. 12.3 SUBSEQUENT DISTRIBUTIONS In the absence of a contrary notice of assignment, the Reorganized Debtors shall make subsequent distributions on the Subsequent Distribution Dates to the record Holders of Allowed Claims as of the Effective Date. 37 46 12.4 SETOFFS The Reorganized Debtors may, but shall not be required to, set off against any Claim and the payments or distributions to be made pursuant to the Plan in respect of such Claim, any Claims of any nature whatsoever the Debtors or the Reorganized Debtors may have against the Holder thereof but neither the failure to do so nor the allowance of any Claim hereunder, for voting or otherwise, shall constitute a waiver or release by the Debtors or the Reorganized Debtors of any such claim that any of such entities may have against any Holder. 12.5 DISTRIBUTION OF UNCLAIMED PROPERTY Any distribution of property (cash or otherwise) under the Plan which is unclaimed after two (2) years following the Effective Date shall be forfeited to, and revested in, the Reorganized Debtors. Any Holder of an Allowed Claim that does not assert a claim pursuant to the Plan for an undelivered or undeliverable distribution to be made within this two (2) year period will be forever barred from asserting any such claim against the Reorganized Debtors or their respective property. 12.6 FRACTIONAL INTERESTS Fractional Interests in New Common Stock shall not be distributed. Notwithstanding any other provision in the Plan, only whole numbers of shares of New Common Stock shall be issued to Holders of Allowed Claims. When any distribution on account of an Allowed Claim would result in the issuance of a number of shares of New Common Stock that is not a whole number, the actual distribution of such New Common Stock shall be rounded to the next higher whole number. No New Common Stock will be distributed to any account holding fewer than 100 shares of Old Common Stock of Mining. Fractional Interests in New Common Stock that are allocated for distribution to Holders of Allowed Claims shall be deemed contributed to the Reorganized Debtors. ARTICLE XIII CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS OF THE PLAN 13.1 CONDITIONS PRECEDENT TO CONFIRMATION The Bankruptcy Court will not enter the CONFIRMATION ORDER unless and until the following conditions have been satisfied or waived in writing by each of the Plan Proponents. (1) The CONFIRMATION ORDER will be acceptable in form and substance to the Plan Proponents. (2) The Debtor shall have received a binding, unconditional commitment for the Exit Financing Facility on terms and conditions satisfactory to the Plan Proponents. (3) The Confirmation Hearing has been commenced by December 31, 2000. (4) The Plan shall not have been amended, altered or modified from the Plan as filed on September 29, 2000, unless such amendment, alteration or modification has been consented to by each of the Plan Proponents. (5) All exhibits to the Plan are in form and substance satisfactory to the Plan Proponents. 38 47 13.2 CONDITIONS PRECEDENT TO EFFECTIVENESS The Plan shall not become effective unless and until the following conditions shall have been satisfied or waived by a writing signed by an authorized representative of each Plan Proponent. Condition 8 below can only be waived by all of each Plan Proponent, the Environmental Regulators and the Tribe. Condition 9 below may only be waived by each Plan Proponent and ASARCO, Inc. (1) The Bankruptcy Court shall have entered the CONFIRMATION ORDER; (2) The Reorganized Debtors shall have, or immediately upon the effectiveness of the Plan shall have, sufficient cash to make all cash payments required to be made on the Effective Date pursuant to the terms of the Plan; (3) The Elliott Group and the Stonehill Group shall have selected the Creditor Directors. (4) All conditions necessary to effectuate the Reorganized Debtors' Exit Financing Facility shall have been satisfied or waived. (5) Any statutory fees owing the U.S. Trustee shall have been provided for or paid in full. (6) All other actions and documents necessary to implement the provisions of the Plan shall have been effected or executed or, if waivable, waived by the Person or Persons entitled to the benefit thereof, including, without limitation, the form of Registration Rights Agreement included in the Plan Supplement, the form of Call Option Agreement included in the Plan Supplement, and the form of Transfer Agreement included in the Plan Supplement. (7) If any entity appeals the CONFIRMATION ORDER and the Elliott Group and the Stonehill Group have not consented to the occurence of the Effective Date in view of the appeal. (8) The Agreement in Principle shall have been substantially incorporated into the New Consent Decree as provided in section 8 of the Agreement in Principle. The New Consent Decree shall have been lodged with the Idaho District Court and submitted for public comment for fifteen (15) days prior to court approval by the Idaho District Court; and the New Consent Decree shall have been approved by final order of the Idaho District Court. (9) The ASARCO Settlement shall have been approved by the Bankruptcy Court. This Plan shall become null and void in the event the ASARCO Settlement is not approved by the Bankruptcy Court. 13.3 EFFECT OF FAILURE OF CONDITIONS In the event that the conditions to effectiveness of the Plan have not occurred and have not been waived as set forth herein (i) no distributions under the Plan shall be made, (ii) all of the Debtors' obligations in respect of Claims or Interests shall remain unchanged, and (iii) upon the filing of a notice with the Bankruptcy Court; the CONFIRMATION ORDER, if entered, shall be vacated. If the CONFIRMATION ORDER is vacated pursuant to this Section then: (1) the Plan will be null and void in all respects, including with respect 39 48 to: (a) the discharge of Claims and termination of Interests pursuant to Section 1141 of the Bankruptcy Code; (b) the assumptions, assignments or rejections of executory contracts and unexpired leases pursuant to Sections 10.2, 10.3 and 10.5; and (2) nothing contained in the Plan will: (a) constitute a waiver or release of any claims by or against, or any Interest in, Debtors; or (b) prejudice in any manner the rights of the Debtors or any other party in interest, each of which will be reinstated as if the Confirmation Order had not been entered. ARTICLE XIV EFFECTS OF CONFIRMATION 14.1 TITLE TO ASSETS Consistent with sections 1123(a)(5)(A) and 1141 of the Bankruptcy Code, on the Effective Date, title to all assets and property of the Estates of the Debtors shall pass to, and vest in, the Reorganized Debtors free and clear of all Claims, Allowed Interests, liens, charges and other rights of creditors or equity holders arising prior to the Effective Date. On and after the Effective Date, the Reorganized Debtors may operate their respective businesses, and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules and the Bankruptcy Court, except as otherwise provided herein or in the CONFIRMATION ORDER. Without limiting the foregoing, each Reorganized Debtor may pay the charges that it incurs on or after the Effective Date for professionals' fees, disbursements, and expenses without application to the Bankruptcy Court. 14.2 DISCHARGE Except as provided in the Plan or in the CONFIRMATION ORDER, the rights afforded under the Plan and treatment of Claims and Interests under the Plan will be in exchange for, and in complete satisfaction, discharge and release of all Claims and termination of all Interests of any nature whatsoever, known or unknown, arising on or before the Effective Date, including any interest accrued on Claims from the Petition Date. Except as provided in the Plan or in the CONFIRMATION ORDER, Confirmation will as of the Effective Date and immediately after cancellation of the Old Common Stock: (a) discharge the Debtors from all Claims or other debts that arose on or before the Effective Date, and all debts of the kind specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a proof of Claim based on such debt is filed or deemed filed pursuant to section 501 of the Bankruptcy Code, (ii) a Claim based on such debt is allowed pursuant to section 502 of the Bankruptcy Code, or (iii) the Holder of a Claim based on such debt has accepted the Plan; and (b) terminate all Interests and other rights of equity security holders in the Debtors. In accordance with the foregoing, except as provided in the Plan or the CONFIRMATION ORDER, the CONFIRMATION ORDER will be a judicial determination, as of the Effective Date and immediately after the cancellation of the Old Common Stock and the issuance of the New Mining Stock, of a discharge of all Claims and other debts and liabilities against the Debtors and a termination of all Interests and other rights of equity security holders in the Debtors, pursuant to sections 524 and 1141 of the Bankruptcy Code, and such discharge will void any judgment obtained against a Debtor at any time, to the extent that such judgment relates to a discharge of the Claim or terminated Interest. 14.3 INJUNCTIONS 14.3.1 Except as provided in the Plan or the CONFIRMATION ORDER, as of the Effective Date, all entities that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder of a Debtor that is terminated pursuant to the terms of the Plan will be permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (a) commencing or continuing in any manner any action or other proceeding against the Debtors, the Reorganized Debtors or their respective 40 49 property other than to enforce any right pursuant to the Plan to a distribution; (b) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors, the Reorganized Debtors or their respective property, other than as permitted pursuant to subsection "(a)" above; (c) creating, perfecting, or enforcing any lien or encumbrance against the Debtors, the Reorganized Debtors or their respective property; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors or the Reorganized Debtors; and (e) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of the Plan. 14.3.2 As of the Effective Date, all entities that have held, currently hold or may hold any Claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities that are released pursuant to the Plan will be permanently enjoined from taking any of the following actions against any released entity or its property on account of such released Claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities: (a) commencing or continuing in any manner or other proceedings; (b) enforcing, attaching, collecting or recovering in any manner, any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to any released entity; and (e) commencing or continuing any action, in any manner, in any place that does not comply with, or is inconsistent with, the provisions of the Plan. 14.3.3 By accepting distributions pursuant to the Plan, each Holder of an Allowed Claim receiving distributions pursuant to the Plan will be deemed to have specifically consented to the injunctions set forth in Section 14.3. 14.3.4 Notwithstanding any provision in the Plan to the contrary, the confirmation of this Plan does not affect the right of the United States of America to affect setoff or recoupment. Notwithstanding the foregoing, nothing herein shall be deemed to limit or modify any of the terms or conditions of the Agreement in Principle or the New Consent Decree, including those terms relating to covenants not to sue. 14.3.5 Nothing in this Article XIV shall limit or impair the enforceability of the reservation of rights of the Environmental Regulators and the Tribe in the New Consent Decree. 14.4 EXCULPATION AND RELEASES In consideration for, among other things, the promises and obligations of the Debtors and the Reorganized Debtors under the Plan and under the agreements among Mining, Metals, Argentina, the Elliott Group, and the Stonehill Group: 14.4.1 As of the Effective Date, in consideration for the obligations of the Debtors and Reorganized Debtors under the Plan, the New Mining Stock and other contracts, instruments, releases, agreements or documents to be entered into or delivered in connection with the Plan: (i) each Holder of a Claim or Interest that votes in favor of the Plan and (ii) to the fullest extent permissible under applicable law, as such law may be extended or interpreted subsequent to the Effective Date, each entity that has held, holds or may hold a Claim or Interest or at any time was a creditor or stockholder of any Debtors and that does not vote on the Plan or votes against the Plan, will be deemed to forever release, waive and discharge all Claims (including derivative Claims), obligations, suits, judgments, damages, demands, debts, rights, causes of action and liabilities (other than the right to enforce the Debtors' or the Reorganized Debtors' obligations under the Plan and the contracts, instruments, releases, agreements and documents delivered thereunder), or their liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising in law, equity or otherwise, that are based in whole or in part 41 50 on any act, omission, transaction or other occurrence taking place on or prior to the Effective Date in anyway relating to a Debtor, the Reorganization Cases or the Plan that such entity has, had or may have, against the Debtors, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee, or any of them, their Estates, all Persons or entities claiming through them, and any of their respective present or former directors, officers, employees, attorneys, accountants, underwriters, investment bankers, financial advisors and agents, acting in such capacity (which release will be in addition to the discharge of Claims and termination of Interests provided herein and under the CONFIRMATION ORDER and the Bankruptcy Code). 14.4.2 As of and on the Effective Date, the Debtors, their Estates, and all Persons claiming through them, and any of their successors, assigns or representatives shall be deemed to have waived, released and discharged all rights or claims, whether based upon tort, fraud, contract or otherwise, and whether arising out of the Debtors' restructuring, DIP Facility, Exit Financing Facility or otherwise, which they possessed or may possess prior to the Effective Date against the Debtors, their Estates, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee, their respective present directors, officers, employees, agents, representatives and attorneys and any of their successors or assigns except as otherwise provided in the Plan or the CONFIRMATION ORDER. 14.4.3 The Debtors, the Reorganized Debtors, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee and their respective members, officers, directors, employees, representatives, counsel or agents shall be deemed released by each of them against the other of or from any and all claims, obligations, rights, causes of action and liabilities for any act or omission in connection with, or arising out of, the Debtors' Chapter 11 cases, including without limiting the generality of the foregoing, the Disclosure Statement, the pursuit of approval of the Disclosure Statement, the pursuit of Confirmation of the Plan, the consummation of the Plan or the administration of the Plan or the property to be distributed under the Plan, except for willful misconduct, and all such Persons, in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan and under the Bankruptcy Code. 14.4.4 Notwithstanding any provision in the Plan to the contrary, the United States of America shall not be bound by exculpations or releases granted to any non-Debtors. Notwithstanding the foregoing, nothing herein shall be deemed to limit or modify any of the terms and conditions of the Agreement in Principle or the New Consent Decree, including those terms relating to covenants not to sue. 14.4.5 The Environmental Regulators and the Tribe shall not be subject to the release provisions of this Plan; provided, however, that the Environmental Regulators and the Tribe shall be subject to the terms and conditions to be set forth in the New Consent Decree which will incorporate the terms and conditions of the Agreement in Principle, including the mutual covenant not to sue set forth in section 3 thereof. 14.5 RIGHTS OF ACTION Any rights or causes of action accruing to the Debtors or the Reorganized Debtors including, without limitation, those arising under or pursuant to the Bankruptcy Code, shall remain assets of the Reorganized Debtors. The Reorganized Debtors, or any of them, may pursue, abandon, settle or release all reserved rights of action, as appropriate, in accordance with what is in the best interests, and for the benefit of, the Reorganized Debtors. Any distributions provided for in the Plan and the allowance of any Claim for the purpose of voting on the Plan is and shall be without prejudice to the rights of the Reorganized Debtors to pursue and prosecute any reserved rights of action including, without limitation, those arising under or pursuant to the Bankruptcy Code. 42 51 ARTICLE XV MODIFICATION OF THE PLAN 15.1 The Debtors, with the express written the consent of the other Plan Proponents, may alter, amend, or modify the Plan under section 1127 of the Bankruptcy Code at any time prior to the Confirmation Date. After the Confirmation Date, the Debtors or the Reorganized Debtors may institute proceedings in the Bankruptcy Court, as appropriate, to remedy any defect or omission or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the CONFIRMATION ORDER, or to address such matters as may be necessary to carry out the purposes and effects of the Plan. ARTICLE XVI RETENTION OF JURISDICTION 16.1 The Bankruptcy Court shall retain and shall have exclusive jurisdiction over the Reorganization Cases and any and all proceedings therein including, without limitation, in respect of the following: 16.1.1 To determine any and all objections to the allowance of Claims, including, but not limited, allowing, disallowing, determining, liquidating, classifying, estimating or establishing the priority or secured or unsecured status of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim, and the resolution of any objection to the allowance, priority or classification of Claims or Interests; 16.1.2 To determine any and all motions to estimate Claims, at any time, regardless of whether the Claim to be estimated is the subject of a pending objection, a pending appeal, or otherwise; 16.1.3 To determine any and all pending applications for the assumption or rejection of executory contracts or unexpired leases to which any of the Debtors is a party or with respect to which any of the Debtors may be liable, and to hear and determine, and if need be to liquidate, any and all Claims arising therefrom, including any Cure Claims; 16.1.4 To determine any and all applications, adversary proceedings and contested or litigated matters that may be pending on the Effective Date; 16.1.5 To consider any modifications of the Plan, to cure any defect or omission, or reconcile any inconsistency in the Plan or in any order of the Bankruptcy Court; 16.1.6 To determine all controversies, suits and disputes that may arise in connection with the interpretation or consummation of the Plan or the obligations under the Plan of the Debtors or the Reorganized Debtors; 16.1.7 To issue such orders in aid of execution of the Plan to the extent authorized by the Bankruptcy Code; 16.1.8 To determine such other matters as may be set forth in the CONFIRMATION ORDER or as may arise in connection with the Plan or the CONFIRMATION ORDER; and 16.1.9 To determine any and all applications for allowances of compensation and reimbursement of expenses and any other fees and expenses authorized to be paid or reimbursed under the Bankruptcy Code or the Plan. 43 52 16.1.10 Enter such orders as may be necessary or appropriate to implement or consummate the provisions of the Plan and all contracts, instruments, releases and other agreements or documents entered into or delivered in connection with the Plan, the Disclosure Statement or the CONFIRMATION ORDER; 16.1.11 Resolve any cases, controversies, suits or disputes that may arise in connection with consummation, interpretation or enforcement of the Plan or any contract, instrument, release or other agreement or document that is entered into or delivered to the Plan; 16.1.12 Modify the Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code; modify the Disclosure Statement, the CONFIRMATION ORDER or any contract, instrument, release or other agreement or document entered into or delivered in connection with the Plan, the Disclosure Statement or the CONFIRMATION ORDER or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court Order, the Plan, the Disclosure Statement, the CONFIRMATION ORDER or any contract, instrument, release or other agreement or document entered into, delivered or created in connection with the Plan, the Disclosure Statement or the CONFIRMATION ORDER, in such a manner as may be necessary or appropriate to consummate the Plan; 16.1.13 To issue injunctions, enforce the injunctions contained in the Plan and the CONFIRMATION ORDER enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation of the Plan or the CONFIRMATION ORDER; 16.1.14 To enter and implement such orders as are necessary or appropriate if the CONFIRMATION ORDER is for any reason or any respect modified, stayed, reversed, revoked or vacated or distributions pursuant to the Plan are enjoined or stayed; 16.1.15 Determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the CONFIRMATION ORDER or any contract, instrument, release or other agreement or document entered into or delivered in connection with the Plan, the Disclosure Statement or the CONFIRMATION ORDER; 16.1.16 To enter a final decree closing the Debtors' Reorganization Cases. 16.1.17 To determine matters concerning state, local, and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code, including any Disputed Claims or Taxes. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 PAYMENT OF STATUTORY FEES All fees payable pursuant to section 1930 of Title 28 of the United States Code, as determined by the Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid in cash on or before the Effective Date. 17.2 COMMITTEES The appointment and existence of any and all other statutory committees in the Debtors' Reorganization Cases shall terminate on the Effective Date. Any professionals retained by any such committees and the members thereof will not be entitled to assert any claims for payment of compensation 44 53 or reimbursement of expenses for any services rendered or expenses incurred after the Effective Date, except in connection with any appeal of the CONFIRMATION ORDER. 17.3 BINDING EFFECT The Plan shall be binding upon and inure to the benefit of the Debtors, the Reorganized Debtors, the Holders of Claims and Allowed Interests and their respective successors and assigns. 17.4 NOTICES Any notice to the Debtors or the Reorganized Debtors required or permitted to be provided under the Plan or the Disclosure Statement shall be in writing and shall be served by either (i) certified mail, return receipt requested, postage prepaid, (ii) hand delivery, or (iii) reputable overnight delivery service, freight prepaid, to be addressed as follows: SUNSHINE MINING AND REFINING COMPANY SUNSHINE ARGENTINA, INC. SUNSHINE PRECIOUS METALS, INC. SUNSHINE EXPLORATION, INC. ARGENTINA NEWCO, INC; Attn: William W. Davis 5956 Sherry Lane, Suite 1621 Dallas, TX 75225 (214) 265-1377 --and-- RICHARDS, LAYTON & FINGER, P.A. Attn: Daniel J. DeFranceschi, Esq. One Rodney Square Wilmington, Delaware 19899 (302) 302-658-6541 with copies to: KASOWITZ, BENSON, TORRES & FRIEDMAN Attn: David S. Rosner, Esq. 1633 Broadway New York, New York 10019 (212) 506-1700 --and-- KRAMER, LEVEN, NAFTALIS FRANKEL LLP Attn: Thomas Moers Mayer 919 Third Avenue New York, New York 10022 (212) 715-9169 45 54 17.5 GOVERNING LAW Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and the Bankruptcy Rules) the laws of the State of Delaware shall govern the construction and implementation of the Plan and, unless otherwise stated therein, any agreements, documents, and instruments executed in connection with the Plan. 17.6 SATURDAY, SUNDAY, OR LEGAL HOLIDAY If any payment, distribution or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment, distribution or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date. 17.7 FILING OF ADDITIONAL DOCUMENTS The Debtors or the Reorganized Debtors shall file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. 17.8 PLAN CONTROLS To the extent the Plan is inconsistent with the Disclosure Statement or any other document, agreement, pleading or understanding, other than the CONFIRMATION ORDER the provisions of the Plan shall be controlling. 17.9 RESERVATION OF RIGHTS If the Plan is not confirmed by the Bankruptcy Court or any other court of competent jurisdiction for any reason, the rights of all parties in interest in the Debtors' Reorganization Cases are and shall be reserved in full. Any concession reflected or provision contained herein, if any, is made for purposes of the Plan only, and if the Plan does not become effective, no party in interest in the Debtors' Reorganization Cases shall be bound or deemed prejudiced by any such concession. 17.10 SEVERABILITY OF PLAN PROVISIONS If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provisions to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision then will be applicable as altered or interpreted; provided such alteration or interpretation must be in form and substance acceptable to all of the Plan Proponents. Notwithstanding any such holding alteration or interpretations, the remainder and the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration or interpretation. The CONFIRMATION ORDER will constitute a judicial determination and will provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms. 46 55 ARTICLE XVIII THE ENVIRONMENTAL SETTLEMENT 18.1 BACKGROUND OF THE ENVIRONMENTAL SETTLEMENT The Debtors, the Elliott Group, the Stonehill Group, the Environmental Regulators and the Tribe have agreed in principle to a settlement of various issues and disputes. The terms of that agreement are embodied in the Agreement in Principle, a copy of which is attached as Exhibit A. The Agreement in Principle arises in part from the NRD Actions pending in the Idaho District Court. The NRD Actions were brought by the Environmental Regulators and the Tribe for damages to natural resources and to recover certain response costs in the area of Idaho commonly known as the Coeur d'Alene Basin. The Agreement in Principle is also related to and arises from the 1994 Consent Decree between the Environmental Regulators and other parties, which obligated Mining and Metals, among others, to perform certain remediation work in the populated areas of the Bunker Hill Superfund site included in the Coeur d'Alene Basin. The Environmental Regulators and the Tribe, for their part, and the Debtors, the Elliott Group and the Stonehill Group, for theirs, disagree as to whether the claims of the Environmental Regulators and the Tribe are dischargeable in these chapter 11 cases. The Agreement in Principle is intended to resolve that dispute, among others. 18.2 THE TERMS OF THE ENVIRONMENTAL SETTLEMENT 18.2.1 The terms and conditions of the Agreement In Principle are incorporated herein by reference as if fully set forth. To the extent there is any conflict between this Article XVIII and the Agreement In Principle, the terms of the Agreement In Principle shall control. 18.2.2 Any Claims of the Environmental Regulators and the Tribe shall be treated in accordance with the New Consent Decree and shall not be included or treated under any other Class of Claims or Interests hereunder. 18.2.3 The terms and conditions of the Agreement In Principle will be set forth and contained in the New Consent Decree among the Environmental Regulators, the Tribe, and the Debtors, as well as in a corresponding amendment to the 1994 Consent Decree. Agreement In Principle Section 1. 18.2.4 The Environmental Regulators and the Tribe collectively will receive from Reorganized Mining, on the Effective Date, the Warrants, which permit the Environmental Regulators and the Tribe to purchase 9.95% of New Mining Stock (i) with a strike price for such Warrants equal to the strike price of the Debtors' management options based on an equity value of Reorganized Mining of $33.0 million, (ii) with a cashless exercise feature, (iii) that terminate on the tenth (10th) anniversary of the Effective Date, and (iv) that are exempt from initial registration pursuant to 11 U.S.C. Section 1145. The Warrants are described in greater detail in section 2 of the Agreement In Principle. 18.2.5 Reorganized Metals will make quarterly payments equal to a percentage of the Net Smelter Returns from all mining by Reorganized Metals anywhere in the United States on properties in which Metals had an interest at the time of the Agreement in Principle and within one mile of the current boundaries of the Sunshine Mine as further described in section 2.b of the Agreement In Principle. 18.2.6 Reorganized Metals will also transfer its interest in certain real property (the "Scheduled Real Property"); to a trustee to be designated by the Government and the Tribe, subject to certain continuing access and mining rights retained by Metals. Agreement In Principle Section 2c. 47 56 18.2.7 Reorganized Metals will complete certain environmental cleanup work as described in section 2d of the Agreement In Principle. 18.2.8 The Environmental Regulators and the Tribe shall covenant in the New Consent Decree not to sue the Debtors or the Reorganized Debtors under CERCLA Sections 106 and 107, RCRA Section 7003, and Clean Water Act Section 311(f) with respect to the Facility, except as provided in paragraph 4(a) of the Agreement In Principle. Except as provided in paragraph 4(b) of the Agreement in Principle, the Debtors and the Reorganized Debtors will covenant not to sue the United States of America (including all of its departments, agencies and instrumentalities) and the Tribe for contribution or response costs, or reimbursement from the Superfund established under CERCLA with respect to the Facility, or any claims arising out of response activities at the Facility. Upon approval of the New Consent Decree by the Idaho District Court, the New Consent Decree shall constitute a final judgment resolving all of the claims against Mining and Metals in the NRD Actions; provided that any party may apply to the Idaho District Court for the purpose of enforcing the terms of the New Consent Decree, and the Environmental Regulators' and the Tribe's rights against Reorganized Mining and Reorganized Metals with respect to the claims and causes of action in the NRD Actions shall be limited to enforcement of, the exercise of reservations of rights in, and the satisfaction of conditions in, the New Consent Decree. Agreement In Principle Section 3. The Environmental Regulators' and the Tribe's covenants not to sue shall not apply to (i) liability based on a failure by the Reorganized Debtors to meet a requirement under the New Consent Decree, (ii) criminal liability, (iii) liability of the Reorganized Debtors within the actual boundaries of real property that they own or operate after the effective date of the New Consent Decree and the Effective Date of the Plan, (iv) liability for the actual disposal or discharge of hazardous waste or material by the Reorganized Debtors at the Facility after the effective date of the New Consent Decree and the Effective Date of the Plan; provided that the Environmental Regulators and the Tribe may use their exceptions not to sue in (iii) and (iv) above only to pursue causes of action against any of the Reorganized Debtors, to the extent that either may be an owner or operator of the property or facility giving rise to the liability, and, so long as the Reorganized Debtors remain separate legal entities, the Environmental Regulators and the Tribe will not assert a cause of action relying on these exceptions against any of the Reorganized Debtors based on a theory that it should be consolidated with or is the "alter ego" of the entity that owns or operates the relevant property or facility or on a theory of "piercing the veil" from the owner or operator to such other Reorganized Debtor. Agreement In Principle Section 4(b). Finally, the New Consent Decree will provide that the Debtors and the Reorganized Debtors will be entitled to protection from certain contribution actions, subject to the terms and conditions set forth in section 5 of the Agreement In Principle. 18.2.9 The incorporation of the terms of the Agreement In Principle into the New Consent Decree is a condition to the effectiveness of the Plan, and such condition may not be waived without the consent of the Environmental Regulators. Agreement In Principle Section 6. 18.2.10 This Article XVIII, and any and all other modifications to the Plan pursuant to the Agreement In Principle, shall become null and void if this Plan as modified by the Agreement In Principle is not approved finally by the Bankruptcy Court and if the New Consent Decree is not finally approved by the relevant authorities and by the Idaho District Court. 18.2.11 In the event that a New Consent Decree incorporating the terms of the Agreement In Principle is not approved by the Idaho District Court, any order confirming this Plan will be vacated, the Agreement In Principle will be null and void, and each of the Plan Proponents, the Environmental Regulators, and the Tribe will be returned to the positions and vested with the rights each had prior to the entry into the Agreement In Principle. 48 57 18.2.12 The New Consent Decree is subject to public comment and approval by the Idaho District Court, as provided in section 7 of the Agreement In Principle. 18.2.13 The Agreement In Principle is expressly subject to the negotiation and approval by the parties thereto of a final settlement agreement in the form of a consent decree and will include additional terms and details, and is not in itself binding or enforceable. Agreement In Principle, Section 8. Dated: December 4, 2000 Respectfully submitted, Wilmington, Delaware SUNSHINE MINING AND REFINING COMPANY By: /s/ WILLIAM W. DAVIS -------------------------------------- William W. Davis Its: -------------------------------------- Executive Vice President and Chief Financial Officer 877 W. Main Street Boise, Idaho 83702 (208) 345-0660 SUNSHINE ARGENTINA, INC. By: /s/ WILLIAM W. DAVIS -------------------------------------- William W. Davis Its: -------------------------------------- Executive Vice President and Chief Financial Officer 877 W. Main Street Boise, Idaho 83702 (208) 345-0660 SUNSHINE PRECIOUS METALS, INC. By: /s/ WILLIAM W. DAVIS -------------------------------------- William W. Davis Its: -------------------------------------- Executive Vice President and Chief Financial Officer 877 W. Main Street Boise, Idaho 83702 (208) 345-0660 49 58 SUNSHINE EXPLORATION, INC. By: /s/ WILLIAM W. DAVIS -------------------------------------- William W. Davis Its: -------------------------------------- Executive Vice President and Chief Financial Officer 877 W. Main Street Boise, Idaho 83702 (208) 345-0660 THE LIVERPOOL LIMITED PARTNERSHIP By: Liverpool Associates, Ltd. General Partner By: /s/ PAUL E. SINGER -------------------------------------- Paul E. Singer Its: -------------------------------------- President WESTGATE INTERNATIONAL, L.P. By: Elliott International Capital Advisors, Inc. Attorney-in-Fact By: /s/ PAUL E. SINGER -------------------------------------- Paul E. Singer Its: -------------------------------------- President STONEHILL INSTITUTIONAL PARTNERS, L.P. By: /s/ JOHN MOTULSKY -------------------------------------- John Motulsky Its: -------------------------------------- General Partner STONEHILL OFFSHORE PARTNERS LIMITED By: Stonehill Advisors LLC By: /s/ JOHN MOTULSKY -------------------------------------- John Motulsky Its: -------------------------------------- Managing Member 50 59 EXHIBIT A 60 SETTLEMENT TERM SHEET AGREEMENT IN PRINCIPLE The parties (collectively, the "Parties") to this Agreement in Principle among Sunshine Mining and Refining Company ("Mining"), Sunshine Precious Metals, Inc. ("Metals"), Sunshine Exploration, Inc. ("Exploration"), and Sunshine Argentina, Inc. ("Argentina" and, together with Mining, Metals, and Exploration, "Sunshine" or the "Debtors"), the United States on behalf of United States Environmental Protection Agency ("EPA"), the United States Department of the Interior ("DOI"), and the United States Department of Agriculture ("Agriculture") (collectively, the "Government", the Coeur d'Alene Tribe (the "Tribe"), the Elliott Group,(1) and the Stonehill Group, will seek to embody the terms of this Agreement in Principle in a consent decree (the "New Consent Decree") that will be submitted for the approval of the Assistant Attorney General of the United States Department of Justice, Environment and Natural Resources Division, authorized officials of EPA, DOI, Agriculture, and the other Parties to this Agreement in Principle. RECITALS WHEREAS, Mining and Metals are defendants in litigation pending in the United States District Court for the District of Idaho (the "Idaho District Court"), Case Numbers CIV96-O122-NEJL (collectively, the "NRD Actions"). The NRD Actions were brought by the Government and the Tribe for damages to natural resources and ro recover certain response costs in the area of Idaho commonly known as the Coeur d'Alene Basin. WHEREAS, Mining and Metals are parties to a consent decree (USDC CIV-94-0206-N-HLR) (the "1994 Consent Decree") which was approved by the Idaho District Court on November 17, 1994 between the Government and other parties obligating Mining and Metals, among others, - ---------- (1) Capitalized terms not otherwise defined in this Agreement in Principle shall have the meanings ascribed to those terms in the Debtors Second Amended Joint Chapter 11 Plan of Reorganization dated as of September 29, 2000 (the "Reorganization Plan"). 61 to perform certain remediation work in the populated areas of the Bunker Hill Superfund site included in the Coeur d'Alene Basin. WHEREAS, Mining, Metals, Exploration, and Argentina, each have filed a case under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") to reorganize their affairs and in connection therewith to discharge certain liabilities among which are the existing and alleged obligations to the Government and the Tribe as set forth above. WHEREAS, as set forth more fully in the Second Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code for the Joint Plan of Reorganization of Sunshine Mining and Refining Company and its Debtor Subsidiaries Dated October 2, 2000 (Docket No. 94) filed by the Debtors with the Delaware Bankruptcy Court, the Government and the Tribe, on the one hand, and the Debtors, on the other hand, disagree as to the dischargeability of certain of these environmental liabilities and/or obligations. WHEREAS, the Elliott Group and the Stonehill Group as principal creditors of Mining, Metals, Exploration, and Argentina are co-proponents of the Debtors' Reorganization Plan and in such capacity support this Agreement in Principle. NOW, THEREFORE, this 17th day of November, 2000, the terms and conditions of this Agreement in principle are as follows: 1. AGREEMENT TO ENTER INTO NEW CONSENT DECREE AND AMENDMENT TO 1994 CONSENT DECREE. The terms and conditions of this Agreement in Principle will be set forth and contained in the New Consent Decree to be negotiated by the Parties and entered in the NRD Actions, as well as in a corresponding amendment to the 1994 Consent Decree. -2- 62 2. CONSIDERATION. a. Warrants. The Government and the Tribe collectively will receive, on the effective date of the Reorganization Plan, warrants (the "Warrants") to purchase 9.95% of Reorganized Mining's common stock (i) with a strike price for such Warrants equal to the strike price of the management options provided under the Reorganization Plan based on an equity value of Reorganized Mining of $33.0 million,(2) (ii) with a cashless exercise feature, (iii) that terminate on the tenth (10th) anniversary of the effective date of the Reorganization Plan, (iv) that are exempt from initial registration pursuant to 11 U.S.C. Section 1145, (v) that are freely transferrable to any other entity at any time, and (vi) that are subject to ordinary terms and conditions, including standard anti-dilution language, of warrants of this nature reasonably acceptable to the Plan Proponents, the Government, and the Tribe. b. Net Smelter Return Payment. Reorganized Metals will pay to the entity or entities specified in the New Consent Decree quarterly payment, payable on or before the thirtieth (30th) day after the conclusion of each quarter, equal to a percentage of the Net Smelter Returns (the "NSR") from all mining by Reorganized Metals anywhere in the United States on properties in which Metals currently has an interest and all mining by Sunshine from the Sunshine Mine and within one-mile of the current boundaries of the Sunshine - ---------- (2) By way of example only, if Reorganized Mining has 10 million shares of common stock outstanding, the strike price of the Warrants would be $3.30 each. -3- 63 Mine or that property depicted on Exhibit B hereto, in accordance with the following (the "NSR Interest"): Silver Price NSR Average Royalty ------------ ------- $0-5.99 0% $6.00-$6.99 1% $7.00-$7.49 2% $7.50-$7.99 2.5% $8.00-$8.49 3% $8.50-$8.99 4% $9.00-$9.49 5% $9.50-$9.99 6% $10.00 and over 7% Reorganized Metals will record the NSR Interest by a royalty deed (substantially in the form attached as Exhibit A) as an encumbrance on the Sunshine Mine. Any other royalty payment obligations that may spring into effect pursuant to this paragraph 2.b will be similarly recorded when, and if, Reorganized Metals acquires additional properties in the United States. The New Consent Decree will provide that (i) Reorganized Metals may sell the Sunshine Mine only subject to the NSR Interest and (ii) the United States and Tribe will negotiate in good faith with such prospective purchaser to cash out the NSR Interest if the purchaser or Sunshine or affiliate so requests; provided, that, the decision to accept such cash out will remain in the sole discretion of the holder of the NSR Interest. c. Conveyance of Land: This Agreement In Principle is premised upon the assumption that, and therefore if it is to be implemented requires that, commencing on the date the Agreement In Principle is signed, Sunshine will preserve the real property identified on Exhibit C (the "Scheduled Real -4- 64 Property") in its existing condition and will not conduct any timber-cutting or other activities that would significantly impair the Scheduled Real Property's ecological value. Within thirty (30) days after the Effective Date, as defined in paragraph 8 hereof, Mining and/or Metals, as appropriate, will convey to an independent trustee (the Property Trustee") all of its right, title, and interest in the Scheduled Real Property free and clear of all liens, claims and encumbrances (except for those permitted liens, claims or encumbrances that have been disclosed to and accepted by the United States and the Tribe). The Property Trustee will be obligated to hold such title for the benefit of Mining, Metals, the United States, and the Tribe, and to convey title in accordance with joint instructions from the United States and the Tribe who will instruct the Property Trustee as to such conveyance within eighteen (18) months (the "Conveyance Time") of the Effective Date; provided that (i) Mining and/or Metals will retain the mineral rights (the "Mineral Rights") to the Scheduled Real Property, subject to a covenant barring Mining or Metals from disturbing the surface of the Scheduled Real Property, (ii) Mining and/or Metals will retain access rights (the "Access Rights" and together with the Mineral Rights, the "Continuing Rights") to the Scheduled Real Property for the purpose of utilizing the Mineral Rights, and (iii) the Property Trustee will convey title to each of the Scheduled Real Properties to the United States and the Tribe as and when they jointly direct; or, if the United States and the Tribe so direct or the Conveyance Time has expired without direction to the Property Trustee from the United States and the Tribe, the Property -5- 65 Trustee will re-convey title in one or more of the parcels of the Scheduled Real Properties (the "Reconveyed Properties") to Mining or Metals, as appropriate, subject to a conservation easement that prevents uses of the Reconveyed Property that may impair the ecological value of such Reconveyed Property. The reasonable fees and expenses of the Property Trustee incurred in connection with the duties of such trustee as described herein, shall be paid by Metals during the Conveyance Time. The Elliott Group and the Stonehill Group agree to release the Scheduled Real Property, other than with respect to the Continuing Rights, from the mortgage securing their debtor-in-possession financing and to subordinate their mortgage to the NSR Interest. d. Cleanup Work: Reorganized Metals shall conduct the following cleanup work at the Silver Summit Mine Site (also known as the Consil Mine Site) (the "SSM Site"): (i) testing and characterization of the barrels, drums, any other containers, and transformers at the SSM Site; (ii) if hazardous substances or physical hazards are found at the SSM Site prepare and submit to EPA for review and approval a plan to address such hazardous substances or physical hazards, and implement the approved plan; and (c) restrict access to the SSM Site from the trail being constructed on the former Union Pacific railroad line, by such measures as securing buildings and installing fencing. 3. COVENANTS NOT TO SUE. The New Consent Decree will contain (a) except as provided in paragraph 4(a) of this Agreement in Principle a covenant by the United States (on behalf the EPA, DOI and Agriculture) -6- 66 and by the Tribe not to sue Sunshine under CERCLA Sections 106 and 107, RCRA Section 7003, and Clean Water Act Section 311(f) with respect to that facility (the "Facility") which is the subject of the Second Amended Complaint in the NRD Action-CIV-96-0122-N-EJL, (b) except as provided in paragraph 4(b), Sunshine's covenant not to sue the United States (including all of its departments, agencies and instrumentalities) and the Tribe for contribution or response costs, or reimbursement from the Superfund established under CERCLA with respect to the Facility, or any claims arising out of response activities at the Facility. Upon approval of the New Consent Decree by the Idaho District Court, the New Consent Decree shall constitute a final judgment resolving all of the claims against Sunshine in the NRD Actions; provided that any party may apply to the Idaho District Court for the purpose of enforcing the terms of the New Consent Decree, and the United States' and the Tribes' rights against Sunshine with respect to the claims and causes of action in the NRD Actions shall be limited to enforcement of, the exercise of reservations of rights in, and the satisfaction of conditions in the New Consent Decree. 4. RESERVATIONS AND PASS THROUGH. (a) The United States' and the Tribe's covenants not to sue, to be set forth in the New Consent Decree will not apply to, and the United States and Tribe will reserve their rights with respect to: (i) liability based on a failure by the Debtors to meet a requirement of the New Consent Decree, (ii) criminal liability, (iii) liability of Sunshine within the actual boundaries of real property it owns or operates (the "Owned/Operated Property") after the effective date of the New Consent Decree and the Reorganization Plan, and (iv) liability for the actual disposal or discharge of hazardous waste material by Sunshine at the Facility after the effective date of the New Consent Decree and the Reorganization Plan; provided that the United States and the Tribe may use the exceptions to their covenants not to sue in (iii) and (iv) above only to pursue causes of action against a Sunshine entity. -7- 67 that is an owner or operator of the property or facility giving rise to the liability, and, so long as the Sunshine entities remain separate legal entities, the United States and the Tribe will not assert a cause of action relying on these exceptions set forth in (iii) and (iv) above against any Sunshine entity based on a theory that it should be consolidated with or is the "alter ego" of the entity that owns or operates the relevant property or facility or on a theory of "piercing the veil" from the owner or operator to such other Sunshine entity. (b) Sunshine's covenant not to sue to be set forth in the New Consent Decree will not apply in the event that the United States or the Tribe brings a cause of action against Sunshine pursuant to their reservations of rights in the New Consent Decree, but only to the extent arising from the same cause of action asserted by the United States or the Tribe pursuant to those reservations. 5. CONTRIBUTION PROTECTION. The New Consent Decree will provide that Sunshine is entitled to protection from contribution actions or claims as provided by CERCLA Section 113(f)(2) for matters addressed by the New Consent Decree. Matters addressed by the New Consent Decree for purposes of contribution protection will include all claims or causes of action under CERCLA Sections 106 and 107, RCRA Section 7003, and Clean Water Act Section 311 for injunctive relief, response costs and natural resource damages related to the Facility, except that contribution protection will not include any claim by a responsible party for money that it has actually expended prior to August 23, 2000, pursuant to the 1994 Consent Decree. Additionally, to the extent that (a) CERCLA Section 113(f)(2) does not entitle Sunshine to contribution protection related to the Tribe's claims and causes of action against Sunshine, and/or (b) the claims and causes of action of the United States in CIV96-0122-N-EJL do not overlap with the claims and causes of action of the Tribe in CIV9I-0342-N-EJL, the Tribe agrees as follows: in the event the Tribe obtains a judgment of joint and several liability against or settles with any -8- 68 defendant or other parties which may be brought into CIV91-0342-N-EJL as defendants or third parties, then the New Consent Decree shall operate to and will release Sunshine from any duty to contribute any pro rata share of any such judgment or settlement. Accordingly, with respect to the matters addressed in the immediately prior sentence, Sunshine will not be required to pay any amount in contribution, indemnification or under any other theory of recovery to any other parties: 6. PLAN MODIFICATION AND CONFIRMATION. The Plan Proponents will modify the Reorganization Plan (i) to include the terms of this Agreement In Principle, (ii) to add a condition to the effectiveness of the Reorganization Plan requiring that the terms of this Agreement In Principle be incorporated into the New Consent Decree and approved by the Idaho District Court (iii) to provide that such condition may not be waived without the consent of the United States, and (iv) to provide that the foregoing additions and the Reorganization Plan become null and void if the Reorganization Plan as modified by this Agreement In Principle is not approved finally by the Bankruptcy Court and if the New Consent Decree is not finally approved by the relevant authorities. The United States and the Tribe consent to confirmation of the Reorganization Plan as modified by this Agreement In Principle and each will vote in favor of the Reorganization Plan as modified by this Agreement In Principle provided that the Government will not be obligated to take a different position from any other federal agency. Should the condition to the effective date added to the Reorganization Plan in accordance with this paragraph of this Agreement In Principle not be satisfied, (i) the order confirming the Reorganization Plan will be vacated, (ii) this Agreement In Principle will be null and void, and (iii) each of the Plan Proponents, the Government, and the Tribe will be returned to the position and vested with the rights each had prior to entry into this Agreement In Principle and/or any documents or agreements arising from this -9- 69 Agreement In Principle, and this Agreement In Principle may not be used as an admission of any liabilities by any of the Parties. 7. PUBLIC COMMENT AND COURT APPROVAL AND MODIFICATION OF 1994 CONSENT DECREE. The New Consent Decree will be lodged with the Idaho District Court and submitted for public comment for fifteen (15) days prior to court approval. The New Consent Decree will provide and be on the condition that the United States reserves the right to withdraw or withhold its consent if the public comments regarding the New Consent Decree disclose factors or considerations which indicate that the New Consent Decree is inappropriate, improper, and inadequate. The New Consent Decree will provide that all other signatories thereto consent to entry of the New Consent Decree without further notice, except that the New Consent Decree shall not become effective until Sunshine's participation in the New Consent Decree is approved by the Bankruptcy Court. The New Consent Decree will provide and be on the condition that the Parties will seek to obtain approval of the Idaho District Court of modification of the 1994 Consent Decree, in the Idaho District Court as necessary to be consistent with the terms of this Agreement In Principle, including terminating Metals' and Mining's obligations to perform or finance future response activities at the Bunker Hill Superfund Site under the 1994 Consent Decree. 8. LIMITED NATURE OF THIS AGREEMENT IN PRINCIPLE. This Agreement In Principle is expressly subject to the negotiation and approval by the Parties of a final settlement agreement in the form a consent decree and will include additional terms and details, and is not in itself binding or enforceable. The Parties contemplate that the New Consent Decree will be submitted to the Idaho District Court as a settlement in United States v. ASARCO, Civil Actida Nos. 96-0122-N-EJL. and 91-0342-N-ELJ, for approval after public notice and an opportunity for public comment. As used in this Agreement In Principle, the "Effective Date" is the -10- 70 date of approval of the New Consent Decree by the Idaho District Court. This Agreement in Principle is not a binding contract and may therefore not be used or relied on by any party for any purpose other than (i) drafting the New Consent Decree that will be submitted for approval to those with authority to approve such a consent decree and (ii) confirming the Reorganization Plan that may not become effective without approval of the New Consent Decree by the Idaho District Court. This Agreement in Principle is not a permit, covenant not to sue, or release, and may not be used a defense to any claim, action, or proceeding. For: Sunshine Mining and Refining Company Sunshine Precious Metals, Inc. Sunshine Exploration, Inc. Sunshine Argentina, Inc. /s/ JOHN S. SIMKO --------------------------------------------- By: John S. Simko Chairman, Chief Executive Officer -11- 71 For: The United States on behalf of: United States Environmental Protection Agency United States Department of the Interior United States Department of Agriculture /s/ WILLIAM D. BRIGHTON --------------------------------------------- By: William D. Brighton, Assistant Chief Environmental Enforcement Section United States Department of Justice -12- 72 For: Coeur d'Alene Tribe ---------------------------------------------------- By: Ernest Stensgar Chairman of Coeur d'Alene Tribe -13- 73 For: The Liverpool Limited Partnership Liverpool Associates, Ltd. Westgate International, L.P. Elliot International Capital Advisors /s/ PAUL SINGER --------------------------------------------- By: Paul Singer, President -14- 74 For: Stonehill Institutional Partners L.P. Stonehill Offshore Partners Limited Stonehill Advisors LLC /s/ JOHN MATULSKY --------------------------------------------- By -15- 75 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE - ------------------------------------ ) In re ) Chapter 11 ) SUNSHINE MINING AND ) Case No. 00-3409 (MFW) REFINING COMPANY, et. al., ) ) Jointly Administered Debtors ) ) - ------------------------------------ ) NOTICE OF CORRECTION OF TYPOGRAPHICAL ERRORS IN THIRD AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION PLEASE TAKE NOTICE that the above-captioned reorganized debtors have filed a corrected version (the "Corrected Plan") of their Third Amended Joint Chapter 11 Plan of Reorganization (the "Plan") which was confirmed by Order dated December 5, 2000. The Corrected Plan corrects three typographical errors appearing on page 20 of the Plan. A blacklined version of that page showing those corrections is attached hereto as Exhibit A. The full copy of the Corrected Plan is attached as Exhibit B to the copy of this notice being filed with the Bankruptcy Court, but it is not attached to the service copy of this notice. Copies of the Corrected Plan are available on request. Dated: February 7, 2001 Wilmington, Delaware /s/ [ILLEGIBLE] ----------------------------------- Daniel J. DeFranceschi (No. 2732) John H. Knight (No. 3848) Christopher D. Loizides (No. 3968) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 (302) 658-6541 Attorneys for The Reorganized Debtors 76 EXHIBIT A (b) To provide the distribution afforded by subsection (a) above, if Class Mining 5 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 5 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 5 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall be in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 5 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Mining Allowed 9% Note Claims will receive no distribution under this Plan in respect of such claim. Class Mining 5 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 5. 6.7 TREATMENT OF CLASS MINING 6 (MINING ALLOWED 5% NOTE CLAIMS (a) If Class Mining 6 votes to accept the Plan by the majorities required by section 1126(c) of the Bankruptcy Code, all Holders of Allowed Mining 5% Notes Claims, in full satisfaction, payment and discharge of their Claims, shall receive a Pro Rata share (relative to other Holders of Class Mining 6 Claims) of the Class Gifted Creditor Stock Shares (Class Mining 6 relative to the aggregate amount of Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, and Class Mining 6) of New Mining Stock. (b) To provide the distribution afforded by subsection (a) above, if Class Mining 6 votes to accept the Plan, the Holders of Argentina Allowed Put Default Claims (Class Argentina 1) and Argentina Allowed Stonehill Note Guarantee Claims (Class Argentina 2): (i) agree that the aggregate amount of New Mining Stock that Classes Argentina 1 and Argentina 2 would have received if Class Mining 6 had not voted to accept the Plan shall be reduced by the amount of New Mining Stock to be distributed in accordance with (a) above; and (ii) authorize and agree that such New Mining Stock shall be distributed to the Holders of Class Mining 6 Claims. The aforesaid reduction of the New Mining Stock distributed to Classes Argentina 1 and Argentina 2 (if it occurs) shall in accordance with the provisions of Section 11.12.3 of the Plan. (c) If Class Mining 6 votes to reject the Plan by the majorities set forth in section 1126(c) of the Bankruptcy Code, Holders of Allowed Mining 5% Notes Claims will receive no distribution under this Plan in respect of such claim. Class Mining 6 is impaired under the provisions of the Plan. The Debtors are soliciting acceptances from the Holders of Claims in Class Mining 6. 6.8 TREATMENT OF CLASS MINING 7 (MINING CONVENIENCE CLAIMS) In full satisfaction, payment and discharge of their Convenience Claims, all Holders of Mining Allowed Convenience Claims shall receive ten percent (10%) of the allowed amount of their Allowed 20 EX-2.2 3 d84396ex2-2.txt ORDER CONFIRMING 3RD AMENDED JOINT CHAPTER 11 1 EXHIBIT 2.2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE [STAMP] - ------------------------------------ ) In re ) Chapter 11 ) SUNSHINE MINING AND REFINING ) Case No. 00-3409 (MFW) COMPANY, et al. ) ) (Jointly Administered) Debtors. ) ) - ------------------------------------ ) ORDER CONFIRMING THE THIRD AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF SUNSHINE MINING AND REFINING COMPANY AND ITS DEBTOR SUBSIDIARIES WHEREAS, Sunshine Mining and Refining Company ("Mining"), Sunshine Argentina, Inc. ("Argentina"), Sunshine Precious Metals, Inc. ("Metals"), and Sunshine Exploration, Inc. ("Exploration" and, together with Mining, Argentina and Metals, the "Debtors") having filed the Second Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code for the Joint Plan of Reorganization of Sunshine Mining and Refining and Its Debtor Subsidiaries (the "Disclosure Statement"), dated as of October 2, 2000 and Second Amended Joint Chapter 11 Plan of Reorganization, dated as of October 2, 2000, as modified by the Third Amended and Restated Joint Plan of Reorganization of Sunshine Mining and Refining and Its Debtor Subsidiaries, dated as of December 4, 2000 (the "Plan") (a copy of which is attached to this Order as Exhibit A hereof);(1) and WHEREAS, on October 2, 2000, upon finding that the Disclosure Statement satisfied the requirements of section 1125 of Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"), the Court entered an order (the "Disclosure Statement Order"), inter alia, - ---------- (1) Unless otherwise defined, capitalized terms used herein shall have the meanings as set forth in the Plan. 2 approving the Disclosure Statement, approving the Debtors' ballots and solicitation procedures, fixing the voting and objection deadline with respect to the Plan at 4:00 p.m. on October 31, 2000, fixing the Confirmation Hearing for November 7, 2000 at 2:00 p.m., and approving the forms of notice to be sent to each Class of Claims or Interests, including the notice of the Confirmation Hearing (the "Confirmation Hearing Notice"); and WHEREAS, The Altman Group, Inc., the Debtors' Ballot Agent, transmitted the Disclosure Statement, the Disclosure Statement Order, the Confirmation Hearing Notice and related solicitation materials in compliance with the Disclosure Statement Order, and such transmission is attested to in the affidavit of Kenneth L. Altman, sworn to on October 12, 2000 and filed with the Clerk of the Court; and WHEREAS, the Debtors caused the Publication Notice and Eurobond Bearer Notice to be published in compliance with the Disclosure Statement Order, and such publication is attested to in the affidavit of Kenneth L. Altman, sworn to on October 12, 2000 and filed with the Clerk of the Court; and WHEREAS, as described in the Certification of Counsel Concerning Non-material Modifications to Solicitation Procedures, holders of the Eurobonds were permitted to vote by sending ballots to the Altman Group or to one of the European Securities Clearing Houses, Euroclear or Clearstream. WHEREAS, the Debtors filed the affidavit of Kenneth L. Altman, sworn to on November 3, 2000, attesting to the tabulation of all ballots received from holders of Claims entitled to vote under the Plan and attesting to the results of the tabulation, with each Class entitled to vote -2- 3 under the Plan having accepted the Plan in satisfaction of the requirements of section 1126 of the Bankruptcy Code; and WHEREAS, the Court received objections from the Pension Benefit Guaranty Corporation (the "PBGC"), and the Coeur d'Alene Mines Corporation ("CDMC") and WHEREAS, the PBGC and CDMC have withdrawn their objections to the Plan based upon the Plan Proponents having made certain revisions to the Plan; and WHEREAS, the Debtors submitted the Affidavit of William W. Davis, the Executive Vice President and Chief Financial Officer of the Debtors, in support of the Plan (the "Davis Affidavit") and the Affidavit of Joseph J. Radecki, Jr., in support of the Plan (the "Radecki Affidavit"); and WHEREAS, the Debtors filed a memorandum of law in support of confirmation of the Plan (the "Confirmation Memorandum") and a response to the CDMC objection to the Plan (the "Response"); and WHEREAS, the Confirmation Hearing was held on November 7, 2000 and was adjourned in open Court at that time to December 5, 2000 at which time the Court conducted the full Confirmation Hearing; and NOW, THEREFORE, the Court having considered the Davis and Radecki Affidavits referred to above, the Confirmation Memorandum, the CDMC objection, the Response, the record of the Confirmation Hearing and the entire record of these Chapter 11 Cases, and after due deliberation thereon; IT IS HEREBY DETERMINED, FOUND, ADVISED AND DECREED that: 1. Core Proceeding (28 U.S.C. Section 157(b)(2)). This Court has jurisdiction under sections 1334(a) and (b) of title 28 of the United States Code and section 105 of the Bankruptcy -3- 4 Code to consider confirmation of the Plan and all provisions thereof. Confirmation of the Plan is a core proceeding under 28 U.S.C. Section 157(b)(2). 2. Solicitation and Notice. The Disclosure Statement, the Plan, Confirmation Hearing Notice, Disclosure Statement Order, and the ballots were transmitted and served in compliance with the Disclosure Statement Order, the Certificate of Counsel Concerning Non-material Modifications to Solicitation Procedures and the Bankruptcy Rules and such transmittal and service were adequate and sufficient. Adequate and sufficient notice of the Confirmation Hearing (including the October 31, 2000 deadline for filing and serving objections to confirmation of the Plan) was given in compliance with the Bankruptcy Rules and the Disclosure Statement Order, and no further notice is required. 3. The Disclosure Statement provides adequate information as to the provisions of the Plan to Holders of claims against and Equity Interests in the Debtors so as to allow such holders eligible to vote to make an informed judgment to accept or reject the Plan. 4. The procedures used to distribute and tabulate the ballots were fair; properly conducted and in accordance with the Disclosure Statement Order and the Certificate of Counsel Concerning Non-Material Modifications to Solicitation Procedures and/or all applicable Bankruptcy Rules. 5. Modifications to the Plan. On December 5, 2000, the Debtors modified the Plan, which modifications are incorporated in the Plan attached hereto as Exhibit A. Those modifications are as follows: a. the incorporation of the terms and conditions of the Agreement in Principle with the Environmental Regulators and The Tribe as set forth in Article XVIII of the Plan which involves, inter alia, the provision of certain consideration to the Environmental Regulators and -4- 5 the Tribe in exchange for certain covenants not to sue on potentially significant environmental claims which are the subject of the NRD Actions pending before the Idaho District Court; b. the incorporation of the terms of an agreement with the Pension Benefit Guaranty Corporation providing, inter alia, that Metals and Mining will continue to be sponsors of certain plans related to ERISA and as further described in section 10.7 of the Plan; c. the conditioning of the effectiveness of the Plan upon the approval of a New Consent Decree incorporating the terms of the Agreement in Principle by the Idaho District Court (Plan, Art. XVIII); d. the conditioning of the effectiveness of the Plan upon this Court's approval of a settlement between the Debtors and ASARCO, Inc (Plan, Section 13.2); 6. The Plan, as modified by the December 5, 2000 modification (the "Modification"), shall constitute the Plan. 7. The Modification does not adversely affect the treatment of any Claims against or Equity Interests in the Debtors under the Plan. 8. In accordance with Bankruptcy Rule 3019, all holders of Claims against the Debtors who voted to accept the Plan are hereby deemed to have accepted the Plan, as amended consistent with the Modification. 9. No holder of a Claim against the Debtors who has voted to accept the Plan shall be permitted to change its acceptance to a rejection as a consequence of the Modification. 10. The filing with the Court of the Plan, as modified by the Modification, on December 5, 2000, the service of same on all persons participating in the Confirmation Hearing and the disclosure of the Modification on the record at the Confirmation Hearing, constitute due and sufficient notice thereof. -5- 6 11. The Modification incorporated in the Plan complies with section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019. 12. Plan Compliance With Bankruptcy Code (11 U.S.C. Section 1129(a)(1)). The Plan complies with the applicable provisions of the Bankruptcy Code and Bankruptcy Rules thereby satisfying 11 U.S.C. Section 1129(a)(l). a. Proper Classification (11 U.S.C. Sections 1122, 1123(a)(11)). The Plan designates thirty (30) Classes of Claims and four (4) Classes of Interests. A reasonable basis exists for the classification of the Claims and Interests in the Plan. Classification of these Claims and Interests is proper and consistent with Section 1122 of the Bankruptcy Code because each Claim and each Interest classified in such Classes is substantially similar to the other Claims and Interests therein. The classification of the Claims and Interests in the Plan is reasonable and necessary to implement the Plan. The Plan thereby satisfies Section 1123(a)(1) of the Code. b. Specified Treatment of Unimpaired Classes (11 U.S.C. Sections 1123(a)(2)). The Plan specifies that Mining Administrative Claims, Mining Tax Claims, Class Mining P, Argentina Administrative Claims, Argentina DIP Claims, Class Argentina P, Metals Administrative Claims, Metals Tax Claims, Class Metals P, Exploration Administrative Claims, Exploration Tax Claims, and Class Exploration P are not impaired under the Plan, thereby satisfying Section 1123(a)(2) of the Bankruptcy Code. c. Specified Treatment of Impaired Classes (11 U.S.C. Section 1123(a)(3)). The Plan specifies the treatment of all impaired Classes, which consist of Class Mining 1, Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, Class Mining 6, Class Mining 7, Class Mining 8, Class Mining 9, Class Argentina 1, Class Argentina 2, Class Argentina 3, Class Metals 1, Class Metals 2, Class Metals 3, Class Metals 4, Class Metals 5, Class Metals 6, Class Exploration 1, Class -6- 7 Exploration 2, Class Exploration 3, and Class Exploration 4 thereby satisfying section 1123(a)(3) of the Bankruptcy Code. d. No Discrimination (11 U.S.C. Section 1123(a)(4)). The Plan provides for the same treatment for each Allowed Claim or Interest in each respective Class unless the holder of such Claim or Interest has agreed to a less favorable treatment of such Claim or Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy Code. e. Implementation of the Plan (11 U.S.C. Section 1123(a)(5)). Article 11 of the Plan provides adequate and proper means for implementation of the Plan, thereby satisfying section 1123(a)(5) of the Bankruptcy Code. f. Nonvoting Equity Securities (11 U.S.C. Section 1123(a)(6)). The Plan does not contemplate the issuance of any non-voting equity securities. Thus, section 1123(a)(6) of the Bankruptcy Code is satisfied. g. Continuation of Existing Corporate Officers and Directors (11 U.S.C. Section 1123(a)(7)). In accordance with Section 1123(a)(7) of the Bankruptcy Code, the continuation of certain current directors of the Debtors as a director of the Reorganized Debtors and the continuation of certain current officers of the Debtors as officers of the Reorganized Debtors as set forth in the Plan, is consistent with the interests of creditors and with public policy. h. Impairment of Classes (11 U.S.C. Section 1123(b)(1)). In accordance with section 1123(b)(1) of the Bankruptcy Code, Section 6 of the Plan impairs or leaves unimpaired, as the case may be, each Class of Claims and Interests under the Plan. i. Rejection of Executory Contracts (11 U.S.C. Section 1123(b)(2)). The Plan constitutes a motion by the Debtors to (a) reject as of the Effective Date all executory contracts and unexpired leases to which such Debtor is a party, except the executory contracts and unexpired leases -7- 8 specified in the Exhibit "A" (the "Assumed Contracts Schedule") to the Order Pursuant to Section 10.1 of the Third Amended Joint Chapter 11 Plan of Reorganization Establishing Procedures for Providing Notice of, and Setting Objection Deadlines to, the Assumption of Executory Contracts and Leases Pursuant to the Plan (the "Cure Claim Order") and (b) assume the executory contracts and unexpired leases specified in the Assumed Contracts Schedule, with cure payments to be made in accordance with the Cure Claim Order. j. Exculpation (11 U.S.C. Section 524(e)). Section 14.4 of the Plan complies with the limitations of section 524(e) of the Bankruptcy Code. The exculpatory language of the Plan is consistent with section 1129(a)(2) and 1125(e) of the Bankruptcy Code. The objection of the PBGC is withdrawn and/or rendered moot as the language requested by the PBGC has been included in the Plan. The Rights of the Environmental Regulators and the Tribe will be governed by the terms of the New Consent Decree rather than Article XIV of the Plan. 13. Debtors' Compliance With Bankruptcy Code (11 U.S.C. Section 1129(a)(2)). The Debtors have complied with the applicable provisions of the Bankruptcy Code, thereby satisfying section 1129(a)(2) of the Bankruptcy Code. 14. Plan Proposed In Good Faith (11 U.S.C. Section 1129(a)(3)). The Debtors have proposed the Plan in good faith and not by any means forbidden by law, thereby satisfying section 1129(a)(3) of the Bankruptcy Code. The Debtors' good faith is evident from the record of these hearings and the retention of jurisdiction provision in the Plan is entirely customary and lawful. 15. Payments For Services Or Costs And Expenses (11 U.S.C. Section 1129(a)(4)). Any payment made or to be made by any Debtor for services or for costs and expenses in or in connection with these Chapter 11 cases, or in connection with the Plan and incident to these Chapter 11 cases, -8- 9 has been approved by, or is subject to the approval of, the Court as reasonable, thereby satisfying section 1129(a)(4) of the Bankruptcy Code. 16. Directors, Officers, And Insiders (11 U.S.C. Section 1129(a)(5)). The Debtors have complied with section 1129(a)(5) of the Bankruptcy Code. To the extent known at this time, the Debtors have disclosed the identity, affiliations and compensation of all existing directors and officers proposed to serve after confirmation of the Plan. 17. No Rate Changes (11 U.S.C. Section 1129(a)(6)). The Debtors are not subject to any governmental regulatory commissions and section 1129(a)(6) is inapplicable. 18. Best Interests of Creditors Test (11 U.S.C. Section 1129(a)(7)). The Plan satisfies section 1129(a)(7) of the Bankruptcy Code. Specifically: a. The liquidation analysis conducted by C1BC World Markets and included in the Disclosure Statement is satisfactory and has not been controverted by other evidence. b. With respect to each impaired Class, each holder of a Claim against or an Interest in a Debtor either has accepted the Plan or will receive or retain under the Plan on account of such Claim or Interest property of a value, as of the Effective Date of the Plan, that is not less than the amount that such holder would receive or retain if such Debtor were liquidated under Chapter 7 of the Bankruptcy Code on such date. No Class has made an election under section 1111(b)(2) of the Bankruptcy Code. 19. Acceptance By Certain Classes (11 U.S.C. Section 1129(a)(8)). Mining Administrative Claims, Mining Tax Claims, Class Mining P, Argentina Administrative Claims, Argentina DIP Claims, Class Argentina P, Metals Administrative Claims, Metals Tax Claims, Class Metals P, Exploration Administrative Claims, Exploration Tax Claims, and Class Exploration P are unimpaired and are deemed to have accepted the Plan. Class Mining 1, Class Mining 2, Class -9- 10 Mining 3, Class Mining 4, Class Mining 5, Class Mining 6, Class Mining 7, Class Mining 9, Class Argentina 1, Class Argentina 2, Class Metals 1, Class Metals 2, Class Metals 3, Class Metals 4, Class Metals 6, Class Exploration 1, Class Exploration 2, Class Exploration 3, and Class Environmental are impaired and have voted to accept the Plan. Because Class Mining 8, Class Argentina 3, Class Metals 5, and Class Exploration 4 will not receive any Distributions under the Plan, they are deemed to have rejected the Plan. Because not all impaired Classes of Claims and Interests have accepted the Plan or are deemed to have accepted the Plan, the requirements of section 1129(a)(8) have not been met, thus requiring application of section 1129(b) of the Bankruptcy Code as to those Debtors that are proceeding with confirmation of the Plan. 20. Treatment Of Administrative And Tax Claims (11 U.S.C. Section 1129(a)(9)). The treatment of Administrative Claims and Priority Non-Tax Claims under Sections 6.1, 6.10, 6.14 and 7.1 of the Plan, respectively, satisfies the requirements of section 1129(a)(9)(A) and (B) of the Bankruptcy Code, and the treatment of Tax Claims under Section 7.2 of the Plan satisfies the requirements of section 1129(a)(9)(C) of the Bankruptcy Code. 21. Acceptance By Impaired Classes (11 U.S.C. Section 1129(a)(10)). More than a majority in number and more than two-thirds in dollar amount of the creditors in Class Mining 1, Class Mining 2, Class Mining 3, Class Mining 4, Class Mining 5, Class Mining 6, Class Mining 7, Class Mining 9, Class Argentina 1, Class Argentina 2, Class Metals 1, Class Metals 2, Class Metals 3, Class Metals 4, Class Metals 6, Class Exploration 1, Class Exploration 2, and Class Exploration 3 who voted to accept or reject the Plan accepted the Plan. Therefore, section 1129(a)(10) of the Bankruptcy Code is satisfied. -10- 11 22. Feasibility (11 U.S.C. Section 1129(a)(11)). Confirmation of the Plan is not likely to be followed by the need for further financial reorganization of the Debtors, thereby satisfying section 1129(a)(11) of the Bankruptcy Code. 23. Payment of Fees (11 U.S.C. Section 1129(a)(12)). All fees under 28 U.S.C. Section 1930 presented to date have been paid or provided for, thereby satisfying section 1129(a)(12) of the Bankruptcy Code. Such fees shall be paid post confirmation to the extent required by 28 U.S.C. Section 1930. 24. Continuation of Retiree Benefits (11 U.S.C. 1129(a)(13)). From and after the Effective Date, the Reorganized Debtors will be obligated to pay retiree benefits (as defined in section 1114 of the Bankruptcy Code) and any similar health, disability or death benefits in accordance with the terms of the retiree benefit plans or other agreements governing the payments of such benefits, subject to any rights to amend, modify, or terminate such benefits under the terms of the applicable retiree benefits plan, other agreement or applicable bankruptcy law. Therefore, section 1129(a)(13) of the Bankruptcy Code is satisfied. 25. Identification of Plan Proponents (Fed. R. Bankr. P.3016(a)). As required by Bankruptcy Rule 3016(a), the Plan is dated and identifies the Plan proponents. 26. Fair and Equitable: No Unfair Discrimination (11 U.S.C. Section 1129(b)). (a) Class Mining 8, Class Argentina 3, Class Metals 5, and Class Exploration 4 Interests. Class Mining 8, Class Argentina 3, Class Metals 5, and Class Exploration 4 are impaired classes of equity interests. Pursuant to section 1129(b) of the Bankruptcy Code, the Court finds that the Plan does not discriminate unfairly, and is fair and equitable with respect to Class Mining 8, Class Argentina 3, Class Metals 5, and Class Exploration 4 Interests. No holder of Claims or Interests junior to the equity interests of Class Mining 8, Class Argentina 3, Class Metals -11- 12 5, and Class Exploration 4 will receive or retain any property under the Plan on account of such junior Claims or Interests and no Class of Claims senior to Class Mining 8, Class Argentina 3, Class Metals 5, and Class Exploration 4 is receiving more than full payment, on account of the Claims in such Class. Thus, the Plan satisfies section 1129(b) as to each of the Classes described above. 27. Principal Purpose of Plan (11 U.S.C. Section 1129(d)). The principal purpose of the Plan is not the avoidance of taxes or the avoidance of section 5 of the Securities Act of 1933. Thus section 1129(d) of the Bankruptcy Code is satisfied. 28. Assumption and Rejection (11 U.S.C. Section 365(b)). Section 10 of the Plan governing the assumption and rejection of executory contracts and unexpired leases satisfies section 365(b) of the Bankruptcy Code. 29. No Substantive Consolidation. The Plan does not seek substantive consolidation of the Debtors and their Estates. 30. Conditions To Confirmation. The conditions to confirmation set forth in Section 13.1 of the Plan have been satisfied. 31. Confirmation. The Plan is hereby confirmed. The terms of the Plan are incorporated by reference into, and are an integral part of, this Confirmation Order. 32. Objections. All of the objections to confirmation of the Plan and all reservations of rights included therein that have not been withdrawn or rendered moot are denied and overruled. 33. Continued Existence of Estates; Vesting. The Debtors' estates shall continue to exist until the Effective Date of the Plan. On the Effective Date, in accordance with sections 1141(b) and 1141(c) of the Bankruptcy Code, pursuant to the Plan and except as otherwise expressly provided in the Plan, title to all assets and property of the Estates of the Debtors shall pass to, and -12- 13 vest in, the Reorganized Debtors free and clear of all Claims, Allowed Interests, liens changes and other rights of creditors or equity holders arising prior to the Effective Date. 34. Assumption and Rejection. (a) On the Effective Date, all executory contracts and unexpired leases listed in the Assumed Contract Schedule are deemed assumed and cure payments shall be made in accordance with the Cure Claim Order and (b) on the Effective Date, all executory contracts and unexpired leases not listed in the Assumed Contract Schedule are hereby deemed rejected; provided, however, that, in the event that the Effective Date does not occur and this Confirmation Order is vacated pursuant to the terms and provisions of the Plan or otherwise the time within which the Debtors may assume or reject all such executory contracts and unexpired leases shall be, and it hereby is, extended for a period of thirty (30) days after the date this Order is vacated. 35. Exculpation. (a) On the Effective Date, in consideration for the obligations of the Debtors and Reorganized Debtors under the Plan, the New Mining Stock and other contracts, instruments, releases, agreements or documents to be entered into or delivered in connection with the Plan: (i) each Holder of a Claim or Interest that voted in favor of the Plan and (ii) to the fullest extent permissible under applicable law, as such law may be extended or interpreted subsequent to the Effective Date, each entity that has held, holds or may hold a Claim or Interest or at any time was a creditor or stockholder of any Debtors and that did not vote on the Plan or voted against the Plan, shall be deemed to forever release, waive and discharge all Claims (including derivative Claims), obligations, suits, judgments, damages, demands, debts, rights, causes of action and liabilities (other than the right to enforce the Debtors' or the Reorganized Debtors' obligations under the Plan and the contracts, instruments, releases, agreements and documents delivered thereunder), or their liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or -13- 14 unforeseen, then existing or thereafter arising in law, equity or otherwise, that are based in whole or in part on any act, omission, transaction or other occurrence taking place on or prior to the Effective Date in any way relating to a Debtor, the Reorganization Cases or the Plan that such entity has, had or may have, against the Debtors, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee, or any of them, their Estates, all Persons or entities claiming through them, and any of their respective present or former directors, officers, employees, attorneys, accountants, underwriters, investment bankers, financial advisors and agents, acting in such capacity. (b) On the Effective Date, the Debtors, their Estates and all Persons claiming through them, and any of their successors, assigns or representatives shall be deemed to have waived, released and discharged all rights or claims, whether based upon tort, fraud, contract or otherwise, and whether arising out of the Debtors' restructuring, DIP Facility, Exit Financing Facility or otherwise, which they possessed or may possess prior to the Effective Date against the Debtors, their Estates, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee, their respective present directors, officers, employees, agents, representatives and attorneys and any of their successors or assigns except as otherwise provided in the Plan or this Order. (c) On the Effective Date, the Debtors, the Reorganized Debtors, the Elliott Group, the Stonehill Group, the Eurobond Indenture Trustee and the Mining 9% Notes Indenture Trustee and their respective members, officers, directors, employees, representatives, counsel or agents shall be deemed released by each of them against the other of or from any and all claims, obligations, rights, causes of action and liabilities for any act or omission in connection with, or arising out of, the Debtors' Chapter 11 cases, including without limiting the generality of the foregoing, the Disclosure -14- 15 Statement, the pursuit of approval of the Disclosure Statement, the pursuit of Confirmation of the Plan, the consummation of the Plan or the administration of the Plan or the property to be distributed under the Plan, except for willful misconduct, and all such Persons, in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan and under the Bankruptcy Code. (d) Notwithstanding any provision in the Plan or this Order to the contrary, the United States of America shall not be bound by exculpations or releases granted to any non-Debtors. Notwithstanding the foregoing, nothing herein shall be deemed to limit or modify any of the terms and conditions of the Agreement in Principle or the New Consent Decree, including those terms relating to covenants not to sue. (e) The Environmental Regulators and the Tribe shall not be subject to the release provisions of this order; provided, however, that the Environmental Regulators and the Tribe shall be subject to the terms and conditions to be set forth in the New Consent Decree which will incorporate the terms and conditions of the Agreement in Principle, including the mutual covenant not to sue set forth in section 3 thereof 36. Injunction. (a) Except as provided in the Plan, on the Effective Date, all entities that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder of a Debtor that is terminated pursuant to the terms of the Plan will be permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (a) commencing or continuing in any manner any action or other proceeding against the Debtors, the Reorganized Debtors or their respective property other than to enforce any right pursuant to the Plan to a -15- 16 distribution; (b) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors, the Reorganized Debtors or their respective property, other than as permitted pursuant to subsection "(a)" above; (c) creating, perfecting, or enforcing any lien or encumbrance against the Debtors, the Reorganized Debtors or their respective property; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors or the Reorganized Debtors; and (e) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of the Plan. (b) On the Effective Date, all entities that have held, currently hold or may hold any Claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities that are released pursuant to the Plan will be permanently enjoined from taking any of the following actions against any released entity or its property on account of such released Claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities: (a) commencing or continuing in any manner or other proceedings; (b) enforcing, attaching, collecting or recovering in any manner, any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to any released entity; and (e) commencing or continuing any action, in any manner, in any place that does not comply with, or is inconsistent with, the provisions of the Plan. (c) By accepting distributions pursuant to the Plan, each Holder of an Allowed Claim receiving distributions pursuant to the Plan will be deemed to have specifically consented to the injunctions set forth in Section 14.3 of the Plan. (d) Notwithstanding any provision in the Plan or this Order to the contrary, the United -16- 17 States of America shall not be precluded from asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors or the Reorganized Debtors prior to or after confirmation of the Plan. Notwithstanding the foregoing, nothing herein shall be deemed to limit or modify any of the terms or conditions of the Agreement in Principle or the New Consent Decree, including those terms relating to covenants not to sue. With the exception of the United States, each holder of a Claim or Interest, any trustee for any such holder, any other party in interest, and any of their respective agents, employees, representatives, financial advisors, or attorneys, and any of their successors and assigns, shall be permanently enjoined from taking any of the following actions against the Debtors, any of their respective present or former members, directors, officers, employees, advisors, attorneys, affiliates, subsidiaries or agents, for any act or omission in connection with, relating to, or arising out of, these Cases, the pursuit of confirmation of the Plan, the consummation of the Plan or the administration of the Plan, except for their willful misconduct or gross negligence: (a) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action or other proceeding of any kind (including without limitation, any proceeding in a judicial, arbitral, administrative or other forum) (other than any actions to enforce any rights or obligations under this Plan); (b) enforcing, levying, attaching (including, without limitation, any pre-judgment attachment), collecting or otherwise recovering by any manner or means, whether directly or indirectly, any judgment, award, decree or order; (c) creating, perfecting or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind; (d) asserting any right of setoff of any kind, directly or indirectly; (e) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Plan; and (f) prosecuting or otherwise asserting any right, claim or cause of action released pursuant to the Plan. -17- 18 37. Injunctions and Automatic Stay. All injunctions or stays provided for in the Chapter 11 cases under section 105 or 362 of the Bankruptcy Code and in existence on the Confirmation Date shall remain in full force and effect until the Effective Date, but shall be of no force and effect thereafter. 38. Binding Effect Enforceability. Effective as of the Confirmation Date, but subject to the occurrence of the Effective Date, in accordance with section 1141(a) of the Bankruptcy Code, the Plan, its provisions, and this Order shall be binding upon and inure to the benefit of: (i) the Debtors; (ii) the Reorganized Debtors; (iii) any party to an executory contract of the Debtor; and (iv) any creditor or equity interest holder of any Debtor, whether or not the Claim or Interest of such creditor or equity interest holder is impaired under the Plan and whether or not such creditor or equity interest holder has accepted the Plan; (v) and their respective successors and assigns. Pursuant to sections 1123(a) and 1142(a) of the Bankruptcy Code and the provisions of this Order, the Plan and all Plan related documents shall apply and be enforceable notwithstanding any otherwise applicable non-bankruptcy law. 39. General Authorizations. The Debtors and their officers are hereby authorized and empowered pursuant to section 1142(b) of the Bankruptcy Code to execute and deliver, and take such action as is necessary to effectuate the terms of, the instruments, agreements, and documents contemplated by the Plan, without further order of the Court, and any and all such documents shall be accepted by each of the respective state filing offices and recorded in accordance with applicable state law and shall become effective in accordance with their terms and the provisions of state law. 40. Distributions Addresses. Subject to Bankruptcy Rule 9010, all distributions under the Plan shall be made to the holder of each allowed claim at the address of such holder as -18- 19 listed on the Schedules, unless the Debtors or, on and after the Effective Date, the Reorganized Debtors, have been notified in writing, prior to the time distribution is made, of a change of address, including, without limitation, by the filing of a timely proof of claim by such holder that provides an address for such holder different from the address reflected on the Schedules. At the request of a beneficial holder of a Claim based on a security, the Debtor shall make the distributions afforded to such claim directly to the beneficial holder; otherwise distributions will be made to the applicable indenture trustees. 41. Cancellation of Old Common Stock and Issuance of New Common Stock. On the Effective Date, all Old Common Stock shall be canceled and be deemed null and void and in accordance with the Plan (i) Reorganized Mining shall issue the New Mining Stock, (ii) Reorganized Argentina shall issue the New Argentina Stock, (iii) Argentina Newco shall issue Argentina Newco Stock, (iv) Reorganized Metals shall issue the New Metals Stock and (v) Reorganized Exploration shall issue the New Exploration Stock, each in an amount sufficient to permit the distributions thereof contemplated by the Plan. 42. Termination of DIP Facility. On the Effective Date, the DIP Claims shall be paid in accordance with the terms of the DIP Facility, or as otherwise may be agreed to by the Debtors and the DIP Lenders, and upon such payment the DIP Facility shall be deemed terminated and canceled. 43. Exit Financing Facility. In connection with the Effective Date, the Reorganized Debtors shall enter into the Exit Financing Facility, dated as of the Effective Date, among the Reorganized Debtors and the Elliott Group and the Stonehill Group (collectively, the "New Lenders"), for the purpose of making any cash payments under the Plan, financing the working capital needs of the Reorganized Debtors from and after the Effective Date and for other general -19- 20 corporate purposes. The Exit Financing Facility will provide the Reorganized Debtors with extensions of credit of up to an aggregate of $5,000,000, subject to the terms and conditions set forth in the agreements and instruments provided for in the Exit Financing Facility. The Reorganized Debtors are authorized to enter into the Exit Financing Facility and all related documents, including security documents, subject to final agreement thereof on such terms as may be agreed upon by the Debtors and the New Lenders, which Exit Financing Facility shall become effective as of the Effective Date. The Reorganized Debtors are hereby authorized to incur obligations (as provided for in the Exit Financing Facility) and, except as may otherwise be provided for in the Exit Financing Facility, grant the New Lenders a first priority security interest in and a lien upon all of the collateral (as such term is defined in the DIP Facility) to secure all such obligations due the New Lenders. The Exit Financing Facility satisfies the condition precedent to effectiveness of the Plan that the Reorganized Debtors shall have sufficient cash to make all cash payments required to be made on the Effective Date pursuant to the terms of the Plan. 44. On the Effective Date, all of the liens to be created pursuant to the Exit Financing Facility shall be deemed affirmed and/or created. In furtherance of the foregoing, the Reorganized Debtors are authorized to make all filings and recordings, and to obtain all governmental approvals and consents necessary to establish and perfect such liens and security interests under the provisions of state, provincial, federal or other law (whether domestic or foreign) that would be applicable in the absence of this Confirmation Order. 45. Exemptions Pertaining to New Common Stock and Warrants (11 U.S.C. Section 1145). By operation of section 1145 of the Bankruptcy Code, the distribution of (i) New Common Stock to be issued under the Plan, (ii) the Warrants pursuant to the New Consent Decree, and (iii) ASARCO Warrants pursuant to the ASARCO Settlement shall be exempt from registration under -20- 21 section 5 of the Securities Act of 1933, as amended, and any state or local law requiring registration for offer or sale of a security or registration or licensing of an issuer of, or broker or dealer in, a security. All such securities so issued shall be freely transferable by the initial recipients thereof (i) except for any such securities received by an underwriter within the meaning of section 1145(b) of the bankruptcy Code and (ii) subject to any restriction contained in the terms of such securities themselves, in the Plan or any documents relating to the Plan. 46. Exemption from Stamp Tax (11 U.S.C. Section 1146). Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of notes or equity securities under the Plan, the creation of any mortgage, deed or trust or other security interest, the making or assignment of any lease or sublease, transfers of real and personal property to the Reorganized Debtors or the making or delivery of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, including, without limitation, any deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan shall be, and they hereby are, exempt from any stamp, real estate transfer, mortgage recording or similar tax. All transfers to Reorganized Debtors effectuated under the Plan including the assumption, assignment and transfer by the Debtors of unexpired leases of non-residential real property pursuant to section 365(a) of the Bankruptcy Code, shall be deemed to have been made under, in furtherance of, or in connection with the Plan and, thus, shall not be subject to any stamp, real estate transfer, mortgage recording or other similar tax. 47. Plan Supplement. Without need for further order or authorization of the Court, the Debtors and the Reorganized Debtors are authorized and empowered to make any and all modifications to any and all documents included as part of the Plan Supplement that do not materially modify the terms of such documents and are consistent with the Plan. -21- 22 48. Approvals and Consents. This Confirmation Order shall constitute all approvals and consents required, if any, by the laws, rules or regulations of any State or other governmental authority with respect to the implementation or consummation of the Plan and any documents or agreements, and any amendments or modifications thereto, any other acts referred to in or contemplated by the Plan, the Plan Supplement, the Disclosure Statement and any documents, instruments or agreements, and any amendments or modifications thereto, provided, however, that the Environmental Settlement shall, as provided in the Plan, remain subject to a public comment process and approval by the Idaho District Court. 49. Failure To Consummate Plan. If the Effective Date does not occur, then (a) the Plan, (b) assumption or rejection of executory contracts or unexpired leases pursuant to the Plan, (c) any document or agreement executed pursuant to the Plan, and (d) any actions, releases, waivers, or injunctions authorized by this Confirmation Order or any order in aid of consummation of the Plan shall be deemed null and void. In such event, nothing contained in this Confirmation Order, any order in aid of consummation of the Plan, or the Plan, and no acts taken in preparation for consummation of the Plan, (a) shall be deemed to constitute a waiver or release of any Claims or Interests by or against any Debtor or any other Person, to prejudice in any manner the rights of any Debtor or any Person in any further proceedings involving such Debtor or otherwise, or to constitute an admission of any sort by any Debtor or any other Person as to any issue, including, without limitation, issues relating to the ownership by or the rights of any Debtor in all or any part of the property owned, sold, held by or in the possession of any Debtor or (b) shall be construed as a finding of fact or conclusion of law in respect thereof. 50. Retention of Jurisdiction. The Court shall retain jurisdiction in accordance with the terms of Article 16 of the Plan, the other provisions of this Confirmation Order and Section -22- 23 1142 of the Bankruptcy Code. Until these Chapter 11 cases are closed, any party in interest may commence a proceeding in the Court in respect of any matter as to which jurisdiction has been retained. 51. Notice of Entry of Confirmation Order. In accordance with Bankruptcy Rules 2002 and 3020(c), as promptly as possible after the entry of this Confirmation Order, The Altman Group, Inc., the Debtors' publication agent, shall give notice of the entry of this Confirmation Order by United States first class mail postage prepaid, by hand, or by overnight courier service to (a) the United States Trustee, (b) counsel for the Lenders, (c) the Securities and Exchange Commission in Washington, D.C., (d) the entities who requested notice of the Plan, the Disclosure Statement, and other documents or who objected to the Disclosure Statement or confirmation of the Plan, (e) entities who requested notices under Bankruptcy Rule 2002, (f) all parties to executory contracts or unexpired leases rejected pursuant to the Plan, (g) all parties who have cast a ballot to accept or reject the Plan, and (h) all creditors who have filed proofs of claim in these Chapter 11 Cases or who are scheduled in the Debtors' schedules of assets and liabilities, dated on or about September 7, 2000, or any amendment or modification thereto. The form of the notice of entry of the confirmation order shall be substantially in the form of Exhibit B hereto. 52. Publication Notice. The Debtors shall post notice of confirmation as promptly as possible on its internet site and include such notice in its filings required by the Securities and Exchange Commission. 53. Reserve. Until the resolution of all Disputed Claims, the Debtors shall reserve sufficient cash and/or stock as applicable in an amount necessary to provide a distribution to any remaining Disputed Claims as if such Claims had been allowed in the full amount sought by such creditors; provided, that, notwithstanding the existence of any Disputed Claims, on the Effective -23- 24 Date, the Debtors shall distribute not less than 89.99% of the New Mining Stock to the Gifting Creditors. 54. Administrative Claim And Rejection Claim Bar Date. (a) Pursuant to Order of this Court the Debtors' claims agent (the "Claims Agent") is: The Altman Group Inc. 60 East 42nd Street Suite 1241 New York, New York 10165 Telephone: 212-681-9600 Attention: Sunshine Mining and Refining, et al. (b) General Bar Date For Administrative Claims. Except as otherwise provided in the Plan, unless previously filed, requests for payment of Administrative Claims must be filed and served on the Claims Agent not later than 30 days after the Effective Date. Holders of Administrative Claims that are required to file and serve a request for payment of such Administrative Claims and that do not file or serve such a request by the applicable bar date will be forever barred from asserting Administrative Claims against the Debtors, the Reorganized Debtors or their respective property and such Administrative Claims will be deemed discharged as of Effective Date. Objections to such requests must be filed and served on the Reorganized Debtors and the requesting party by the latter of (a) 120 days after the Effective Date or (b) 60 days after the filing of the applicable request for payment of Administrative Claims. Unless a dispute exists with respect to the Eurobond Indenture Trustee Fee, the Mining 9% Notes Indenture Trustee Fee or DIP Claims, no request by the holder of any such Fee or Claim need be filed. -24- 25 (c) Bar Date for Professional Compensation. Professionals or other entities asserting a Fee Claim for services rendered before the Effective Date must file with the Court and serve on Counsel for the Reorganized Debtors, the Elliott Group, the Stonehill Group and the United States Trustee an application for final allowance of such Fee Claim no later than 60 days after the Effective Date; provided, however, that any professional who may receive compensation or reimbursement of expenses pursuant to the Ordinary Course Professionals Order may continue to receive such compensation and reimbursement of expenses for services rendered before the Effective Date, without further Bankruptcy Court review or approval, pursuant to the Ordinary Course Professionals Order. Objections to any Fee Claim must be filed and served on the Reorganized Debtors and the requesting party by the later of (i) 90 days after the Effective Date or (ii) 30 days after the filing of the applicable request for payment of the Fee Claim. To the extent necessary, this Order amends and supercedes any previously entered Order of the Bankruptcy Court including the Fee Order, regarding the payment of Fee Claims. (d) Claims Based on Rejection of Executory Contracts or Unexpired Leases. All proofs of Claim with respect to Claims arising from the rejection of executory contracts or unexpired leases must be served upon the Claims Agent by 5:00 P.M. (EASTERN TIME) ON JANUARY 4, 2001. Any such Claims, proofs of which are not served timely, shall be barred forever from assertion against the Debtors, the Reorganized Debtors, their Estates and/or their assets or property. Unless otherwise ordered by the Bankruptcy Court, all such properly filed Claims, upon allowance thereof, shall be, and shall be treated as, General Unsecured Claims. 55. Notice of Effective Date. As promptly as possible after the Effective Date, the Debtors shall serve notice of the Effective Date and all bar dates relating thereto on all parties receiving notice of the entry of this Confirmation Order, except that the Debtors shall not be required to publish notice of the Effective Date. -25- 26 56. Findings of Fact, Conclusions of Law. The determinations, findings, judgments, decrees and orders set forth herein constitute the Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. Each finding of fact set forth herein, to the extent it is or may be deemed a conclusion of law, shall also constitute a conclusion of law. Each conclusion of law set forth herein, to the extent it is or may be deemed a finding of fact, shall also constitute a finding of fact. Dated: December 5, 2000 Wilmington, Delaware /s/ MARY F. WALRATH ------------------------------ UNITED STATES BANKRUPTCY JUDGE -26- 27 EXHIBIT A is not included 28 EXHIBIT B 29 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) Chapter 11 ) SUNSHINE MINING AND REFINING ) Case No. 00-3409 (MFW) COMPANY, et al. ) ) (Jointly Administered) Debtors. ) NOTICE OF ENTRY OF ORDER CONFIRMING THIRD AMENDED JOINT PLAN OF REORGANIZATION OF SUNSHINE MINING AND REFINING COMPANY AND ITS DEBTOR SUBSIDIARIES TO CREDITORS, EQUITY INTEREST HOLDERS AND OTHER PARTIES IN INTEREST: PLEASE TAKE NOTICE THAT the Order Confirming the Third Amended Joint Plan of Reorganization of Sunshine Mining and Refining Company and Its Debtor Subsidiaries (the "Confirmation Order") was signed by The Honorable Mary F. Walrath, United States Bankruptcy Judge, on December 5, 2000, and duly entered and filed in the office of the Clerk of the United States Bankruptcy for the District of Delaware (the "Bankruptcy Court"). PLEASE TAKE FURTHER NOTICE that the Confirmation Order provides that all proofs of claim with respect to claims arising from the rejection of executory contracts or unexpired leases must be filed with the Debtors' Claims Agent: The Altman Group, Inc., 60 East 42nd Street, Suite 1241, New York, NY 10165, Attn: Sunshine Mining and Refining, et al. by 5:00 p.m. (Eastern Time) on January 4,2001. Any such Claims, proofs of which are not filed timely, shall be forever barred. PLEASE TAKE FURTHER NOTICE that the Confirmation Order is available for inspection at the following locations: (i) the office of the Clerk of the Bankruptcy Court at the United States Bankruptcy Court, 824 Market Street, Wilmington, Delaware, 19801; (ii) IKON Office 30 Solutions, 901 N. Market Street, Suite 718, Wilmington, Delaware 19801; and/or (iii) Lason/Delaware Legal Copy, Inc., One Rodney Square, 5th Floor, Wilmington, Delaware 19801. Dated: December 2000 Wilmington, Delaware ------------------------------------------------ Daniel J. DeFranceschi (No. 2732) John H. Knight (No. 3948) Margreta M. Sundelin (No. 3873) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 (302) 658-6541 ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION EX-2.3 4 d84396ex2-3.txt PARTIAL CONSENT DECREE 1 EXHIBIT 2.3 LOIS J. SCHIFFER Assistant Attorney General Environment & Natural Resources Division WILLIAM D. BRIGHTON, Assistant Chief THOMAS SWEGLE, Senior Lawyer ALAN TENENBAUM, Senior Lawyer Environmental Enforcement Section 1425 New York Avenue, N.W. Washington, DC 20005 ALAN BURROW Assistant U.S. Attorney District of Idaho P.O. Box 32 Boise, ID 83707 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO - ------------------------------ ) UNITED STATES OF AMERICA, ) No. 96-0122-N-EJL ) Plaintiff, ) No. 91-0342-N-EJL ) v. ) ) ASARCO INCORPORATED, et. al, ) ) Defendants. ) ) - ------------------------------) ) and Consolidated Case. ) ) - ------------------------------) PARTIAL CONSENT DECREE WITH SUNSHINE MINING AND REFINING COMPANY AND SUNSHINE PRECIOUS METALS, INC. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 1 2 I. BACKGROUND 1. This Partial Consent Decree (the "Consent Decree") is entered into by plaintiffs the United States of America (the "United States") and the Coeur d'Alene Tribe (the Tribe") (collectively "Plaintiffs") , defendants Sunshine Mining and Refining Company ("Mining") and Sunshine Precious Metals, Inc. ("Metals"") , and two subsidiaries of Mining, Sunshine Exploration, Inc. ("Exploration") and Sunshine Argentina, Inc. ("Argentina") (collectively "Sunshine"). 2. The United States has filed a Second Amended Complaint against Mining and Metals and other defendants in Case Number CIV-96-0122-N-EJL (D. Idaho), seeking (1) recovery under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9607, of response costs incurred or to be incurred by the United States Environmental Protection Agency ("EPA") or other federal agencies with respect to the Bunker Hill Facility (as defined in the Second Amended Complaint) in the Coeur d'Alene River Basin (the "Basin") in northern Idaho; and (2) damages under Sections 107(a)(4) and 107(f) of CERCLA , 42 U.S.C. Section 9607(a)(4) & (f), and Section 311(f) of the Clean Water Act ("CWA"), 33 U.S.C. Section 1321(f), for injury to, destruction of, or loss of natural resources at the Bunker HILL Facility as a result of releases of hazardous substances. 3. The Tribe has filed a First Amended Complaint against Mining, Metals, and other defendants in Case Number CIV-91-0342-N-EJL (D. Idaho), seeking damages for injury to, destruction of, or loss of natural resources at the Bunker Hill Facility under Section 107 of CERCLA. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 2 3 4. Mining and Metals are parties to a consent decree in United States v. ASARCO, CIV-94-0206-N-HLR (D. Idaho) (the "1994 Consent Decree") that was approved by the Court on November 17, 1994, among the United States, the State of Idaho, and other parties and that obligates Mining and Metals, among others, to perform certain remediation work in the populated areas of the Bunker Hill Superfund Site, which is a twenty-one square mile area within the Facility. 5. Mining, Metals, Exploration, and Argentina each have filed a petition under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") to reorganize their affairs, and in connection therewith Sunshine seeks to discharge certain liabilities including the existing and alleged obligations to the United States and the Tribe described in Paragraphs 2-4 above. The Delaware Bankruptcy Court has authorized Sunshine to enter into this Consent Decree and has confirmed a reorganization plan for Sunshine (the "Reorganization Plan") subject to the condition that the Consent Decree will be presented to this Court for approval, after an opportunity for public review and comment, and the Plan will not become effective unless and until this Court enters the Consent Decree. 6. Sunshine does not admit to any liability arising out of the transactions or occurrences alleged in the United States' Second Amended Complaint or the Tribe's First Amended Complaint. 7. The United States, the Tribe, and Sunshine agree, and this Court by entering this Consent Decree finds, that this Consent Decree has been negotiated by the Parties in good faith, PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 3 4 that settlement of this matter will avoid prolonged and complicated litigation between the Parties, and that this Consent Decree is fair, reasonable, and in the public interest. THEREFORE, with the consent of the Parties to this Decree, it is ORDERED, ADJUDGED, AND DECREED: II. JURISDICTION 8. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. Sections 1331, 1345, and 1355, 42 U.S.C. Sections 9607 and 9613(b), and 33 U.S.C. Section 1321(n), and also has personal jurisdiction over Mining and Metals. Solely for the purposes of this Consent Decree, Sunshine Argentina, Inc. and Sunshine Exploration, Inc. consent to the jurisdiction of this Court. Sunshine consents to and shall not challenge the entry of this Consent Decree or this Court's jurisdiction to enter and enforce this Consent Decree. III. PARTIES BOUND 9. This Consent Decree is binding upon the United States, the Tribe, and upon Sunshine and Sunshine's successors and assigns, which after the Reorganization Plan becomes effective will include Reorganized Mining and Reorganized Metals. Any change in ownership or other legal status (including corporate, partnership, joint venture, or otherwise), including but not limited to, any transfer of assets or real or personal property, shall in no way alter the status or responsibilities of Sunshine under this Consent Decree. Sunshine agrees to provide its successors and assigns written notice of this Consent Decree and to provide to the United States and the Tribe, in accordance with Section XIX (Notices and Submissions) of this Consent Decree, notice of such transfer to successors or assigns promptly upon closing or announcement of the transfer. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 4 5 IV. DEFINITIONS 10. Unless otherwise expressly provided herein, terms used in this Consent Decree which are defined in: (1) CERCLA or in regulations promulgated under CERCLA, or (2) the CWA or in regulations promulgated under the CWA, shall have the meaning assigned to them in CERCLA or the CWA or their associated regulations. Whenever terms listed below are used in this Consent Decree or in any appendix attached hereto, the following definitions shall apply: a. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq. b. "Coeur d'Alene Basin" or "Basin" shall mean the watershed of the Coeur d'Alene River and its tributaries and Lake Coeur d'Alene. c. "Consent Decree" shall mean this Partial Consent Decree and all appendices attached hereto. In the event of conflict between the Consent Decree and any appendix, the Consent Decree shall control. d. "Day" shall mean a calendar day. In computing any period of time under this Consent Decree, where the last day would fall on a Saturday, Sunday, or federal holiday, the period shall run until the close of business of the next working day. e. "EPA" shall mean the United States Environmental Protection Agency and any successor departments, agencies or instrumentalities of the United States. f. "EPA Hazardous Substance Superfund" shall mean the Hazardous Substance Superfund established by the Internal Revenue Code, 26 U.S.C. Section 9507. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 5 6 g. "Facility" or "Bunker Hill Facility" shall mean the area identified as the "Bunker Hill Facility" in the Second Amended Complaint filed by the United States in this case, CIV-96-0122-N-EJL, which area may be described generally as encompassing (1) the South Fork of the Coeur d'Alene River and its tributaries, and their flood plains; (2) the main stem of the Coeur d'Alene River and its flood plain, including the lateral lakes and associated wetlands; and (3) Lake Coeur d'Alene. h. "Federal Trustees" shall mean the Secretary of Agriculture ("USDA") and the Secretary of the Interior ("DOI"). i. "Future response costs" shall mean all costs, including but not limited to, direct and indirect costs, that the United States or the Tribe will incur or pay for response actions in connection with the Facility, on or after the date of lodging of this Consent Decree. j. "Interest" shall mean interest at the current rate specified for interest on investments of the Hazardous Substance Superfund established by 26 U.S.C. Section 9507, compounded on a daily, monthly or annual basis. k. "Metals" shall mean defendant Sunshine Precious Metals, Inc. and the reorganized entity of that name ("Reorganized Metals") existing after the effective date of the Reorganization Plan. l. "Mining" shall mean defendant Sunshine Mining and Refining Company and the reorganized entity of that name ("Reorganized Mining") existing after the effective date of the Reorganization Plan. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 6 7 m. "Natural resource damages" shall mean all damages recoverable under Section 107 of CERCLA, Section 311(f) of the Clean Water Act, or any other statute providing a similar cause of action on behalf of the public for injury to, destruction of, or loss of natural resources at the Facility under the trusteeship of DOI, USDA, or the Tribe, including the costs of restoring, replacing or acquiring the equivalent of such natural resources; compensation for interim losses to the public during the time the resources have been or continue to be injured; and all reasonable costs of assessing such damages. n. "1994 Consent Decree" shall mean the Consent Decree entered on November 17, 1994, in United States v. ASARCO, Case No. CIV-94-0206-N-HLR (D. Idaho). o. "Owned/Operated Property" shall mean all parcels of real property in the United States owned or controlled by Sunshine on or after December 5, 2000. p. "Paragraph" shall mean a portion of this Consent Decree identified by an arabic numeral or an upper or lower case letter. q. "Parties" shall mean the United States, the Tribe and Sunshine. r. "Past Response Costs" shall mean all costs, including but not limited to, direct and indirect costs, that the United States or the Tribe has incurred and paid for response actions in connection with the Facility, exclusive of response actions under the 1994 Consent Decree, prior to the date of the lodging of this Consent Decree and any accrued interest on such costs. s. "Plaintiffs" shall mean the United States and the Tribe. t. "Property Trustee" shall mean the person designated to perform the trustee duties with respect to the Scheduled Real Property specified in Paragraphs 20 and 21. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 7 8 u. "Reorganization Plan" shall mean the Third Amended Joint Chapter 11 Plan of Reorganization in In Re: Sunshine Mining and Refining Company et al, Jointly Administered, CIV No. 00-3409 (MFW), in the United States Bankruptcy Court for the District of Delaware. v. "Scheduled Real Property" shall mean the real property described in Exhibit C to this Consent Decree, which is currently owned by Sunshine and is subject to conveyance under Paragraph 22. The Scheduled Real Property is depicted approximately on the maps in Exhibit B. w. "Section" shall mean a portion of this Consent Decree identified by a Roman numeral. x. "SSM Site" shall mean the Silver Summit Mine Property (also known as the Consil Mine Site) currently owned by Metals and depicted on Exhibit D to this Consent Decree. y. "Sunshine" shall mean Mining, Metals, Sunshine Exploration, Inc., and Sunshine Argentina, Inc., and their successors. z. "Sunshine Mine" shall mean the underground mine and metallurgical surface and other facilities of Metals in the Coeur d'Alene Mining District, Shoshone County, Idaho. aa. "Tribe" shall mean the federally-recognized Indian Tribe known as the Coeur d'Alene Tribe, including its departments, agencies and instrumentalities. bb. "United States" shall mean the United States of America, including its departments, agencies and instrumentalities. cc. "Work" shall mean all actions by Metals required under Section VII of this Consent Decree. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 8 9 V. STATEMENT OF PURPOSE 11. By entering into this Consent Decree, the mutual objective of the Parties is to achieve a fair and reasonable resolution (subject to the reservations specified herein) of the claims by the United States and the Tribe against Sunshine in these actions, and of all potential claims or counterclaims by Sunshine against the United States or the Tribe relating to the Facility, taking into account the financial circumstances of Sunshine and the claims of other Sunshine creditors in Sunshine's bankruptcy reorganization proceedings. VI. PAYMENTS AND OTHER CONSIDERATION FOR RESPONSE AND RESTORATION COSTS 12. Warrants. On the effective date of the Reorganization Plan, Mining shall provide to the Plaintiffs warrants to purchase a total of 9.95% of Reorganized Mining's common stock (the "Warrants"). The Warrants shall (i) have a strike price equal to the strike price of the management options provided under the Reorganization Plan based on an equity value of Reorganized Mining of $33.0 million,(1) (ii) include a cashless exercise feature, (iii) terminate on he tenth (10th) anniversary of the effective date of the Reorganization Plan, (iv) be exempt from initial registration pursuant to 11 U.S.C. Section 1145, (v) be freely transferrable to any other entitY AT any time, and (vi) be subject to ordinary terms and conditions, including standard anti-dilution language, of warrants of this nature reasonably acceptable to Sunshine, the United States, and the Tribe. 13. Mining shall deliver the Warrants to the United States, for the benefit of EPA, the Federal Trustees, and the Tribe, in accordance with instructions to be provided by Plaintiffs - ---------- (1) By way of example only, if Reorganized Mining has 10 million shares of common stock outstanding, the strike price of the Warrants would be $3.30 each. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 9 10 following the lodging of this Consent Decree. Sale or exercise of the Warrants shall only be by agreement of the United States and the Tribe. Funds obtained through the sale or exercise of the Warrants shall be used, in such proportions as Plaintiffs jointly determine following the entry of this Consent Decree, only (a) by or at the direction of EPA to pay for the costs of response actions at the Facility after the effective date of this Consent Decree; or (b) by the Federal Trustees and/or the Tribe to pay for the costs of planning or implementing actions to restore, replace, or acquire the equivalent of natural resources at the Facility that have been injured as a result of releases of hazardous substances, or to reimburse the Federal Trustees' or the Tribe's assessment costs. 14. Net Smelter Return ("NSR") Payment. Commencing on the effective date of the Reorganization Plan, Metals shall pay to the United States and the Tribe, in the manner described below, a quarterly payment, payable on or before the thirtieth (30th) day (the "due date") after the conclusion of each quarter, equal to a percentage of the Net Smelter Returns (the "NSR") from all mining by Metals anywhere in the United States on properties in which Metals currently has an interest and all mining by any Sunshine entity from the Sunshine Mine or within one-mile of the current boundaries of the properties within the Basin in which Metals currently has an interest, which property is approximately depicted on the three maps attached as Exhibit B hereto (the "NSR Area"), in accordance with the following (the "NSR Interest"): PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 10 11
SILVER PRICE NSR AVERAGE ROYALTY ---------------- ------- $0-5.99 0% $6.00-$6.99 1% $7.00-$7.49 2% $7.50-$7.99 2.5% $8.00-$8.49 3% $8.50-$8.99 4% $9.00-$9.49 5% $9.50-$9.99 6% $10.00 and over 7%
15. Within thirty (30) days of the effective date of this Consent Decree, Metals shall record the NSR Interest by a royalty deed substantially in the form attached as Exhibit A as an encumbrance on the Sunshine Mine and on the mineral rights retained by Metals in the properties described in Exhibit B. Sunshine shall similarly record any other royalty payment obligations that may spring into effect pursuant to Paragraph 13 when, and if, a Sunshine entity acquires additional property or mineral rights within the NSR Area. Sunshine may sell or lease the Sunshine Mine or any other property or mineral rights within the NSR Area only subject to the NSR Interest. The United States and Tribe agree to negotiate in good faith with such prospective purchaser to cash out the NSR Interest if the purchaser or Sunshine or an affiliate so requests; provided, that, the decision to accept such cash out will remain in the sole discretion of the holder of the NSR Interest. 16. With each quarterly NSR payment, Sunshine, shall furnish a calculation sheet detailing the calculation of the payment amount. This calculation will include the relevant silver prices, production quantities, and NSR factors, along with source materials and references supporting the PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 11 12 computations. In the event Sunshine fails to make a NSR payment by the due date, Sunshine shall pay Interest from the due date until full payment has been made. 17. Any metal produced through the re-working of old tailings, waste rock, re-processing, or by any other means shall be included in the produced ounces, pounds, or tons for purposes of the NSR payment calculation. 18. The NSR payments shall be used only (a) by or at the direction of EPA to pay for the costs of response actions at the Facility after the effective date of this Consent Decree; or (b) by the Federal Trustees and/or the Tribe to pay for the costs of planning or implementing actions to restore, replace, or acquire the equivalent of natural resources at the Facility that have been injured as a result of releases of hazardous substances, or to reimburse the Federal Trustees' or the Tribe's assessment costs. NSR payments may be allocated between response costs and restoration or assessment costs as jointly determined by Plaintiffs, and Metals shall direct such payments in accordance with written instructions signed by the United States and the Tribe. In the absence of such joint instructions, Metals shall deposit all NSR payments in an account established in the registry of the Court, for the benefit of the United States and the Tribe, pursuant to an Order to be issued under Rule 67 of the Federal Rules of Civil Procedure following the entry of this Consent Decree. 19. Method of payment: a. Payments to the United States shall be made by FedWire Electronic Funds Transfer ("EFT") to the U.S. Department of Justice account in accordance with instructions to be provided to Sunshine by the United States following the lodging of this Consent Decree. In general, Sunshine will be required in those instructions to divide each payment to the United States PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 12 13 into specified percentages for EPA and the Federal Trustees and to transmit those percentages in accordance with current EFT procedures to each specified Federal account, referencing, and U.S.A.O. File Number ______ , DOJ Case #90-11-3-128/2, and either (i) EPA Region 10 and Site Spill ID #103D or (ii) DOI Account Number 14x5198 (NRDAR), Bunker Hill, Coeur d'Alene, Idaho, Sunshine, as appropriate. Any payments received by the Department of Justice after 4:00 p.m. Eastern Time shall be credited on the next business day. Sunshine shall send written notice to the United States that payment has been made in accordance with Section XIX (Notices and Submissions) and to the Following: Regional Financial Management Officer U.S. EPA Region 10 1200 Sixth Avenue Seattle, Washington 98101 Department of the Interior National Business Center Division of Financial Management Services Branch of Accounting Operations (Mailstop 1313) 1849 C Street, N.W. Washington, D.C. 20240 b. Payments received on behalf of EPA shall be deposited in the Coeur d'Alene Basin Special Account within the EPA Hazardous Substances Superfund, to be retained or used to conduct or finance response actions at or in connection with the Facility or to be transferred by EPA to the EPA Hazardous Substances Superfund. 20. Payments to the Tribe shall be made by check payable to "Coeur d'Alene Tribe" and sent to: Coeur d'Alene Tribe Finance Department 850 A Street P.O. Box 408 Plummer, Idaho 83851 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 13 14 The payment shall reference the Tribe's "NRD Case No. 91-0341" and this Consent Decree. Copies of check(s) sent pursuant to this Paragraph and any accompanying transmittal letter(s) shall be sent to the Tribe as provided in Section XIX (Notices and Submissions. 21. Preservation and Conveyance of Land. This Consent Decree is conditioned on the understanding, and Metals represents and warrants, that commencing on November 20, 2000, Metals has preserved the real property described in Exhibit C (the "Scheduled Real Property") and depicted approximately on Exhibit B in its then-existing condition and has not conducted any timber-cutting or other activities that would significantly impair the Scheduled Real Property's ecological value, and that it will continue to so preserve the ecological value of the Scheduled Real Property. 22. Within thirty (30) days after the effective date of the Consent Decree, Metals shall convey to an independent trustee (the "Property Trustee") approved by Plaintiffs all of its right, title, and interest in the Scheduled Real Property free and clear of all liens, claims and encumbrances (except for those permitted liens, claims or encumbrances that have been disclosed to and accepted by the United States and the Tribe); provided that (i) Metals will retain the mineral rights (the "Mineral Rights") to the Scheduled Real Property, subject to a covenant barring Metals from disturbing the surface of the Scheduled Real Property, (ii) Metals will retain access rights (the "Access Rights" and together with the Mineral Rights, the "Continuing Rights") to the Scheduled Real Property for the purpose of utilizing the Mineral Rights. Prior to making the conveyance required by this Paragraph, Sunshine shall obtain from Highwood Partners, L.P. and PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 14 15 Stonehill Capital Management, LLC (the "Mortgagees") releases of their mortgages on the Scheduled Real Property, other than with respect to the Continuing Rights, and a binding agreement subordinating the Mortgagees' remaining mortgage interests to the NSR Interest. The Property Trustee shall be required to convey the Scheduled Real Property to the United States or the Tribe, and/or to impose a conservation easement on such property, as described below, as partial compensation for injury to, destruction of, or loss of natural resources. 23. Metals shall enter into an agreement with the Property Trustee which obligates the Property Trustee to hold title to the Scheduled Real Property for the benefit of Metals, the United States, and the Tribe, and to convey title in accordance with joint instructions from the United States and the Tribe, who will instruct the Property Trustee as to such conveyance within eighteen (18) months (the "Conveyance Time") of the Effective Date. The Property Trustee shall convey title to each of the Scheduled Real Properties to the United States or the Tribe as and when they jointly direct; or, if the United States and the Tribe so direct or the Conveyance Time has expired without direction to the Property Trustee from the United States and the Tribe, the Property Trustee shall reconvey title in one or more of the parcels of the Scheduled Real Properties (the "Reconveyed Properties") to Metals, subject to a conservation easement, in a form approved by Plaintiffs, that prevents uses of the Reconveyed Property that may impair the ecological value of such Reconveyed Property. Metals shall pay the reasonable fees and expenses of the Property Trustee incurred in connection with the duties of such trustee as described herein during the Conveyance Time. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 15 16 VII. WORK TO BE PERFORMED 24. Cleanup Work. Metals shall conduct the following cleanup work at the Silver Summit Mine Site (also known as the Consil Mine Site) (the "SSM Site"): (i) test and characterize the barrels, drums, any other containers, and transformers at the SSM Site; (ii) if hazardous substances or physical hazards are found at the SSM Site, prepare and submit to EPA for review and approval a plan to address such hazardous substances or physical hazards, and implement the approved plan; and (c) restrict access to the SSM Site from the trail being constructed on the former Union Pacific railroad line, by such measures as securing buildings and installing fencing. 25. Work Plan and Implementation: Within twenty (20) days after the effective date of this Consent Decree, Metals shall submit to EPA for approval a draft plan (the "Work Plan") for the Work at the SSM Site described in Paragraph 24 above. The draft Work Plan shall provide a description of, and an expeditious schedule for the Work. EPA, at its discretion subject to the provisions of this Consent Decree, may approve, disapprove, require revisions to, or modify the draft Work Plan. Metals shall implement the Work Plan as finally approved by EPA. Once approved, or approved with modifications, the Work Plan, the schedule, and any subsequent modifications shall be fully enforceable under this Consent Decree. Metals shall notify EPA prior to performing any activity pursuant to the EPA-approved Work Plan. Metals shall not undertake any work at the SSM Site pursuant to the Work Plan without prior EPA approval. 26. Health and Safety Plan: Twenty (20) days after the effective date of this Consent Decree, Metals shall submit for EPA review and comment a plan that ensures the protection of the public health and safety during performance of the Work required pursuant to this Consent Decree. This plan shall be prepared in accordance with current EPA guidelines and shall comply with all current applicable Mine Safety and Health Administration regulations. Metals shall incorporate all PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 16 17 changes to the plan recommended by EPA, and implement the plan during the performance of the activities at the SSM Site. 27. Quality Assurance Plan: All sampling and analysis performed pursuant to this Consent Decree shall conform to EPA direction, approval, and guidance regarding sampling, quality assurance/quality control (QA/QC), data validation, and chain of custody procedures. Metals shall ensure that any laboratory used to perform analysis complies with EPA's Contract Laboratory Program (CLP). Metals shall submit to EPA the results of all sampling or tests and all other data collected or generated by or on behalf of Metals in connection with this Consent Decree to EPA within twenty (20) days of receipt by Metals. 28. Upon request by EPA, Metals shall have a CLP-compliant laboratory analyze samples submitted by EPA for quality assurance monitoring. Upon request by EPA, Metals shall provide to EPA the QA/QC procedures followed by all sampling teams and laboratories performing data collection and/or analysis. 29. Upon request by EPA, Metals shall provide to EPA or its authorized representative split or duplicate samples of any samples collected by Metals while performing activities at the SSM Site. Metals shall notify EPA not less than ten (10) days in advance of any sample collection activity. EPA shall have the right to take any additional samples that it deems necessary. 30. Prior to any off-site shipment of waste material from the SSM Site to an out-of-state waste management facility, unless the total of all such shipments will not exceed ten cubic yards, Metals shall provide written notification of the shipment to the appropriate state environmental official in the receiving facility's state and to EPA. Metals shall include in the written notification the following information, where available: (1) the name and location of the facility to which PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 17 18 the waste material is to be shipped; (2) the type and quantity of the waste material to be shipped; (3) the expected schedule for the shipment of the waste material; and (4) the method of transportation. Metals shall notify the state in which the planned receiving facility is located of major changes in the shipment plan, such as a decision to ship the waste material to another facility within the same state, or to a facility in another state. 31. Progress Reports: Beginning thirty (30) days after the effective date of this Consent Decree, Metals shall submit written progress reports to EPA concerning cleanup activities undertaken pursuant to this Consent Decree until such activities are fully completed . These progress reports shall be submitted every thirty (30) days during the cleanup activities at the SSM Site. These progress reports shall describe all significant developments during the preceding period; work performed and problems encountered; the actual work completed and any problems encountered in completing the work; the developments anticipated and the work scheduled during the next reporting period; and a schedule of completion for the unfinished work from the preceding period and work to be performed, anticipated problems and planned resolutions of past and anticipated problems. Each of these reports shall be submitted within forty-eight (48) hours of the end of each corresponding reporting period. Progress reports may be transmitted by fax followed by first class mail. 32. Final Report. Within thirty (30) days after completion of the Work required pursuant to this Consent Decree, Metals shall submit for EPA review and approval a final report summarizing the actions taken to comply with this Consent Decree. The final report shall include a good faith estimate of total costs or a statement of actual costs incurred in performing the Work, a detailed description of all work performed, a presentation of analytical results of all sampling and PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 18 19 analysis performed, and accompanying appendices containing all relevant documentation generated during performance of the Work (e.g., manifests, invoices, bills, contracts, and permits). The final report shall also include the following certification signed by a person who supervised or directed the preparation of that report: "Under penalty of law, I certify that to the best of my knowledge, after appropriate inquiries of all relevant persons involved in the preparation of the report, the information submitted is true, accurate, and complete in all material respects. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations." 33. Emergency Response and Notification of Releases: If any incident, or change in conditions, during activities conducted pursuant to this Consent Decree causes or threatens to cause an additional release of hazardous substances from the SSM Site or an endangerment to the public health, welfare, or the environment, Metals shall immediately take all appropriate action in order to abate or minimize such release or endangerment caused or threatened by the release. Metals shall also immediately notify EPA of the incident or change in conditions. Metals shall submit a written report to EPA within seven (7) days after each release, setting forth the events that occurred and the measures taken or to be taken to mitigate any release or endangerment caused or threatened by the release and the measures to prevent the reoccurrence of such a release. VIII. STIPULATED PENALTIES 34. In the event that any Sunshine entity fails to comply with any requirement applicable to it under Paragraphs 12-15 of this Consent Decree, or in the event Metals fails to perform the Work required under Section VII properly by the deadlines set forth in that Section or in the plans approved by EPA under that Section, the relevant Sunshine entity shall pay to EPA and the Tribe stipulated penalties in the following amounts for each day of every such violation: PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 19 20
Period of Noncompliance Penalty Per Violation Per Day ----------------------- ----------------------------- 1st through 30th day $ 200 31st through 60th day $ 750 Beyond 60 days $ 2,500
One-half of the above amounts shall be payable to EPA and one-half to the Tribe. 35. In the event that Metals fails to comply with any requirement applicable to it in Paragraph 21-23 of this Consent Decree (Preservation and Conveyance of Land), Metals shall pay to the United States and the Tribe stipulated penalties in the following amounts for each day of each and every violation of said requirements:
Period of Noncompliance Penalty Per Violation Per Day ----------------------- ----------------------------- 1st through 30th day $ 200 31st through 60th day $ 750 Beyond 60 days $ 2,500
One-half of the above amounts shall be payable to the United States and one-half to the Tribe. 36. Stipulated penalties shall begin to accrue on the day that performance is due or noncompliance occurs, and shall continue to accrue through the final day of correction of the noncompliance, provided, however, that if a dispute under this Consent Decree is submitted to the Court for resolution in accordance with Section IX, stipulated penalties shall not accrue with respect to the disputed obligation during the period, if any, beginning on the date of the Court's receipt of the final submission regarding the dispute until the date the Court issues a final decision on the dispute. Nothing herein shall prevent the simultaneous accrual of separate penalties for separate violations of this Consent Decree. 37. All penalties due to EPA, the United States, or the Tribe under this Section shall be paid within thirty (30) days of receipt by Sunshine of notification of noncompliance. Interest shall begin to accrue on the unpaid balance at the end of the 30-day period. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 20 21 38. a. Stipulated penalties due to EPA under this Section shall be paid by certified or cashier's check made payable to "EPA Hazardous Substances Superfund," shall be mailed to: Mellon Bank, EPA Region 10, ATTN: Superfund Accounting, P.O. Box 360903M, Pittsburgh, Pennsylvania 15251; shall indicate that the payment is for stipulated penalties, and shall reference the EPA Region and Site/Spill ID #102D, DOJ Case Number 90-11-3-128/2, and the name and address of the party making payment. b. Stipulated penalties due to the United States shall be paid by electronic funds transfer in accordance with instructions to be provided by the Financial Litigation Unit of the U.S. Attorney's Office for the District of Idaho, referencing U.S.A.O. File #_____ and DOJ Case #90- 11-3-128/2 and indicating that the payment is for stipulated penalties. c. Stipulated penalties due to the Tribe shall be paid by check payable to "Coeur d'Alene Tribe" and sent to: Coeur d'Alene Tribe Finance Department 850 A Street P.O. Box 408 Plummer, Idaho 83851 and shall indicate that the payment is for stipulated penalties and shall reference the Tribe's "NRD Case No. 91-0341" and this Consent Decree. Copies of check(s) paid pursuant to this Section, and any accompanying transmittal letter(s), shall be sent to the United States and the Tribe as provided in Section XIX (Notices and Submissions), and to Regional Financial Management Officer, Environmental Protection Agency, 1200 6th Avenue, MD-149, Seattle, Washington 98102. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 21 22 39. The payment of stipulated penalties shall not alter in any way Metals' obligation to complete the performance of the Work or any other obligations of Sunshine under this Consent Decree. 40. Nothing in this Consent Decree shall be construed as prohibiting, altering, or in any way limiting the ability of the United States or the Tribe to seek any other remedies or sanctions available to enforce Sunshine's obligations under this Consent Decree, including, but not limited to, contempt and/or penalties pursuant to Section 122(l) of CERCLA; provided, however, that the United States shall not seek civil penalties pursuant to Section 122(l) of CERCLA for any violation for which a stipulated penalty is provided herein, except in the case of a willful violation of the Consent Decree. Notwithstanding any other provision of this Section, EPA, the United States, or the Tribe may, in its unreviewable discretion, waive any portion of stipulated penalties that are due to it under this Consent Decree. IX. DISPUTE RESOLUTION 41. Unless otherwise expressly provided for in this Consent Decree or otherwise agreed in writing by the Parties with respect to a particular dispute, the dispute resolution procedures of this Section shall be the exclusive mechanism to resolve disputes arising under or with respect to this Consent Decree. However, the procedures set forth in this Section shall not apply to actions by the United States to enforce obligations of Sunshine that have not been disputed in accordance with this Section. 42. Any dispute which arises under or with respect to this Consent Decree shall in the first instance be the subject of informal negotiations between the parties to the dispute. The period for informal negotiations shall not exceed 30 days from the time the dispute arises, unless it is modified PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 22 23 by written agreement of the parties to the dispute. The dispute shall be considered to have arisen when one party sends the other parties a written Notice of Dispute. 43. In the event that the parties cannot resolve a dispute by informal negotiations under the preceding Paragraph, then the position advanced (a) by EPA on any dispute relating to the Work or (b) by Plaintiffs on any other disputed matter shall be considered binding unless, within ten (10) days after the conclusion of the informal negotiation period, Sunshine invokes the formal dispute resolution procedures of this Section by serving on the United States and the Tribe a written Statement of Position on the matter in dispute, including, but not limited to, any factual data, analysis or opinion supporting that position and any supporting documentation relied upon by Sunshine. 44. Disputes relating to the Work. With respect to any dispute relating to the Work, following receipt of Metals' Statement of Position, the Director of the Office of Environmental Cleanup, EPA Region 10, will issue a decision resolving the dispute. The Office of Environmental Cleanup Director's decision shall be binding on Metals unless, within fifteen (15) days of receipt of the decision, Metals files with the Court and serves on the parties a motion for judicial review of the decision setting forth the matter in dispute, the efforts made by the parties to resolve it, the relief requested, and the schedule, if any, within which the dispute must be resolved to ensure orderly implementation of the Consent Decree. The United States may file a response to Metals' motion. In proceedings on any dispute relating to the Work, Metals shall have the burden of demonstrating that the EPA's position is arbitrary and capricious or otherwise not in accordance with the law. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 23 24 45. Other disputes. With respect to any dispute under this Consent Decree not relating to the Work, following receipt of Sunshine's Statement of Position, Plaintiffs shall serve upon Sunshine a written statement of their position on the dispute. The position of Plaintiffs shall be binding on Sunshine unless, within thirty (30) days after receipt of Plaintiffs' statement of position, Sunshine files with the Court and serves on Plaintiffs a motion for judicial review of the decision setting forth the matter in dispute, the efforts made by the parties to resolve it, the relief requested, and the schedule, if any, within which the dispute must be resolved to ensure orderly implementation of the Consent Decree. Either or both of the Plaintiffs may file a response to Sunshine's motion Judicial review of any dispute governed by this Paragraph shall be governed by applicable principles of law. 46. The invocation of formal dispute resolution procedures under this Section shall not extend, postpone or affect in any way any obligation of Sunshine under this Consent Decree, not directly in dispute, unless Plaintiffs agree or the Court rules otherwise. Except as provided in Paragraph 36 with respect to disputes submitted to the Court, stipulated penalties with respect to the disputed matter shall continue to accrue, but payment shall be stayed pending resolution of the dispute. Notwithstanding the stay of payment, stipulated penalties shall accrue (except as provided in Paragraph 36) from the first day of noncompliance with any applicable provision of this Consent Decree. Stipulated penalties shall be assessed and paid as provided in Section VIII (Stipulated Penalties), except that no penalty shall be paid to the extent Sunshine prevails on the disputed issue. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 24 25 X. COVENANTS NOT TO SUE BY PLAINTIFFS 47. Covenants Not To Sue By the United States. Except as specifically provided in Section XI (Reservation of Rights by Plaintiffs), the United States covenants not to sue or to take any administrative action against Sunshine under Sections 106 and 107 of CERCLA, 42 U.S.C. Sections 9606, 9607, Section 7003 of Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6973, Section 311(f) of the Clean Water Act, 33 U.S.C. Section 1321(f), or under any other statute providing a cause of action for natural resource damages on behalf of the public, for the performance of response actions or the recovery of past or future response costs or natural resource damages at the Facility. The United States further covenants not to sue or to take any administrative action against Sunshine to enforce any obligations of Sunshine to perform response actions or other work, or to pay any costs, under the 1994 Consent Decree. 48. Covenant Not to Sue by the Tribe. Except as expressly provided in Section XI, the Tribe covenants not to sue or to take administrative action against Sunshine for response costs or natural resource damages at the Facility or any other common law or statutory claim relating to the Facility. XI. RESERVATION OF RIGHTS BY PLAINTIFFS 49. Notwithstanding any other provision of this Consent Decree, the United States' and the Tribe's covenants not to sue set forth in Section X shall not apply to, and the United States and Tribe reserve all rights with respect to: (i) liability of any Sunshine entity based on a failure by that entity to meet a requirement of the Consent Decree; (ii) criminal liability; PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 25 26 (iii) liability of Sunshine within the actual boundaries of the Owned/Operated Property; and (iv) liability for the actual disposal or discharge of hazardous substances by Sunshine at the Facility after the effective date of the Consent Decree and the Reorganization Plan; provided that the United States and the Tribe may use the reservations in (iii) and (iv) above only to pursue causes of action against a Sunshine entity that is an owner or operator of the property or facility giving rise to the liability or that meets the liability standards of Subsections (3) or (4) of Section 107(a) of CERCLA (arranger and transporter liability); and, so long as the Sunshine entities remain separate legal entities, the United States and the Tribe will not assert a cause of action relying on the reservations set forth in (iii) and (iv) above against any Sunshine entity based on a theory that it should be consolidated with or is the "alter ego" of the entity that owns or operates the relevant property or facility or arranged for the disposal or transported for disposal the relevant wastes (the "directly liable entity"), or on a theory of "piercing the veil" from the directly liable entity to such other Sunshine entity. 50. Notwithstanding any other provision of this Consent Decree, the United States and the Tribe reserve, and this Consent Decree is without prejudice to, the right to re-institute or reopen these actions, or to commence new actions, if the certification made by Sunshine in Section XVII is misleading, false or materially incomplete. XII. COVENANTS NOT TO SUE BY SUNSHINE 51. Sunshine covenants not to sue and agree not to assert any claims or causes of action against the United States or the Tribe, their contractors or employees, with respect to the Facility or this Consent Decree, including but not limited to: PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 26 27 a. any direct or indirect claim for reimbursement from the Hazardous Substance Superfund based on Sections 106(b)(2), 107, 111, 112, or 113 of CERCLA, 42 U.S.C. Sections 9606(b)(2), 9607, 9611, 9612, or 9613, or any other provision of law; b. any claim arising out of response actions at the Facility for which the Past or Future Response Costs were incurred; and c. any claim against the United States pursuant to Sections 107 and 113 of CERCLA, 42 U.S.C. Sections 9607 and 9613, relating to the Facility. 52. Nothing in this Consent Decree shall be deemed to constitute approval or preauthorization of a claim within the meaning of Section 111 of CERCLA, 42 U.S.C. Section 9611, or 40 C.F.R. Section 300.700(d). 53. Sunshine's covenant not to sue set forth above shall not apply in the event that the United States or the Tribe brings a cause of action against Sunshine pursuant to their reservations of rights in Section XI of this Consent Decree, but only to the extent arising from the same transaction or occurrences giving rise to the cause of action asserted by the United States or the Tribe pursuant to those reservations. XIII. EFFECT OF SETTLEMENT/CONTRIBUTION PROTECTION 54. Sunshine shall be entitled to protection from contribution actions or claims as provided by CERCLA Section 113(f)(2) for matters addressed by this Consent Decree. Matters addressed by the Consent Decree for purposes of contribution protection shall include all claims or causes of action under Sections 106 and 107 of CERCLA, Section 7003 of RCRA, and Section 311(f) of the Clean Water Act for injunctive relief, response costs, or natural resource damages PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 27 28 with respect to the Facility, except for any claim by ASARCO, Inc. or Hecla Mining Co. for money that it has actually expended prior to August 23, 2000, pursuant to the 1994 Consent Decree. 55. To the extent that (a) CERCLA Section 113(f)(2) does not entitle Sunshine to contribution protection related to the Tribe's claims and causes of action against Sunshine, and/or (b) the claims and causes of action of the United States in CIV96-0122-N-EJL do not overlap with the claims and causes of action of the Tribe in CIV 91-0342-N-EJL, the Tribe agrees as follows: In the event the Tribe obtains a judgment of joint and several liability against or settles with any defendant or other parties which may be brought into CIV91-0342-N-EJL as defendants or third parties, then this Consent Decree shall operate to and will release Sunshine from any duty to contribute any pro rata share of any such judgment or settlement. Accordingly, with respect to the matters addressed in the immediately prior sentence, Sunshine will not be required to pay any amount in contribution, indemnification or under any other theory of recovery to any other parties. 56. Nothing in this Consent Decree shall be construed to create any rights in, or grant any cause of action to, any person not a Party to this Consent Decree. The preceding sentence shall not be construed to waive or nullify any rights that any person not a signatory to this decree may have under applicable law. Each of the Parties expressly reserves any and all rights (including, but not limited to, any right to contribution), defenses, claims, demands, and causes of action which each Party may have with respect to any matter, transaction, or occurrence relating in any way to the Site against any person not a Party hereto. 57. In accordance with Section 113(f)(2) of CERCLA, only the value of the consideration actually received by the United States or the Tribe under this Consent Decree, and not the total PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 28 29 amount of Sunshine's potential liability to the United States or the Tribe at the Facility, shall be credited by the United States or the Tribe to their respective accounts for the Facility. 58. In any subsequent administrative or judicial proceeding initiated by the United States or the Tribe for injunctive relief, recovery of response costs, or other appropriate relief relating to the Facility, Sunshine shall not assert, and may not maintain, any defense or claim based upon the principles of waiver, res judicata, collateral estoppel, issue preclusion, claim-splitting, or other defenses based upon any contention that the claims raised by the United States in the subsequent proceeding were or should have been brought in the instant case; provided, however, that nothing in this Paragraph affects the enforceability of the covenants not to sue set forth in Section X (Covenants Not to Sue by Plaintiffs). XIV. SITE ACCESS 59. Commencing on the date of lodging of this Consent Decree, Metals agrees to provide the United States and its representatives, including EPA and its contractors, and the Tribe access at all reasonable times to the SSM Site which is determined by EPA to be required for the implementation of this Consent Decree, or for the purpose of conducting any response activity related to the SSM Site, including, but not limited to, the following: a. Monitoring of investigation, removal, remedial, or other activities at the SSM Site; b. Verifying any data or information submitted to the United States; c. Conducting investigations relating to contamination at or near the SSM Site; d. Obtaining samples, including, but not limited to, soils, sediments, surface waters, and groundwater samples; PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 29 30 e. Assessing the need for, planning, or implementing response actions at or near the SSM Site; f. Inspecting and copying records, operating logs, contracts, or other documents maintained or generated by Sunshine or its agents, consistent with Section XIII (Access to Information); and g. Assessing Metals' compliance with Section VII of this Consent Decree. 60. Notwithstanding any provision of this Consent Decree, the United States retains all of its access authorities and rights, including enforcement authorities related thereto, under CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6927, and any other applicable statutes or regulations. XV. ACCESS TO INFORMATION 61. Sunshine shall provide to EPA and the Tribe, upon request, copies of all documents and information within their possession or control or that of their contractors or agents relating to activities at the Facility or to the implementation of this Consent Decree, including, but not limited to, sampling, analysis, chain of custody records, manifests, trucking logs, receipts, reports, sample traffic routing, correspondence, or other documents or information related to the Work. Sunshine shall also make available to EPA, for purposes of investigation, information gathering, or testimony, their employees, agents, or representatives with knowledge of relevant facts concerning the performance of the Work. No claim of confidentiality or privilege shall be made with respect to any data, including, but not limited to, all sampling, analytical, monitoring, hydrogeologic, scientific, chemical, or engineering data, or any other documents or information to the extent they evidence conditions at or around the Facility. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 30 31 XVI. RETENTION OF RECORDS 62. Until 10 years after the effective date of this Consent Decree, Sunshine shall preserve and retain all records and documents now in its possession or control or which come into its possession or control that relate in any manner to the performance of the Work or liability of any person for response actions conducted and to be conducted at the Facility, regardless of any corporate retention policy to the contrary. Until 10 years after the effective date of this Consent Decree, Sunshine shall also instruct its contractors and agents to preserve all documents, records, and information of whatever kind, nature or description relating to the performance of the Work. 63. At the conclusion of this document retention period, Sunshine shall notify the United States and the Tribe at least 90 days prior to the destruction of any such records or documents, and, upon request by the United States or the Tribe, Sunshine shall deliver any such records or documents to EPA or the Tribe. Sunshine may assert that certain documents, records and other information are privileged under the attorney-client privilege or any other privilege recognized by federal law. If Sunshine asserts such a privilege, they shall provide the Plaintiffs with the following: (1) the title of the document, record, or information; (2) the date of the document, record, or information; (3) the name and title of the author of the document, record, or information; (4) the name and title of each addressee and recipient; (5) a description of the subject of the document, record, or information; and (6) the privilege asserted by Sunshine. However, no documents, reports or other information created or generated pursuant to the requirements of the Consent Decree shall be withheld on the grounds that they are privileged. 64. Sunshine hereby certifies that, to the best of its knowledge and belief, after thorough inquiry, it has not altered, mutilated, discarded, destroyed or otherwise disposed of any records, documents or other information relating to its potential liability regarding the Facility since PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 31 32 notification of potential liability by the United States or the State or the filing of suit against it regarding the Site and that it has fully complied with any and all EPA requests for information pursuant to Section 104(e) and 122(e) of CERCLA, 42 U.S.C. Sections 9604(e) and 9622(e), and Section 3007 of RCRA, 42 U.S.C. Section 6927. XVII. CERTIFICATIONS 65. By signing this Consent Decree, Sunshine certifies that, to the best of its knowledge and belief, (a) the information that it has filed in connection with its reorganization proceedings in the Delaware District Court, or has otherwise provided to the United States or the Tribe, concerning its financial condition, operations, and assets (including its disclosures with respect to the existence of any insurance that may be applicable to Plaintiffs' claims and any encumbrances on the Scheduled Real Property) is true, accurate, and materially complete; and (b) in accordance with Paragraph 21 above, it has preserved the condition of the Scheduled Real Property and has not conducted any activity on that property that may significantly impair its ecological value, since November 20, 2000. In the event these certifications are found to be materially false, the Consent decree shall be voidable in Plaintiffs' sole discretion. XVIII. NOTICE OF BUSINESS ACTIVITIES 66. Within twenty-four (24) hours of issuing any press release, filing any report or notice with the Securities and Exchange Commission, or making any other information about Sunshine's business activities available to the public, Sunshine shall send a copy of the press release, report or notice, or other information to the United States and the Tribe. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 32 33 XIX. NOTICES AND SUBMISSIONS 67. Whenever, under the terms of this Consent Decree, notice is required to be given or a document is required to be sent by one party to another, it shall be directed to the individuals at the addresses specified below, unless those individuals or their successors give notice of a change to the other Parties in writing. Written notice as specified herein shall constitute complete satisfaction of any written notice requirement of the Consent Decree with respect to the United States, EPA, the Federal Trustees, the Tribe and Sunshine, respectively. As to the United States: Chief, Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice P.O. Box 7611 Washington, D.C. 20044-7611 Re: DJ # 90-11-3-128/2 Director, Environmental Cleanup Office U.S. Environmental Protection Agency Region 10 1200 Sixth Avenue Seattle, Washington 98101 Regional Solicitor U.S. Department of the Interior 500 NE Multnomah, Suite 607 Portland, Oregon 97232 As to EPA: Anne Daily U.S. Environmental Protection Agency Region 10 1200 Sixth Avenue Seattle, WA 98101 Cara Steiner-Riley U.S. Environmental Protection Agency Region 10 1200 Sixth Avenue Seattle, WA 98101 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 33 34 As to the Federal Trustees: Regional Director U. S. Fish and Wildlife Service 911 NE 11th Ave. Portland, Oregon 97232 As to the Tribe: Chairman Coeur d'Alene Tribe P.O. Box 408 Plummer, Idaho 83851 Raymond C. Givens Givens, Funke and Work 424 Sherman Avenue, Suite 308 P.O. Box 969 Coeur d'Alene, Idaho 83816 As to Sunshine: Fred M. Gibler Evans, Keane P.O. Box 659 Kellogg, Idaho 83837 William M. Davis Sunshine Mining & Refining Company 5956 Sherry Lane, Suite 1621 Dallas, Texas 75225 XX. RETENTION OF JURISDICTION 68. This Court shall retain jurisdiction over this matter for the purpose of interpreting and enforcing the terms of this Consent Decree. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 34 35 XXI. INTEGRATION AND APPENDICES 69. This Consent Decree and its appendices and expressly incorporated documents constitute the final, complete and exclusive agreement and understanding among the Parties with respect to the settlement embodied in this Consent Decree. The Parties acknowledge that there are no representations, agreements or understandings relating to the settlement other than those expressly contained in this Consent Decree. The following appendices are attached to and incorporated into this Consent Decree: Exhibit A: Form of Net Smelter Return Interest Exhibit B: Sunshine Mineral Interests in the Basin Exhibit C: Scheduled Real Property Exhibit D: SSM Site XXII. MODIFICATION 70. No material modification shall be made to this Consent Decree without written agreement of the Parties and approval of the Court. Modifications to the Consent Decree that do not materially affect its terms may be made by written agreement of the Parties; provided that any such agreement shall be filed with the Court. Modifications to the plans and schedules for performance of the Work required by Section VII may be made by written agreement between EPA and Metals, after providing the Tribe with a reasonable opportunity to review and comment on the proposed modification. PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 35 36 XXIII. LODGING AND OPPORTUNITY FOR PUBLIC COMMENT 71. Consistent with 42 U.S.C. Section 9622(d)(2), this Consent Decree shall be lodged with thE Court for a period of not less than 14 days for public notice and comment. The United States reserves the right to withdraw or withhold its consent to the Consent Decree if the comments regarding the Consent Decree disclose facts or considerations which indicate that the Consent Decree is inappropriate, improper, or inadequate. Sunshine consents to the entry of this Consent Decree without further notice. 72. If for any reason this Court should decline to approve this Consent Decree in the form presented, this agreement is voidable at the sole discretion of any Party and the terms of the agreement may not be used as evidence in any litigation. XIV. EFFECTIVE DATE 73. The effective date of this Consent Decree shall be the date upon which it is entered by the Court. XXV. SIGNATORIES/SERVICE 74. Each undersigned representative of Sunshine or the Tribe and the Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice certifies that he or she is fully authorized to enter into the terms and conditions of this Consent Decree and to execute and legally bind such Party to this document. 75. Sunshine hereby agrees not to oppose entry of this Consent Decree by this Court or to challenge any provision of this Consent Decree, unless the United States has notified Sunshine in writing that it no longer supports entry of the Consent Decree. 76. Sunshine shall identify, on the attached signature page, the name and address of an agent who is authorized to accept service of process by mail on behalf of Sunshine with respect to PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 36 37 all matters arising under or relating to this Consent Decree. Sunshine hereby agrees to accept service in that manner and to waive the formal service requirements set forth in Rule 4 of the Federal Rules of Civil Procedure and any applicable local rules of this Court, including but not limited to, service of a summons. XXVI. FINAL JUDGMENT 77. Upon approval and entry of this Consent Decree by the Court, this Consent Decree shall constitute a final judgment resolving all claims in these actions between and among the United States, the Tribe, and Sunshine, in accordance with its terms; provided that any party may apply to this Court, without filing a new action, for the purpose of enforcing the terms of the Consent Decree. The Court finds that there is no just reason for delay and therefore enters this Decree as a final judgment under Fed. R. Civ. P. 54 and 58. SO ORDERED THIS _______ DAY OF ________________, ____. ----------------------------------- Honorable Edward J. Lodge United States District Judge PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 37 38 THE UNDERSIGNED PARTIES enter into this Partial Consent Decree in the matter of United States v. ASARCO Incorporated, et al. FOR THE UNITED STATES OF AMERICA Date: --------------- ------------------------------------ LOIS J. SCHIFFER Assistant Attorney General Environment & Natural Resources Division Date: --------------- ------------------------------------ WILLIAM D. BRIGHTON, Assistant Chief THOMAS SWEGLE, Senior Lawyer ALAN TENENBAUM, Senior Lawyer Environmental Enforcement Section 1425 New York Avenue, N.W. Washington, DC 20005 (202) 514-2244 Date: --------------- ------------------------------------ ALAN BURROW Assistant U.S. Attorney District of Idaho P.O. Box 32 Boise, ID 83707 (208) 334-1211 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 38 39 Date: --------------- ------------------------------------ CHARLES FINDLEY Regional Director U.S. Environmental Protection Agency Region 10 1200 Sixth Avenue Seattle, Washington, 98101 Date: --------------- ------------------------------------ CARA STEINER-RILEY Assistant Regional Counsel U.S. Environmental Protection Agency Region 10 1200 Sixth Avenue Seattle, Washington, 98101 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 39 40 THE UNDERSIGNED PARTIES enter into this Partial Consent Decree in the matter of United States v. ASARCO Incorporated, et al. FOR THE COEUR d'ALENE TRIBE Date: --------------- ------------------------------------ ERNEST STENSGAR Tribal Chairman Coeur d'Alene Tribe P.O. box 408 Plummer, Idaho 83851 Date: --------------- ------------------------------------ RAYMOND C. GIVENS Counsel for Coeur d'Alene Tribe Givens, Funke and Work P.O. Box 969 Coeur d'Alene, Idaho 83816 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 40 41 THE UNDERSIGNED PARTIES enter into this Partial Consent Decree in the matter of United States v. ASARCO Incorporated, et al. FOR SUNSHINE MINING AND REFINING CO., SUNSHINE PRECIOUS METALS, Inc., SUNSHINE ARGENTINA, INC. AND SUNSHINE EXPLORATION, INC. Date: --------------- ------------------------------------- JOHN SIMKO Chairman Sunshine Mining and Refining Company 877 W. Main Street, Suite 600 Boise, Idaho 837802 PARTIAL CONSENT DECREE WITH SUNSHINE DEFENDANTS IN U.S. v. ASARCO - PAGE 41 EX-2.4 5 d84396ex2-4.txt NOTICE OF EFFECTIVE DATE OF 3RD AMENDED CHAPTER 11 1 EXHIBIT 2.4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE - ------------------------------------ ) In re ) Chapter 11 ) SUNSHINE MINING AND REFINING ) Case No. 00-3409 (MFW) COMPANY, et. al. ) ) Jointly Administered Debtors ) ) - ------------------------------------ ) NOTICE OF THE EFFECTIVE DATE PLEASE TAKE NOTICE THAT: 1. The order confirming the Third Amended Joint Chapter 11 Plan of Reorganization of Sunshine Mining and Refining Company and its Debtor Subsidiaries having become a final order, and all conditions precedent having been properly satisfied or waived, the Plan became effective on February 5, 2001 (the "Effective Date"). 2. All objections to claims must be filed and served before 120 days after the Effective Date. 3. All professional fee applications must be filed before 60 days after the Effective Date. 4. All objections to claims of professionals must be filed before 90 days after the Effective Date (or 30 days after the filing of the fee application, if later). 5. All administrative claims must be filed before 30 days after the Effective Date. 6. All objections to administrative claims must be filed before 120 days after the Effective Date (or 60 days after the filing of the request, if later). 2 Dated: February 7, 2001 Wilmington, Delaware /s/ [ILLEGIBLE] ----------------------------------- Daniel J. DeFranceschi (No. 2732) John H. Knight (No. 3848) Christopher D. Loizides (No. 3968) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 (302) 658-6541 Attorneys for Reorganized Debtors EX-3.1 6 d84396ex3-1.txt AMENDED/RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SUNSHINE MINING AND REFINING COMPANY (A DELAWARE CORPORATION) The present name of the Corporation is Sunshine Mining and Refining Company. The Corporation was incorporated under the name "Sunshine Holdings, Inc." by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on June 1, 1988. This Amended and Restated Certificate of Incorporation of the Corporation, which both restates and further amends the provisions of the Corporation's Certificate of Incorporation, was adopted in accordance with Section 303 of the General Corporation Law of the State of Delaware. Provision for this Amended and Restated Certificate of Incorporation is contained in an order dated December 5, 2000, of the United States Bankruptcy Court for the District of Delaware in In re: Sunshine Mining and Refining Company, et. al. The Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows: ARTICLE I NAME The name of the Corporation is Sunshine Mining and Refining Company (the "Corporation"). ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, 19801. The name of its registered agent at that address is The Corporation Trust Company. ARTICLE III CORPORATE PURPOSES The purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL"). 2 ARTICLE IV CAPITAL STOCK The total number of shares of all classes of capital stock that the Corporation is authorized to issue is two hundred and twenty million (220,000,000) shares, 200,000,000 of which shares shall be common stock, par value $0.01 per share ("COMMON STOCK") and 20,000,000 of which Shares shall be designated as Preferred Stock, par value $0.01 per share ("Preferred"). The Board of Directors of the Corporation is expressly authorized to provide from time to time for the issue of all or any of the shares of Preferred in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, and such designations, preferences, and relative, participating, optional or other special rights, and such qualifications, limitations, or restrictions thereof, as shall be stated and express in the resolution or resolutions adopted by the Board of Directors of the Corporation providing for the issue of such shares and as may be permitted by the DGCL. All shares of capital stock shall be "voting" as required by Section 1123(a) of the United States Bankruptcy Code. ARTICLE V CORPORATE EXISTENCE The Corporation is to have perpetual existence. ARTICLE VI THE BOARD OF DIRECTORS (a) Number of Directors. The number of directors comprising the Board of Directors of the Corporation shall be five. (b) Election of Directors. Elections of directors need not be by written ballot unless the by-laws of the Corporation so provide. (c) Classification of Directors. The directors of the Corporation shall be divided into three classes. The term of office of the directors of Class I shall expire at the annual meeting of the stockholders of the Corporation in 2002. The term of office of the directors of Class II shall expire at the annual meeting of the stockholders of the Corporation in 2003. The term of office of the directors of the Class III shall expire at the annual meeting of the stockholders of the Corporation in 2004. At each annual election of directors, directors shall be chosen for a full three-year term to succeed those whose terms expire. Directors elected from time to time other than as successors to directors whose terms have expired, or to fill the remaining term of a director previously elected, shall be assigned by the Board of Directors of the Corporation to the first, second or third class so as to maintain, so far as is possible, equal numbers of directors in each class. (d) Vacancies. Except as required by law or this Certificate, all vacancies on the Board must be filled by unanimous vote of the non-employee directors then in office, although less than a quorum, or by a sole remaining director. Vacancies may not be filled by the Stockholders. 2 3 (e) Removal of Directors. Directors may not be removed other than for "cause." As used herein, "cause" shall consist of the conviction in a court of law for any felony involving fraud, theft, deception or breach of fiduciary duties. (f) Authority. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to act as set forth in paragraphs (i), (ii) and (iii) below: (i) to make, alter, amend or repeal the By-Laws; (ii) to designate one or more committees, each committee to consist of one or more directors of the Corporation, which, to the extent provided in the resolution designating the committee or in the By-Laws of the Corporation, shall, subject to the limitations prescribed by law or otherwise in this Certificate of Incorporation, have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require such seal (such committee or committees shall have such name or names as may be provided in the By-Laws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors); and (iii) to exercise, in addition to the powers and authorities hereinbefore or by law conferred upon it, any such powers and authorities and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware and of this Certificate of Incorporation (and in particular Article III) and of the By-Laws of the Corporation. Notwithstanding anything to the contrary contained in this Article VI, the Board of Directors of the Corporation shall not act, or propose to act, in any manner contrary to the provisions of the Call Option Agreement and the Pledge Agreement. (g) Voting on Certain Matters. The following transactions shall require the approval of two-thirds of the Corporation's directors: (i) A merger or consolidation of the Corporation; (ii) A sale or disposition of all or substantially all of the Corporation's assets; (iii) The appointment of the Corporation's chief executive officer, chief financial officer or chief operating officer; (iv) The issuance of common stock or securities or securities convertible into common stock; (v) Any change in the size of the Board of Directors; 3 4 (vi) Any amendment to this Certificate of Incorporation or the By-Laws of the Corporation; and (vii) Any transaction between the Corporation and any affiliate of the Corporation, Sunshine International Mining, Inc. ("Newco") or Sunshine Argentina, Inc. ("Sunshine Argentina") or any affiliate of The Liverpool Limited Partnership, Elliott International, L.P., Stonehill Institutional Partners, L.P. or Stonehill Offshore Partners Limited (other than transactions between the Corporation and any wholly-owned subsidiary of the Corporation other than Newco or Sunshine Argentina); (viii) Any borrowing by the Corporation in excess of US$3 million; and (ix) Any material agreement with a material impact on the value or the marketability of the Pirquitas Mine located in Jujuy, Argentina. Amendment of this provision shall require the approval of two-thirds of the shares of Common Stock outstanding. The other provisions may be amended pursuant to the Delaware General Corporation Code. (h) Initial Directors. The names and mailing addresses of the persons who are to serve as directors until the annual meeting of stockholders at which their term expires or until their successors are elected and qualified are as follows, each of whom shall serve in the class of directors set forth beneath his or her name:
NAME ADDRESS - ---- ------- John Simko - Class I 5956 Sherry Lane Suite 6121 Dallas, Texas 75225 Charles C. Reardon - Class II 141 South Windsor Avenue Bright Waters, New York 11718 Keith McCandlish - Class II #20, 708-11th Avenue, S.W. Calgary, Alberta Canada, T2R0E4 Arnold Kastenbaum - Class III 655 Barrymore Lane Mamaroneck, New York 10543 George Elvin - Class III 590 Madison Avenue 21st Floor New York, New York
4 5 ARTICLE VII INDEMNIFICATION OF DIRECTORS (a) To the fullest extent permitted by the Delaware General Corporation Law, as it now exists or may hereafter be amended, a director or officer of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation existing at the time of such repeal or modification. (b) To the fullest extent permitted by Section 145 of the DGCL or any successor provisions thereto, (i) the Corporation shall (A) indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding (a "proceeding"), whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation, against expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding and (B) pay, upon receipt of any undertaking to repay amounts advanced required by the DGCL, expenses incurred by such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, and (ii) the Corporation may (A) indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding and (B) pay expenses incurred by such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding. Notwithstanding clause (i)(A) of the preceding sentence, the Corporation shall be required to indemnify an indemnitee in connection with a proceeding (or part thereof) commenced by such indemnitee only if the commencement of such proceeding (or part thereof) by the indemnitee was authorized by the Board of Directors of the Corporation. The foregoing indemnification and advancement of expenses provisions shall not be deemed exclusive of any other rights to indemnification or advancement of expenses to which any such person may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise and are deemed to be contract rights with respect to each person entitled to the benefits of such new provisions. Any change in law that purports to restrict the ability of the Corporation to indemnify or advance expenses to any such person shall not affect the Corporation's obligation or right to indemnify and advance expenses to any such person with respect to any action, claim, suit or proceeding that occurred or arose or that is based on events or acts that occurred or arose, prior to such change in law. 5 6 ARTICLE VIII RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law and all the provisions of this Certificate of Incorporation, and all rights and powers conferred in this Certificate of Incorporation on stockholders, directors and officers are subject to this reserved power. IN WITNESS WHEREOF, pursuant to Section 303 of the DGCL and the terms of a Plan of Reorganization approved by the United States Bankruptcy Court for the District of Delaware, having jurisdiction over the Corporation, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its President and attested by its Secretary, all on February 16, 2001. SEAL By: /s/ William W. Davis ------------------------------------------- Name: William W. Davis President, Sunshine Mining and Refining Company Attest: /s/ Mary Jo Williams - -------------------- Name: Mary Jo Williams Secretary, Sunshine Mining & Refining Company 6 EX-3.2 7 d84396ex3-2.txt AMENDED/RESTATED BYLAWS 1 EXHIBIT 3.2 AMENDED AND RESTATED BY-LAWS of SUNSHINE MINING AND REFINING COMPANY (a Delaware Corporation) ---------- ARTICLE I STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of, the Corporation by the Chairman or Vice-Chairman of the board of directors of the Corporation (the "Board"), if any, or by the President or Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation certifying the number of shares owned by him in the Corporation. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue. Whenever the Corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock and whenever the Corporation shall issue any shares of its stock as partly paid stock, the certificate representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the Delaware General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The Corporation may issue a new certificate of stock in place of any certificate therefore issued by it, alleged to have been lost, stolen or destroyed, and the Board may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. 2. FRACTIONAL SHARE INTERESTS. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in 2 cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation, in each case to the extent of such fraction. The Board may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board may impose. 3. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the Corporation shall be made only on the stock ledger of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation or with a transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty days nor less than 10 days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is express; and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders all apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the Corporation has only one class of shares of stock outstanding, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of 2 3 record of outstanding shares of stock of any class upon which or upon whom the certificate of incorporation of the Corporation (the "Certificate of Incorporation") confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the Delaware General Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder. 6. STOCKHOLDER MEETINGS. (a) TIME. The annual meeting shall be held on the date and at the time fixed, from time to time, by the Board, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the Corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the Board. (b) PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the Board may, from time to time, fix. Whenever, the director shall fail to fix such place, the meeting shall be held at the registered office of the Corporation in the State of Delaware. (c) CALL. Annual meetings and special meetings may be called by the Board or by any officer instructed by the Board to call the meeting. (d) NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the Corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes of the meeting. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is to be called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents provided by the Delaware General Corporation Law. Except as otherwise provided by the Delaware General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time, shall have been waived, and directed to each stockbroker at his record address or at such other address which he may have furnished by requested in writing to the Secretary of the Corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the Board, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver or notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the 3 4 meeting is not lawfully called or convened. Neither the business to be transacted at, not the purpose or purposes of, any regular or special meeting of the stockholders need to be specified in any written waiver of notice. (e) STOCKHOLDER LIST. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or otherwise municipality or community where the meeting is to be held, place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote at any meeting of stockholders. (f) CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting; the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, if any, or, if none of the foregoing is in office and present and acting, by a Chairman to be chosen by the stockholders. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if nether neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. (g) PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provided for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. (h) INSPECTORS. The Board, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting of any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting 4 5 power of each, the shares of stock represented at the meeting, existence of a quorum, the validity and effect of proxies, and shall receive votes , ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as a re proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. (i) QUORUM. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. (j) VOTING. Each share of stock shall entitle the holder thereof to one vote. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast except where the Delaware General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the Certificate of Incorporation or these By-Laws. In the election of directors, and for any other action, voting need not be by ballot. 7. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the Delaware General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE II DIRECTORS 1. FUNCTIONS AND DEFINITION. The business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole Board" herein refers to the total number of directors which the Corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, or a citizen or resident of the United States or the State of Delaware. The Board shall consist of five (5) persons. 3. CLASSIFICATION. The Board shall be classified as provided in Article VI of the Certificate of Incorporation. 4. ELECTION AND TERM. The members of the Board shall be elected for the terms set forth in Article VI of the Certificate of Incorporation. 5 6 5. MEETINGS. (a) TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. (b) PLACE. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. (c) CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or the President, or of a majority of the directors in office. (d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time for the meeting stated herein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. (e) QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as otherwise provided herein or in the Certificate of Incorporation and except as otherwise provided by the Delaware General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the Delaware General Corporation Law and these By-Laws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board of action of disinterested directors. (f) CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. 6. COMMITTEES. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting 6 7 of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board in the management of the business and affairs of the Corporation with exception of any authority the delegation of which is prohibited by section 141 of the Delaware General Corporation Law, and may authorize the seal of the Corporation to be affixed to all papers which may require it. 7. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. 8. ELECTRONIC COMMUNICATION. Any member or members of the Board or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. ARTICLE III OFFICERS The officers of the Corporation shall consist of a President and a Secretary, and may include, by election or appointment, one or more Vice Presidents (any one or more of whom may be given an additional designation of rank or function), a Treasurer and such Assistant Secretaries, such Assistant Treasurers and such other officers with such titles as the resolution of the Board choosing them shall designate. Except as may otherwise be provided in the resolution of the Board choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. Any officer may be removed with or without cause by the Board. Any vacancy in any office may be filled by the Board. All officers of the Corporation shall have such authority and perform such duties in the management and operation of the Corporation as may be prescribed in the resolutions of the Board designating and choosing such officers or prescribing the authority and duties of the various officers of the Corporation, and as are customarily incident to their office, except to the extent that such resolutions may be inconsistent therewith. The Secretary shall keep or cause to be kept in the corporate minute books the minutes of the meetings of the stockholders, the Board, and all committees created by the Board and shall have such other powers and authority which ordinarily are inherent in such office in addition to those which the Board may from time to time prescribe. The Treasurer shall have charge and custody of, and be responsible for, all funds and 7 8 securities of the Corporation and shall have such other powers and authority which ordinarily are inherent in such office in addition to those which the Board from time to time may prescribe. ARTICLE IV BOOKS AND RECORDS The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of the shareholders, of the Board, and of any committee which the Board may appoint. ARTICLE V INDEMNIFICATION (a) To the fullest extent permitted by the Delaware General Corporation Law, as it now exists or may hereafter be amended, a director or officer of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation existing at the time of such repeal or modification. (b) To the fullest extent permitted by Section 145 of the DGCL or any successor provisions thereto, (i) the Corporation shall (A) indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding (a "proceeding"), whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation, against expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding and (B) pay, upon receipt of any undertaking to repay amounts advanced required by the DGCL, expenses incurred by such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, and (ii) the Corporation may (A) indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding and (B) pay expenses incurred by such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding. Notwithstanding clause (i)(A) of the preceding sentence, the Corporation shall be required to indemnify an indemnitee in connection with a proceeding (or part thereof) commenced by such indemnitee only if the commencement of such proceeding (or part thereof) by the indemnitee was authorized by the Board of Directors of the Corporation. The foregoing indemnification and advancement of expenses provisions shall not be deemed 8 9 exclusive of any other rights to indemnification or advancement of expenses to which any such person may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise and are deemed to be contract rights with respect to each person entitled to the benefits of such new provisions. Any change in law that purports to restrict the ability of the Corporation to indemnify or advance expenses to any such person shall not affect the Corporation's obligation or right to indemnify and advance expenses to any such person with respect to any action, claim, suit or proceeding that occurred or arose or that is based on events or acts that occurred or arose, prior to such change in law. (c) Third Party Actions. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. (d) Derivative Actions. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation's favor by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation, provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action or suit by judgment or settlement shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation. 9 10 (e) Successful Defense. To the extent that a director, trustee, officer, employee or agent of the Corporation has been successful on the merits or otherwise, in whole or in part, in defense of any action, suit or proceeding referred to in Sections (c) and (d) of this Article V, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (f) Authorization. Any indemnification under Sections (c) and (d) of this Article V (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth above in Sections (c) and (d) of this Article V. Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, by a majority vote of directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (d) by the shareholders. Anyone making such a determination under this Section (f) may determine that a person has met the standard therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification. (g) Advances. Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Section (f) of this Article V upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article V. (h) Non-Exclusivity. The indemnification provided by this Article V shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. (i) Insurance. The Corporation shall have the powers to purchase and maintain insurance on behalf of any person who is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity or arising out of such persons' status as such, whether or not the Corporation would have the power to indemnify such person against such liability. (j) "Corporation" Defined. For purposes of this Article V, references to the "Corporation" shall include, in addition to the Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its 10 11 separate existence had continued, would have had power and authority to indemnify its directors, trustees, officers, employees or agents, so that any person who is or was a director, trustee, officer, employee or agent of such constituent corporation or of any entity a majority of the voting stock of which is owned by such constituent corporation, or is or was serving at the request of such constituent corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. ARTICLE VI CORPORATE SEAL The corporate seal shall be in such form as the Board shall prescribe. ARTICLE VII FISCAL YEAR The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board. ARTICLE VIII CONTROL OVER BY-LAWS Subject to the provisions of the Certificate of Incorporation and the provisions of the Delaware General Corporation Law, the power to amend, alter or repeal these By-Laws and to adopt new By-Laws may be exercised by the Board or by the stockholders. Duly Adopted this February 9, 2001. /s/ John Simko ------------------------------------- John Simko Chairman of the Board 11 EX-10.1 8 d84396ex10-1.txt CALL OPTION AGREEMENT DATED 2/5/01 1 EXHIBIT 10.1 CALL OPTION AGREEMENT CALL OPTION AGREEMENT made as of February 5, 2001, by and among SUNSHINE INTERNATIONAL MINING, INC., a Delaware corporation ("GRANTOR"), SUNSHINE MINING AND REFINING COMPANY, a Delaware corporation (the "COMPANY"), SUNSHINE ARGENTINA, INC., a Delaware corporation ("SAI"), (each a "SUNSHINE COMPANY" and collectively, the "SUNSHINE COMPANIES"), ELLIOTT INTERNATIONAL, L.P., a Cayman Islands limited partnership ("EILP"), THE LIVERPOOL LIMITED PARTNERSHIP, a Bermuda limited partnership ("TLLP" and, together with EILP, the "ELLIOTT HOLDERS") and STONEHILL INSTITUTIONAL PARTNERS, L.P. ("SIP") and STONEHILL OFFSHORE PARTNERS LIMITED ("SOPL" and, together with SIP, the "STONEHILL HOLDERS")(collectively, the "HOLDERS"). WHEREAS, in connection herewith, the Company, SAI, together with Sunshine Precious Metals Inc., a Delaware corporation, have filed a Joint Chapter 11 Plan of Reorganization in the United States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY COURT") which shall have been co-proposed by the Elliott Holders and the Stonehill Holders (the "PLAN") and related statements, motions and applications and the agreements and instruments to be entered into by the Sunshine Companies pursuant to the Plan and attached as exhibits thereto (the "TRANSACTION DOCUMENTS") and among other things, provide for the restructuring of the Company (the "RESTRUCTURING"); WHEREAS, in connection with the Restructuring, the Company and the Holders are entering into that certain Registration Rights Agreement of even date herewith (the "REGISTRATION RIGHTS AGREEMENT"); WHEREAS, upon the completion of the Restructuring, assuming that there have been no stock splits, dividends, combinations, reorganizations, recapitalizations and similar capital structure changes ("CAPITAL STRUCTURE CHANGES") with respect thereto, the Elliott Holders will have received, or be entitled to receive, a total of 50.98% of outstanding shares ("ELLIOTT'S INTEREST") of the Company's common stock, par value $.01 (the "COMMON STOCK") and the Stonehill Holders will have received or be entitled to receive a total of 39.01% of the outstanding shares of Common Stock ("STONEHILL'S INTEREST"); WHEREAS, the Company owns 100% of the capital stock of the Grantor; WHEREAS, Grantor owns 100% of the capital stock in SAI; WHEREAS, pursuant to the Transaction Documents, the parties hereto desire that Grantor issue a call option to each Holder (each a "CALL OPTION" and, collectively, the "CALL OPTIONS") to purchase, collectively, up to 100% of the shares of capital stock of SAI (the "SAI SHARES") and to grant each Holder a first priority perfected security interest in such SAI Shares in connection therewith; 2 NOW, THEREFORE, in consideration of the premises, and for such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. GRANT OF CALL OPTIONS. (a) Subject to Section 1(b) below and the terms and conditions herein, Grantor hereby grants to each Holder a Call Option to purchase up to a certain maximum number of SAI Shares (as adjusted for Capital Structure Changes) at a certain purchase price per SAI Share (the "PURCHASE PRICE"), all as set forth in Schedule 1 annexed hereto. (b) In the event that the Elliott Holders sell more than 50% of their shares of Common Stock initially received in the Restructuring (as adjusted for Capital Structure Changes) or the Stonehill Holders sell more than 50% of their shares of Common Stock initially received in the Restructuring (as adjusted for Capital Structure Changes), then the number of SAI Shares that the Elliott Holders or the Stonehill Holders, respectively, are entitled to purchase as set forth in Schedule 1 hereto shall be reduced ratably to the extent that such Holders sold in excess of such amounts. For example, if the Elliott Holders were to sell 55% of their shares of Common Stock initially received in the Restructuring, then the maximum number of SAI Shares that the Elliott Holders could purchase, in the aggregate, upon the exercise of their Call Options would be reduced by a percentage equal to (55% - 50% ) x 2, or 10%. Schedule 1 shall be amended and redistributed to the parties hereto and the Pledge Agent (as defined in Section 4) shall be directed to reflect any such reductions. 2. TERM. The term of each Call Option (the "TERM") shall commence on the date upon which the Plan approved by the Bankruptcy Court goes effective (the "CLOSING DATE") and shall expire upon the earlier of the following: (a) the exercise in full of such Call Option, (b) The market capitalization of the Company shall exceed $150 million for at least 60 consecutive calendar days, and (c) The ten year anniversary of the effective date of the Plan of Reorganization ; provided, however, that, with respect to (b) above, all of the Common Stock is registered and freely tradeable during such 60-day-period (e.g., among other things, (x) no Interfering Event has occurred, without giving effect to any Suspension Grace Period (each as defined in the Registration Rights Agreement), (y) the Holders are not restricted from trading because the Holders are in possession of material, non-public information and (z) none of the events set forth in Section 3(a) below shall have occurred. 3. EXERCISE OF CALL OPTIONS. (a) Right to Exercise. The Call Option shall become exercisable upon the occurrence of any one of the following: 2 3 (i) the Common Stock is delisted from, or not approved for trading on, the New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market System, the Nasdaq Small-Cap Market or the Nasdaq OTC Bulletin Board (each, an "APPROVED MARKET"); (ii) the Common Stock is suspended from listing or is no longer approved for trading on an Approved Market for at least seven (7) consecutive calendar days; (iii) the market capitalization of the Company is less than $15 million for at least fifteen (15) consecutive calendar days; provided, however, that such market capitalization shall not have subsequently gone above $15 million for at least 30 calendar days (but if the market capitalization thereafter drops below $15 million for at least 15 consecutive calendar days, then the Call Option shall again become exercisable); (iv) a bankruptcy proceeding has occurred with respect to a Sunshine Company or any other direct or indirect subsidiary of the Company; (v) the Company fails to comply with its obligations set forth in this Agreement; (vi) unless waived by all of the Holders, (A) any person not designated by the Holders, other than management directors, is serving as a member of the board of directors of the Grantor or (B) any person designated by the Holders in accordance with Section 6(j) hereof to serve as a member of the board of directors of the Grantor is not serving in such capacity as a result of any action or omission on the part of any Sunshine Company; (vii) any Interfering Event (as defined in the Registration Rights Agreement) has occurred which causes the Call Options to become immediately exercisable pursuant to the Registration Rights Agreement; (viii) any representation or warranty of the Sunshine Companies made in this Agreement, the Pledge Agreement or any other Transaction Document shall be false or misleading; or (ix) any of the Sunshine Companies otherwise fails to comply with or breaches any other provision of any Transaction Document or the by-laws or charter of any Sunshine Company. The Company and the Grantor shall provide the Holders with immediate written notice of the occurrence of any of the events described in (i), (ii), (iv), (v), (vi), (vii), (viii) or (ix). (b) Exercise Notice. If any of the conditions to exercise set forth in Section 3(a) above shall have been met, then the Call Options may be exercised, at any time and from time to time, by each Holder in full or in part by the tendering of a written notice (the "EXERCISE NOTICE") to the Grantor and the Pledge Agent (as defined in Section 4(b) below) at the address set forth in Section 9(c) herein. The Exercise Notice shall specify: 3 4 (i) the date on which the purchase is to take place (the "PURCHASE DATE"), which may be the same date as the Exercise Notice; (ii) the number of SAI Shares with respect to which the Holder is then exercising its Call Option (the "CALL AMOUNT"); (iii) the aggregate purchase price for the Call Amount (determined by multiplying the Purchase Price set forth in Schedule 1 hereto by the Call Amount); and (iv) whether the exercising Holder elects to pay the aggregate purchase price in cash or by delivering shares of Common Stock (pursuant to Section 3(c) and 3(d)(ii) below) in lieu of cash. Upon receipt of the Exercise Notice as a result of which the Holders shall have acquired, in the aggregate, a majority of the SAI Shares, the Company and Grantor shall cause each officer and director of SAI to offer his or her resignation in writing to the Holder(s), which such resignation shall become effective upon the Purchase Date unless otherwise agreed to by the officer or director and the Holder(s). (c) Cashless Exercise. If the exercising Holder elects to pay for the Call Amount by delivering shares of Common Stock, the number of shares of Common Stock to be delivered by the Holder(s) shall be computed using the following formula: X = Y x B ------ A where: X = the number of shares of Common Stock to be delivered Y = the number of SAI Shares included in the Call Amount A = the Market Value (defined below) per share of Common Stock B = the Purchase Price For the purposes of the foregoing, "MARKET VALUE" shall mean the price of one share of Common Stock determined as follows: (i) if the Common Stock is listed on the New York Stock Exchange or on the American Stock Exchange, the closing price on such exchange on the date prior to the Purchase Date; (ii) if (i) does not apply and the Common Stock is listed on the NASDAQ National Market System, the NASDAQ Small-Cap Market or the NASDAQ OTC Bulletin Board, the last reported bid price on the day preceding the Purchase Date; (iii) if neither (i) nor (ii) apply but the Common Stock is quoted in the over-the-counter market, another recognized exchange or on the pink sheets, the closing bid price on the day preceding the Purchase Date; and 4 5 (iv) if neither clause (i), (ii) or (iii) above applies, the fair market value of the Common Stock as reasonably determined in good faith by the Company's board of directors with the concurrence of an investment banker acceptable to the Holders and with the concurrence of the Holders. (d) Purchase Date. (i) On the Purchase Date, the Grantor shall deliver beneficial ownership of the Call Amount to the Holder by delivering, or causing the Pledge Agent (as defined in Section 4 below) to deliver, the certificates therefore together with duly executed "stock powers". In the event that the Call Amount is not delivered to the Holder in accordance with the foregoing on a timely basis, the Holder may, by written notice, rescind its exercise of the Call Option, in whole or in part, reserving all rights to damages for breach of this Agreement or any other Transaction Document. (ii) On the Purchase Date, SAI agrees to register the transfer of the shares of capital stock of SAI included in the Call Amount to the name of the exercising Holder or its designee. This obligation of SAI is and shall at all times be valid and enforceable and SAI absolutely, unconditionally and irrevocably waives any and all rights to assert any defense or other objection to this obligation. (iii) On the Purchase Date, provided that as a result of the exercise of the Call Option, the Holders shall have acquired, in the aggregate, a majority of the outstanding SAI Shares, the written resignation of each director and officer of SAI shall be delivered to the Holders and shall become effective unless otherwise agreed to by the director or the officer and the Holder(s) pursuant to Section 3(b) above. (iv) In exchange for the above, on the Purchase Date, the exercising Holder shall deliver (A) the aggregate purchase price set forth in the Exercise Notice to the Grantor by wire transfer in immediately available funds to an account designated on Schedule 2 annexed hereto or such other account as may be designated in writing by the Grantor from time to time or (B) if the Holder opted for a cashless exercise in the Exercise Notice, (1) the physical stock certificates representing the Common Stock deliverable upon such cashless exercise (as determined in accordance with Section 3(c) above) or (2) in lieu thereof, provided the transfer agent of such Holder is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the Grantor, the Holder shall use its best efforts to cause its transfer agent to electronically transmit such shares of Common Stock to the Grantor on the Purchase Date by crediting the account of Grantor's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system. The parties agree to coordinate with DTC to accomplish this objective. (e) Transfer Tax. Transfers of the Call Amounts upon exercise of the Call Options shall be made without charge to the Holders for any transfer tax or other costs in respect thereof. 5 6 4. SECURITY INTEREST. (a) Generally. In order to secure the observance and performance of the Grantor's obligations under this Agreement, the Grantor hereby transfers, assigns and grants to the Pledge Agent for the ratable benefit of the Holders a first priority perfected and continuing security interest in the SAI Shares. (b) Perfection of Security Interest. The security interest and lien granted to the Holders hereunder shall constitute valid, perfected and first priority security interests and liens in and to the SAI Shares, in each case enforceable against third parties and securing the obligations purported to be secured thereby, upon: (i) the execution of this Agreement and that certain Pledge Agreement of even date among the Grantor, the Holders and Wells Fargo Bank Minnesota, N.A. (the "PLEDGE AGENT") attached hereto as Exhibit 1 (the "PLEDGE AGREEMENT"); (ii) (A) the pledge of the SAI Shares by the Grantor to the Pledge Agent for the ratable benefit of the Holders, and (B) the delivery by the Grantor of the certificates representing such SAI Shares together with duly executed "stock powers" to the Pledge Agent in connection therewith; and (iii) the filing of certain UCC-1 financing statements describing the SAI Shares with the appropriate offices in Idaho and Delaware. (c) Pledge of SAI Shares. In connection with the pledge and delivery of SAI Shares to the Pledge Agent pursuant to the Pledge Agreement, Grantor will grant the Pledge Agent the right (and the obligation) to vote such SAI Shares as instructed by the Holders in accordance with the Pledge Agreement. 5. REPRESENTATIONS AND WARRANTIES OF THE SUNSHINE COMPANIES. Each of the Sunshine Companies, severally and jointly, hereby makes the following representations and warranties to Holders as of the date hereof: (a) Representations and Warranties. Each of the representations and warranties of the Sunshine Companies contained in the other Transaction Documents are true and accurate. (b) Due Organization. Each Sunshine Company is a corporation duly organized and in good standing under the laws of the State of Delaware. Each Sunshine Company is duly qualified as a foreign corporation in each jurisdiction where the nature and conduct of its business or the location of its assets so requires. (c) Power and Authority. Each Sunshine Company has full power and authority to enter into and perform this Agreement and the Pledge Agreement and the Grantor has full power and authority to sell, create a security interest in, and pledge the SAI Shares in accordance herewith. This Agreement (i) has been duly authorized, executed and delivered by each Sunshine Company and (ii) is legal, valid and binding and enforceable against such 6 7 Sunshine Company in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. (d) No Other Consents. Other than the approval of the Bankruptcy Court, no consent is required to be received by any Sunshine Company from any governmental authority or any other person in connection with the execution or delivery by each such Sunshine Company of this Agreement or the exercise of the Call Options or the Pledge Agreement, or the sale, creation of a security interest in, or pledge of, the SAI Shares. (e) No Violations. The execution and delivery of this Agreement and the Pledge Agreement by the Sunshine Companies, the consummation by each Sunshine Company of the transactions contemplated herein and therein and the compliance by each Sunshine Company with any of the provisions hereof and thereof relating to the Sunshine Companies will not (i) conflict with or result in any breach of any provision of the certificate of incorporation, by-laws or other charter document of the Sunshine Company, (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any material contract, agreement, note, indenture, mortgage, lease, license or other arrangement or understanding to which such Sunshine Company is a party or by which such Sunshine Company or any of its assets or property is subject, (iii) result in the creation or imposition of any material lien or encumbrance of any kind upon any of the asset of such Sunshine Company or any subsidiary thereof or (iv) violate any applicable provision of any U.S., state, local or foreign statute, law, rule or regulation or any order, decision, injunction, judgment, aware or decree to which such Sunshine Company or its assets or properties are subject. (f) Capitalization. (i) SAI is a direct and wholly-owned subsidiary of Grantor. The authorized capital stock of SAI consists of 10,000 shares of common stock. As of the date hereof, there were 1,000 shares of common stock issued and outstanding, all of which are owned legally and beneficially by Grantor, and no shares of capital stock are reserved for issuance. All of the outstanding shares of capital stock of SAI have been validly issued and are fully paid and nonassessable. There are currently no outstanding options, outstanding warrants nor other rights to acquire SAI capital stock. (ii) There are no other scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights exchangeable or convertible into, SAI Shares, or contracts, commitments, understandings, or arrangements by which SAI is or may become bound to issue additional shares of capital stock of SAI or options, warrants, scrip, rights to subscribe to, or commitments to purchase or acquire, any shares, or securities or rights convertible into shares, of capital stock of SAI. 7 8 (g) Subsidiaries. Except as disclosed in the Transaction Documents, SAI has no subsidiaries. (h) Due Authorization. The SAI Shares will be delivered by the Grantor to the Pledge Agent in the manner set forth in the Pledge Agreement free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on voting rights, charges and other encumbrances whatsoever, except for those created for the benefit of the Holders pursuant to the Transaction Documents. The delivery by the Pledge Agent to the Holders of the SAI Shares in the manner provided in this Agreement and the Pledge Agreement will transfer to the Holders good and valid title to the SAI Shares, free and clear of all security interests, liens and encumbrances whatsoever, except for those created by the Holder or those created for the benefit of the Holders pursuant to the Transaction Documents. (i) Indebtedness and Other Liabilities. Neither the Grantor nor SAI has any Indebtedness (as defined below) except as disclosed in the Plan or Schedule 5(i) hereto. Each of the Grantor and SAI has no other liabilities or obligations (including, without limitation, claims existing under environmental or similar laws) that are not disclosed in the Plan or on Schedule 5(i) hereto other than those liabilities incurred in the ordinary course of such Sunshine Company's respective businesses since December 31, 1999, which liabilities, individually or in the aggregate, do not or would not have a Material Adverse Effect (as defined in the Transaction Documents) on such Sunshine Company. There are no liens, security interests or other encumbrances on, or with respect to, any asset of SAI other than a mortgage on the Pirquitas Mine to secure financing made to SAI by Highwood Partners, L.P. and Stonehill Capital Management, LLC.. "INDEBTEDNESS" means, with respect to any person or entity, all obligations (s) which in accordance with the generally accepted accounting principles in the U.S., shall be classified upon the balance sheet of such person as liabilities, (t) for borrowed money, (u) consisting of intercompany advances, (v) which have been incurred in connection with the acquisition of any property (including without limitation, all obligations evidenced by any indenture, bond, note, commercial paper or other similar security, but excluding, in any case, obligations arising from the endorsement in the ordinary course of business of negotiable instruments for deposit or collection), (w) obligations secured by any lien existing on property owned, even though such person has not assumed or become liable for the payment of such obligations, (x) obligations created or arising under conditional sale or other title retention agreement with respect to property acquired by such person, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of such property, (y) for capitalized leases, (z) for all guarantees, whether or not reflected in the balance sheet of such person, and (aa) all reimbursement and other payment obligations (whether contingent, matured or otherwise) of such person in respect of acceptance or documentary credit. Notwithstanding the foregoing, the definition of the term Indebtedness will not apply to any of the following: (i) trade debt to unaffiliated third parties incurred in the ordinary course of business; 8 9 (ii) hedging obligations incurred in connection with the ordinary course of business to protect against currency exchange rate risks or precious metal price risks; (iii) performance bonds or surety or appeal bonds entered into in the ordinary course of business; and (iv) Indebtedness represented by lease obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Company or such subsidiary in an outstanding aggregate principal amount not to exceed $25,000. (j) SAI Ownership of Pirquitas Mine. SAI is the sole record and beneficial owner of the silver mine in Argentina known as the "Pirquitas Mine" (the "PIRQUITAS MINE"), all real property and personal property relating to the mining operations thereon, and all rights and permits to develop and operate the Pirquitas Mine. 6. COVENANTS OF SUNSHINE COMPANIES. During the Term of the Call Option, each of the Sunshine Companies, severally and jointly, hereby covenants to the Holders that: (a) Corporate Existence. The Sunshine Companies shall maintain and preserve their individual corporate existence unless otherwise agreed to in writing by each of the Holders. (b) Indebtedness. Neither the Grantor nor SAI shall incur Indebtedness or pledge, hypothecate, grant any lien with respect to or otherwise encumber any assets without the prior written approval of each of the Holders. (c) Transfers, Liens, Etc. (i) Except as otherwise provided in any Transaction Document to the contrary, neither the Grantor nor SAI shall split, combine or reclassify, sell, assign, divide, transfer, dispose of, or pledge, hypothecate or otherwise encumber the SAI Shares or any securities convertible into or exchangeable for such SAI Shares, without the written consent of each of the Holders. (ii) Neither Grantor nor SAI shall create, incur or permit to exist any security interest, lien or other encumbrance on or with respect to any SAI Shares other than in accordance with the Transaction Documents. (iii) Any attempted transfer of SAI Shares in contravention of the provisions of this Section 6(c) shall be void and ineffectual and shall not bind or be recognized by any Sunshine Company. (iv) Except as required by this Agreement, SAI shall not issue any additional shares of capital stock. 9 10 (d) Subsidiaries. The Grantor and SAI shall not create, own or hold any interest in any subsidiary (other than the subsidiaries disclosed in the Transaction Documents) without the written consent of each Holder. Unless otherwise agreed to in writing by each of the Holders, in the event that the Grantor or SAI shall create, own or hold any interest in any subsidiary in accordance with the foregoing: (i) the Grantor and SAI shall cause such subsidiary to sign this Agreement as an additional party, at which time all capital stock of the subsidiary ("SUBSIDIARY SHARES") shall be treated the equivalent of SAI Shares for all purposes hereunder; (ii) the Grantor, SAI and such subsidiary shall assume the equivalent obligations that the Grantor and SAI have with respect to SAI Shares in connection with the Subsidiary Shares (including, but not limited to, granting to the Holders a first priority perfected security interest in the Subsidiary Shares and perfecting such security interest in accordance with Section 4(b) hereof); and (iii) the Grantor, SAI and such subsidiary shall take all such further actions and deliver all documents and instruments as may be necessary to accomplish the foregoing. (e) Transfer of Assets. (i) Neither Grantor nor SAI shall transfer any asset, or a controlling interest therein (including, but not limited to, any amounts received, directly or indirectly, by such Sunshine Company from one or more of the Holders pursuant to the Transaction Documents) to any of the other Sunshine Companies or any affiliates of the Sunshine Companies (including any subsidiaries of such Sunshine Company) without the prior written approval of each Holder. (ii) Neither Grantor nor SAI shall transfer any asset or a controlling interest therein outside the ordinary course of business. (iii) Any attempted transfer in contravention of the provisions of this Section 6(e) shall be void and ineffectual and shall not bind or be recognized by the Company or SAI. (f) Obligations of SAI. On each Purchase Date, SAI shall (i) register the transfer of the SAI Shares included in the Call Amount to the name of the exercising Holder or its designee and (ii) if as a result of the Call Option exercise, the Holders shall in the aggregate, have acquired a majority of the SAI Shares, take all such actions as are necessary to effectuate the resignation of each officer of SAI unless otherwise agreed to by the officer and the exercising Holder(s) pursuant to Section 3(b) above. (g) No Conflicting Actions. No Sunshine Company shall take any action which is inconsistent or in conflict with the terms and provisions of this Agreement and the Pledge Agreement. 10 11 (h) No Modification. The obligations of the Sunshine Companies hereunder shall not be modified by any sale or issuance of each of their capital stock to another person or entity. (i) Accuracy of Representations and Warranties. The representations and warranties of each Sunshine Company will be true and correct in all material respects as of the date when made, except for representations and warranties of an earlier date, which will be true and correct in all material respects as of such date. (j) Board of Directors. For so long as any Holder holds any Call Option, the directors of Grantor, other than management directors, shall be nominated solely by the Holders holding a Call Option, the Company agrees to vote the capital stock of Grantor in favor of such Holders' nominees and the Company agrees not to remove any director without the consent of the Holders holding Call Options. Furthermore, for so long as any Holder holds any Call Option, the Company agrees that it shall make no stockholder proposals with respect to Grantor and shall not nominate any directors (other than the nominees proposed by the Holders other than the management director). (k) No Dividends or Other Distribution. No Sunshine Company shall, without the written consent of each of the Holders, declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its capital stock or any warrants, rights or options to acquire such capital stock, now or hereafter outstanding, return any capital to its stockholders as such, make any distribution of assets, capital stock, warrants, rights, options, obligations or securities to its stockholders as such or issue or sell any capital stock or any warrants, rights or options to acquire such capital stock, or permit any of its subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of a Sunshine Company or any warrants, rights or options to acquire such capital stock or to issue or sell any capital stock or any warrants, rights or options to acquire such capital stock. (l) No Burdensome Agreements. No Sunshine Company shall become a party to any agreement or arrangement, or otherwise undertake any responsibility, that may prove to be materially burdensome on the Sunshine Company or its ability to comply with the provisions hereof. (m) Transactions With Affiliates. Each Sunshine Company agrees that any transaction or arrangement between it or any of its subsidiaries and any affiliate or employee of the Sunshine Company shall be effected on an arms' length basis in accordance with customary commercial practice and, except with respect to grants of options and stock to service providers, including employees, shall receive the prior written approval of each Holder holding a Call Option. 7. INDEMNIFICATION. Each of the Sunshine Companies, jointly and severally, agrees to indemnify each Holder and hold it harmless from and against (a) any loss, costs and damages (including reasonable attorney's fees) incurred as of result of such party's breach of any representation, warranty, covenant or agreement in this Agreement or incurred in connection with the enforcement of this indemnity; (b) any and all injuries, claims, damages, judgments, liabilities, 11 12 costs and expenses (including, without limitation, reasonable fees and disbursements of counsel whether involving a third party or a claim between the parties), charges and encumbrances which may be incurred by or asserted against a Holder in connection with or arising out of this Agreement other than those resulting from Holder's breach of this Agreement; (c) any assertion, declaration or defense of the Holders' rights or security interest under the provisions of this Agreement or the Pledge Agreement in connection with the realization, possession, safeguarding, insuring or other protection of the SAI Shares or in connection with the collecting, perfecting or protecting of the Holders' liens and security interests hereunder or under the Pledge Agreement. 8. MISCELLANEOUS. (a) Further Assurances. Each of the Sunshine Companies and each of the Holders shall promptly execute and deliver all further instruments and documents and take all further action that may be reasonably necessary or desirable to effect the purposes of this Agreement. (b) Amendment. This Agreement may not be amended, modified or terminated except by written agreement of each of the Sunshine Companies and each of the Holders. (c) Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The addresses for such communications shall be: to the Sunshine Companies: Sunshine Mining and Refining Company Sunshine International Mining, Inc. Sunshine Argentina, Inc. 5956 Sherry Lane Suite 1621 Dallas, Texas 75225 Attention: William Davis Facsimile: (214) 265-0324 with copies to: Prager, Metzger & Kroemer, PLLC 2626 Cole Avenue Suite 900 Dallas, Texas 75204 Attention: Steven C. Metzger, Esq. Facsimile: (214) 523-3838 12 13 to the Stonehill Holders: c/o Stonehill Capital Management LLC 126 E. 56th Street, 9th Floor New York, New York 10022 Attention: John Motulsky Facsimile: (212) 838-2291 with a copy to: Proskauer Rose LLP 1585 Broadway New York, New York 10036 Attention: Lawrence Budish, Esq. Facsimile: (212) 969-2900 to the Elliott Holders: c/o Elliott Management Corporation 712 Fifth Avenue New York, New York 10019 Attention: Dan Gropper Facsimile: (212) 974-2092 with copies to: Kleinberg, Kaplan, Wolff & Cohen, P.C. 551 Fifth Avenue, 18th Floor New York, New York 10176 Attention: Stephen M. Schultz, Esq. Facsimile: (212) 986-8866 Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other parties hereto. (d) Titles. The titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (e) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. (f) Successors and Assigns. This Agreement shall be binding upon the inure to the benefit of the parties and their successors and permitted assigns. Each Holder may assign this Agreement or any rights or obligations hereunder without the consent of the Sunshine Companies, but only if such transfer is made to an entity that, on the date hereof, is an affiliate of such Holder. 13 14 (g) Remedies Cumulative. Each Holder's rights and remedies under this Agreement and the Pledge Agreement shall be cumulative and non-exclusive of any other rights or remedies which it or he may have under any other Transaction Document or any other agreement or instrument, by operation of law or otherwise, and may be exercised alternatively, successively or concurrently as each Holder may deem expedient. (h) Severability. Any provision of this Agreement that may be determined by competent authority to be illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity, prohibition or unenforceability without invalidating the remaining terms and provisions hereof, and any such illegality, invalidity, prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable any terms and provisions hereof in any other jurisdiction. (i) Governing Law. This Agreement and the validity and performance of the terms hereof shall be governed and construed in accordance with the laws of the State of Delaware applicable to contracts executed and to be performed entirely within such state. (j) Jurisdiction. The Sunshine Companies and the Holders (i) hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts in the State of Delaware for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. To the fullest extent permitted by applicable law, the Sunshine Companies and the Holders consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 8(j) shall affect or limit any right to serve process in any other manner permitted by law. (k) Specific Performance. The Sunshine Companies and the Holders acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the Pledge Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and the Pledge Agreement and to enforce specifically the terms and provisions hereof and thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. (l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY. (m) No Third Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective successors and assigns. 14 15 (n) Execution in Counterpart. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, it being understood that all parties need not sign the counterpart. 15 16 IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be duly executed as of the date first above written. THE SUNSHINE COMPANIES THE HOLDERS SUNSHINE INTERNATIONAL MINING, INC. ELLIOTT INTERNATIONAL, L.P. By: Elliott International Capital Advisors, Inc. Attorney-in-Fact By: By: ------------------------------- --------------------------------- Name: Name: Paul E. Singer Title: Title: President SUNSHINE MINING AND REFINING THE LIVERPOOL LIMITED PARTNERSHIP COMPANY By: Liverpool Associates, Ltd. General Partner By: By: ------------------------------- --------------------------------- Name: Name: Paul E. Singer Title: Title: President SUNSHINE ARGENTINA, INC. STONEHILL INSTITUTIONAL PARTNERS, L.P. By: By: ------------------------------- --------------------------------- Name: Name: John Motulsky Title: Title: General Partner STONEHILL OFFSHORE PARTNERS LIMITED By: Stonehill Advisors LLC By: --------------------------------- Name: John Motulsky Title: Managing Member 16 17 SCHEDULE 1 to the Call Option Agreement
ELLIOTT STONEHILL HOLDERS HOLDERS ------- --------- SAI SHARES (a) maximum # of SAI Shares 566 434 (b) Purchase Price $1,000 per share $1,000 per share
17 18 SCHEDULE 2 to the Call Option Agreement Wire Instructions for Grantor: 18 19 INDEX OF DEFINED TERMS
AS DEFINED ON PAGE ------------------ APPROVED MARKET...............................................................3 BANKRUPTCY COURT..............................................................1 CALL AMOUNT...................................................................4 CALL OPTION...................................................................1 CALL OPTIONS..................................................................1 CAPITAL STRUCTURE CHANGES.....................................................1 CLOSING DATE..................................................................2 COMMON STOCK..................................................................1 COMPANY.......................................................................1 DTC...........................................................................5 DWAC..........................................................................5 EILP..........................................................................1 ELLIOTT HOLDERS...............................................................1 ELLIOTT'S INTEREST............................................................1 EXERCISE NOTICE...............................................................3 FAST..........................................................................5 GRANTOR.......................................................................1 HOLDERS.......................................................................1 INDEBTEDNESS..................................................................8 MARKET VALUE..................................................................4 PIRQUITAS MINE................................................................9 PLAN..........................................................................1 PLEDGE AGENT..................................................................6 PLEDGE AGREEMENT..............................................................6 PURCHASE DATE.................................................................4 PURCHASE PRICE................................................................4 REGISTRATION RIGHTS AGREEMENT.................................................1 RESTRUCTURING.................................................................1 SAI...........................................................................1 SAI SHARES....................................................................1 SIP...........................................................................1 SOPL..........................................................................1 STONEHILL HOLDERS.............................................................1 STONEHILL'S INTEREST..........................................................1 SUBSIDIARY SHARES............................................................10 SUNSHINE COMPANIES............................................................1 SUNSHINE COMPANY..............................................................1 TERM..........................................................................2 TLLP..........................................................................1 TRANSACTION DOCUMENTS.........................................................1
19 20 EXHIBIT 1 to Call Option Agreement PLEDGE AGREEMENT PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of February ___, 2001, by and among SUNSHINE INTERNATIONAL MINING, INC., a Delaware corporation (the "GRANTOR"), THE LIVERPOOL LIMITED PARTNERSHIP, a Bermuda limited partnership ("TLLP"), ELLIOTT INTERNATIONAL, L.P., a Cayman Islands limited partnership ("EILP", and together with TLLP, the "ELLIOTT HOLDERS"), STONEHILL INSTITUTIONAL PARTNERS, L.P. ("SIP") and STONEHILL OFFSHORE PARTNERS, LIMITED ("SOPL" and together with SIP, the "STONEHILL HOLDERS") and WELLS FARGO BANK MINNESOTA, N.A., as administrative and pledge agent (in such capacity, the "PLEDGE AGENT") for the Elliott Holders and the Stonehill Holders (collectively, the "Holders"). WHEREAS, contemporaneously with the execution and delivery of this Pledge Agreement, the Grantor and the Holders are entering into that certain Call Option Agreement dated as of the date hereof (as amended, modified or supplemented from time to time, the "CALL OPTION AGREEMENT"); WHEREAS, unless otherwise defined herein, terms defined in the Call Option Agreement are used herein as therein defined; WHEREAS, under the Call Option Agreement, as of the date hereof, the Grantor shall issue a call option to each Holder (each a "CALL OPTION" and collectively, the "CALL OPTIONS") to purchase, collectively, up to 100% of the shares (the "SAI SHARES") of capital stock of Sunshine Argentina, Inc. ("SAI") and grant to each Holder a first priority perfected security interest in such shares therewith; WHEREAS, Schedule 1 to the Call Option Agreement sets forth among other things, the maximum number of SAI Shares that each Holder may receive upon exercise of its Call Option; WHEREAS, the Pledge Agent has been provided with a copy of, has reviewed, is familiar with and understands the Call Option Agreement and Schedule 1 thereto; WHEREAS, pursuant to the Call Option Agreement, the parties hereto desire to more fully set forth their respective rights in connection with such security interest and pledge; and NOW, THEREFORE, for good and valuable consideration, the Grantor hereby agrees with the Holders as follows: SECTION 1. GRANT OF SECURITY AND PLEDGE. (a) The Grantor hereby transfers, grants, bargains, sells, conveys, hypothecates, assigns, pledges and sets over to the Pledge Agent for the ratable benefit of the Holders and 21 hereby grants to the Pledge Agent for the ratable benefit of the Holders, a perfected pledge and security interest in all of the Grantor's right, title and interest in and to the Collateral, which pledge and security interest in the Collateral securing the Call Option made under the Call Option Agreement shall have first priority. For the purposes hereof, "COLLATERAL" shall mean: (i) all SAI Shares, whether currently issued or issued in the future, and the certificates representing or evidencing all such shares (the "PLEDGED SHARES"); (ii) all other securities which may be delivered to and held by the Pledge Agent in respect of the Pledged Shares pursuant to the terms hereof; (iii) all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed, in respect of, in exchange for or upon the conversion of the securities referred to in clauses (i) and (ii) above; and (iv) all rights and privileges of each Grantor, as applicable, with respect to the securities and other property referred to in clauses (i), (ii) and (iii). (b) This Pledge Agreement and the Collateral secure the obligations of the Grantor now or hereafter existing under the Call Option Agreement, and all obligations of the Grantor now or hereafter existing under or in respect of this Pledge Agreement (the "OBLIGATIONS"). SECTION 2. DELIVERY OF COLLATERAL. (a) On the Closing Date (as defined in the Call Option Agreement), all certificates or instruments representing or evidencing the Collateral shall be delivered to and held by the Pledge Agent pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignment in blank ("BENEFICIAL OWNERSHIP"), all in form and substance satisfactory to the Pledge Agent. (b) All Collateral hereinafter received by the Grantor shall be received in trust for the benefit of the Holders, shall be segregated by the Grantor from the other property or funds of the Grantor and shall be forthwith delivered to the Pledge Agent to hold as Collateral. SECTION 3. VOTING AND OTHER RIGHTS (a) So long as the SAI Shares are Collateral under this Agreement, the Pledge Agent shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral, or any part thereof, as instructed by the Holders based upon each of their ratable interest in the SAI Shares as set forth in Schedule 1 of the Call Option Agreement for any purpose not inconsistent with the terms of this Pledge Agreement. (b) The Grantor shall execute and deliver (or cause to be executed and delivered) to the Pledge Agent all such proxies and other instruments as the Pledge Agent may reasonably request for the purpose of enabling the Pledge Agent to exercise the voting and other rights which it is entitled to exercise per the instructions of the Holders pursuant to Section 3(a) above. 2 22 SECTION 4. DEFAULT ON OBLIGATIONS; EXERCISE OF CALL OPTION. In the event that: (i) as a result of a failure by the Grantor to perform an Obligation, the Call Options shall have become exercisable or (ii) the Call Options shall otherwise have become exercisable, then: (a) Upon receipt of an Exercise Notice from a Holder, the Pledge Agent shall take all steps necessary to prepare for the timely delivery to the exercising Holder of the Call Amount (not to exceed the maximum number of SAI Shares that the exercising Holder is entitled to receive as set forth on Schedule 1). On the Purchase Date, the Pledge Agent shall deliver Beneficial Ownership of such Call Amount and all other Collateral related thereto to such Holder. (b) On the Purchase Date, all rights of the Pledge Agent to vote or otherwise act on behalf of the Holder with respect to the transferred SAI Shares (including, but not limited to, the right to exercise the voting and other consensual rights which it would otherwise be entitled to exercise) shall cease and all such rights shall thereupon become vested exclusively in the transferee, who shall thereupon have the sole right to exercise such voting and other consensual rights. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents and warrants that each of the representations and warranties contained in the Call Option Agreement are true and accurate. SECTION 6. FURTHER ASSURANCES. (a) The Grantor agrees that from time to time, at the expense of the Grantor, it will promptly execute and deliver all further instruments and documents and take all further action that may be necessary or that the Pledge Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Pledge Agent and/or the Holders to exercise and enforce any of its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Grantor will execute and file such financing or continuation statements or amendments thereto and such other instruments or notices as may be necessary, or as the Pledge Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Pledge Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. (c) Each Grantor will furnish to the Pledge Agent, from time to time, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Pledge Agent may reasonably request, all in reasonable detail. SECTION 7. OTHER TRANSFERS, LIENS; ADDITIONAL SHARES. Each Grantor shall not: (a) Sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except for dispositions otherwise permitted by the Call Option Agreement. 3 23 (b) Create or suffer to exist any lien, security interest or other charge or encumbrance upon or with respect to any of the Collateral to secure any obligation of any person or entity, except for the security interest created by this Pledge Agreement, or except as otherwise expressly provided in the Transaction Documents. (c) The Grantor agrees that it shall not cause SAI to issue any stock or other securities in addition to or substitution for the SAI Shares and shall pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of SAI or the SAI Shares. SECTION 8. PLEDGE AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor hereby irrevocably appoints the Pledge Agent the Grantor's attorney-in-fact (which appointment shall be irrevocable and deemed coupled with an interest), with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Pledge Agent's discretion to take any action and to execute any instrument which the Pledge Agent may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including, without limitation: (a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) or (ii) above, (c) to receive, endorse and collect all instruments made payable to the Grantor representing any dividend or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and (d) to file any claims or take any action or institute any proceedings which the Pledge Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Pledge Agent with respect to any of the Collateral. SECTION 9. PLEDGE AGENT MAY PERFORM. If the Grantor fails to perform any Obligation contained herein, the Pledge Agent may itself perform, or cause performance of, such agreement, and the expenses of the Pledge Agent incurred in connection therewith shall be payable by the Grantor under Section 11(b). SECTION 10. AGREEMENT. The Grantor, the Holders and the Pledge Agent, by execution and delivery of this Agreement, each agree to act with respect to the Collateral and each other in accordance herewith and in the Call Option Agreement. The Pledge Agent, by its execution and delivery of this Agreement, hereby agrees to accept receipt of the Collateral and agrees to act with respect thereto as set forth herein and in accordance with the Call Option Agreement. 4 24 SECTION 11. INDEMNITY AND EXPENSES. (a) The Grantor agrees to indemnify the Pledge Agent from and against any and all claims, losses and liabilities growing out of or resulting from this Pledge Agreement (including, without limitation, enforcement of this Pledge Agreement), except claims, losses or liabilities directly arising from the Pledge Agent's own gross negligence, willful misconduct or bad faith. (b) The Grantor will upon demand pay to the Pledge Agent the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Pledge Agent may incur in connection with (i) the administration of this Pledge Agreement, (ii) the custody, preservation, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Pledge Agent hereunder or (iv) the failure by the Grantor to perform or observe any of the provisions hereof. (c) The Grantor agrees that the Pledge Agent does not assume, and shall have no responsibility for, the payment of any sums due or to become due under any agreement or contract other than included in the Collateral or the performance of any obligations to be performed under or with respect to any such agreement or contract by any of the Grantor, and except as the same may have resulted from the gross negligence or willful misconduct of the Pledge Agent, the Grantor hereby agrees to indemnify and hold the Pledge Agent harmless with respect to any and all claims by any person relating thereto. SECTION 12. SECURITY INTEREST ABSOLUTE. All rights of the Pledge Agent and security interests hereunder, and all obligations of the Grantor hereunder, shall be absolute and unconditional, irrespective of any circumstances which might constitute a defense available to, or a discharge of, any guarantor or other obligator in respect of its Obligations. SECTION 13. AMENDMENTS; ETC. No amendment or waiver of any provision of this Pledge Agreement, nor any consent to any departure by the Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 14. ADDRESSES FOR NOTICES. Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The address for all such communications to the Pledge Agent shall be: Wells Fargo Bank Minnesota, N.A. Customized Fiduciary Services Corporate/Legal Markets Sixth and Marquette Minneapolis, Minnesota 55479 Attention: ----------------- Facsimile: ----------------- 5 25 All notices and other communications provided for hereunder shall be in writing and shall be given in accordance with Section 8(c) of the Call Option Agreement. SECTION 15. CONTINUING SECURITY INTEREST. This Pledge Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the expiration of the term of the Call Options pursuant to Section 2 of the Call Option Agreement and all other Obligations have been performed in full (the "TERMINATION DATE"), (b) be binding upon the Grantor, and (c) inure to the benefit of each of the Holders and their respective successors, transferees, and assigns. On the Termination Date, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor subject to any existing liens, security interests or encumbrances on such Collateral. Upon any such termination, the Pledge Agent will, at the Grantor's expense, execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such termination. SECTION 16. GOVERNING LAW. This Pledge Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York and by federal law (including, without limitation, Title 11, U.S. Code) to the extent the same has preempted the law of the State of New York or such other jurisdiction. SECTION 17. HEADINGS. Section headings in this Pledge Agreement are included herein for convenience of reference only and shall not constitute a part of this Pledge Agreement for any other purpose. 6 26 IN WITNESS WHEREOF, the Grantor, the Holders and the Pledge Agent have caused this Pledge Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. GRANTOR: SUNSHINE INTERNATIONAL MINING, INC. By: --------------------------------- Name: Title: THE LIVERPOOL LIMITED PARTNERSHIP By: Liverpool Associates, Ltd. General Partner By: ---------------------------------------- Name: Paul E. Singer Title: President ELLIOTT INTERNATIONAL, L.P. By: Elliott International Capital Advisors, Inc. Attorney-in-fact By: ---------------------------------------- Name: Paul E. Singer Title: President STONEHILL INSTITUTIONAL PARTNERS, L.P. By: ---------------------------------------- Name: Title: 7 27 STONEHILL OFFSHORE PARTNERS, LIMITED By: ---------------------------------------- Name: Title: AGENT: WELLS FARGO BANK MINNESOTA, N.A. By: -------------------------------- Name: Title: [Signature page to Pledge Agreement] 8 28 INDEX OF DEFINED TERMS
AS DEFINED IN SECTION: ---------------------- "BENEFICIAL OWNERSHIP".............................................Section 2(a) "CALL OPTION AGREEMENT"................................................Preamble "CALL OPTION"..........................................................Preamble "CALL OPTIONS".........................................................Preamble "COLLATERAL".......................................................Section 1(a) "ELLIOTT HOLDERS"......................................................Preamble "GRANTOR"..............................................................Preamble "HOLDERS"..............................................................Preamble "OBLIGATIONS"......................................................Section 1(b) "PLEDGE AGENT".........................................................Preamble "PLEDGE AGREEMENT".....................................................Preamble "PLEDGED SHARES"...................................................Section 1(a) "SAI SHARES"...........................................................Preamble "SAI"..................................................................Preamble "SIP"..................................................................Preamble "SOPL".................................................................Preamble "STONEHILL HOLDERS"....................................................Preamble "TERMINATION DATE"...................................................Section 15 "TLLP".................................................................Preamble "WILP".................................................................Preamble
9 EX-10.2 9 d84396ex10-2.txt REGISTRATION RIGHTS AGREEMENT DATED 2/5/01 1 EXHIBIT 10.2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of February 5, 2001 between Sunshine Mining and Refining Company, a Delaware corporation, with offices at 817 West Main Street, Suite 600, Boise, Idaho 83702 (the "COMPANY") and each of the entities listed under "INVESTORS" on the signature page hereto (each an "INVESTOR" and collectively the "INVESTORS"), each with offices at the address listed under such Investor's name on Schedule I hereto. WITNESSETH: WHEREAS, pursuant to a Plan of Reorganization, dated as of August 23, 2000 filed by the Company, as subsequently amended and which became effective on February 5, 2001, certain affiliates of the Company and the Investors with the federal bankruptcy court in Delaware (the "PLAN OF REORGANIZATION"); and WHEREAS, the Company and the investors desire that all shares of the Company's common stock, par value $0.01 per share ("Common Stock") issued to the Investors pursuant to the Plan of Reorganization (the "Reorganization Shares") be subject to the registration rights contained herein; NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in and this Agreement, the Company and the Investors agrees as follows: 1. Certain Definitions. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Plan of Reorganization. As used in this Agreement, the following terms shall have the following respective meanings: "Approved Market" shall mean the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ Small Cap Market or the NASDAQ OTC Bulletin Board. "Closing Date" shall refer to the Effective Date of the Plan of Reorganization. "Commission" or "SEC" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" shall have the meaning set forth in the preamble. "Default Payment" shall have the meaning set forth in Section 2(b)(i). "Deficiency" shall have the meaning set forth in Section 2(b)(iv). 2 "Holder" and "Holders" shall mean the Investor or the Investors, respectively, and any transferee of the Registrable Securities which have not been sold to the public to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement. "Indemnified Party" shall have the meaning set forth in Section 6(c). "Indemnifying Party" shall have the meaning set forth in Section 6(c). "Interfering Events" shall have the meaning set forth in Section 2(b). "Listing Period" shall have the meaning set forth in Section 2(b)(ii)(A). "Market Price"" shall mean the price of one share of Common Stock determined as follows: (i) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the closing price on such exchange on the date of valuation; (ii) if (i) does not apply and the Common Stock is listed on the NASDAQ National Market System, the NASDAQ Small-Cap Market or the NASDAQ OTC Bulletin Board, the last reported bid price on the date of valuation; (iii) If neither (i) nor (ii) apply but the Common Stock is quoted in the over-the-counter market, another recognized exchange or on the pink sheets, the last reported bid price on the date of valuation; and (iv) If neither clause (i), (ii) or (iii) above applies, the good faith determination of the Board of Directors, with the concurrence and participation of an investment banking firm acceptable to the Holders. "Mandatory Repurchase Price" shall have the meaning set forth in Section 2(b)(i)(B). "Put Notice" shall have the meaning set forth in Section 2(b)(i)(B). "Registrable Securities" shall mean (i) the Reorganization Shares; (ii) any securities of the Company issued or issuable to the Investors or their permitted transferees upon any stock split, stock dividend, recapitalization or similar event with respect to the aforementioned securities; and (iii) any securities of the Company issued as a dividend or other distribution with respect to, conversion or exchange of, or in replacement of, Registrable Securities. 2 3 The terms "register", "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses to be incurred by the Company in connection with each Holder's registration rights under this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, "Blue Sky" fees and expenses, reasonable fees and disbursements of counsel to Holders (using a single counsel selected by a majority in interest of the Holders) for a "due diligence" examination of the Company and review of the Registration Statement and related documents, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company). "Registration Statement" shall have the meaning set forth in Section 2(a) herein. "Regulation D" shall mean Regulation D as promulgated pursuant to the Securities Act, and as subsequently amended. "Securities Act" or "Act" shall mean the Securities Act of 1933, as amended. "Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for Holders not included within "Registration Expenses". "Suspension Grace Period" shall have the meaning set forth in Section 2(b)(iii). 2. Registration Requirements. The Company shall use its best efforts to effect the registration of the Investors' Registrable Securities (including without limitation the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable "Blue Sky" or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the sale or distribution of all the Registrable Securities in the manner (including manner of sale) designated by the Holder and in all U.S. jurisdictions. Such best efforts by the Company shall include the following: (a) The Company shall, as expeditiously as reasonably possible after the Effective Date (as defined in the Plan of Reorganization) (the "CLOSING DATE"): (i) But in any event by March 20, 2001 (THE "FILING DATE") prepare and file a registration statement with the Commission pursuant to Rule 415 under the Securities Act on Form S-3 under the Securities Act (or in the event that the Company is ineligible to use such form, such other form as the Company is eligible to use under the Securities Act) covering the Registrable Securities (such registration statement, including any amendments or supplements thereto and prospectuses contained therein, is 3 4 referred to herein as the "REGISTRATION STATEMENT"), which Registration Statement, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), shall state that such Registration Statement also covers such number of additional shares of Common Stock as may become issuable to prevent dilution resulting from stock splits, stock dividends or similar events. The number of shares of Common Stock initially included in such Registration Statement shall be no less than the number of shares of Common Stock that are as of the date of this Agreement issued or issuable to the Investors. Thereafter, the Company shall use its best efforts to cause such Registration Statement to be declared effective as soon as practicable, and in any event prior to 60 days following the Filing Date. The Company shall provide Holders and their legal counsel reasonable opportunity to review any such Registration Statement or amendment or supplement thereto prior to filing. (ii) Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement in accordance with the intended methods of disposition by the seller thereof as set forth in the Registration Statement and notify the Holders of the filing and effectiveness of such Registration Statement and any amendments or supplements. (iii) Furnish to each Holder such numbers of copies of a current prospectus conforming with the requirements of the Act, copies of the Registration Statement, any amendment or supplement thereto and any documents incorporated by reference therein and such other documents as such Holder may reasonably require in order to facilitate the disposition of Registrable Securities owned by such Holder. (iv) Register and qualify the securities covered by such Registration Statement under the securities or "Blue Sky" laws of all U.S. jurisdictions; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. (v) Notify each Holder immediately of the happening of any event as a result of which the prospectus (including any supplements thereto or thereof and any information incorporated or deemed to be incorporated by reference therein) included in such Registration Statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and use its best efforts to promptly update and/or correct such prospectus. 4 5 (vi) Notify each Holder immediately of the issuance by the Commission or any state securities commission or agency of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. The Company shall use its best efforts to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible time. (vii) Permit the Holders of the Registrable Securities included in the Registration Statement to review the Registration Statement and all amendments and supplements thereto within a reasonable period of time prior to each filing, and shall not file any document in a form to which such counsel reasonably objects. (viii) List the Registrable Securities covered by such Registration Statement with all securities exchange(s) and/or markets on which the Common Stock is then listed and prepare and file any required filings with the New York Stock Exchange, the National Association of Securities Dealers, Inc. or any exchange or market where the Common Stock is then traded. (ix) If applicable, take all steps necessary to enable Holders to avail themselves of the prospectus delivery mechanism set forth in Rule 153 (or successor thereto) under the Act. (x) Upon the effectiveness of the Registration Statement, cause any restrictive legend placed on the certificates representing Registrable Securities to be removed promptly. (b) Set forth below in this Section 2(b) are (I) events that may arise that the Investors consider will interfere with the full enjoyment of their rights under the Transaction Documents (the "INTERFERING EVENTS"), and (II) certain remedies applicable in each of these events. (i) Delay in Effectiveness of Registration Statement. (A) In the event that the Registration Statement has not been declared effective within 60 calendar days from the Filing Date and provided that such Holder is not able to freely transfer the Registrable Securities pursuant to Rule 144(k) of the Act, then the Company shall pay to each Holder (in cash or shares of Common Stock, at the option of each Holder as provided in Section 2(b)(iv)), a default payment for each 30-day period (or portion thereof) that the effectiveness of the Registration Statement has not been declared effective or failure to issue such unlegended Registrable Securities persists, equal to 1% of the value of the outstanding Registrable Securities held by such Holder, based upon the Market Price determined on the last day of each such 30-day period (a "Default Payment"). 5 6 (B) If the Registration Statement has not been declared effective within 120 days after the Filing Date and provided that such Holder is not able to freely transfer the Registrable Securities pursuant to Rule 144(k) of the Act, then (x) the Call Options shall become immediately exercisable and (y) each Holder shall have the right to sell at any time after the 150th day after the Closing Date any or all of its Registrable Securities and at the Mandatory Repurchase Price (as defined below). Each Holder shall exercise such right by providing the Company with written notice thereof (the "PUT NOTICE"), which such Put Notice shall include the type and amount of each security that the Holder seeks to repurchase and a date at least five (5) business days from the date thereof on which the Holder seeks the repurchase to occur. The "MANDATORY REPURCHASE PRICE" shall be equal to, with respect to the Registrable Securities to be sold in accordance with this paragraph, (x) the number of such shares multiplied by (y) 115% of the Market Price on the date the Holder acquires the right to require the Company to repurchase the shares or the date upon which the Holder received the shares. (ii) No Listing; Premium Price Redemption for Delisting of Class of Shares. (A) In the event that the Company fails, refuses or is unable to cause the Registrable Securities covered by the Registration Statement to be approved for trading subject to issuance with an Approved Market: (1) at all times during the period ("LISTING PERIOD") commencing the earlier of the effective date of the Registration Statement or the 60th calendar day following the Filing Date, and continuing thereafter for so long as the Call Options are outstanding, then the Company shall pay in cash or Common Stock, as provided in Section 2(b)(i)(A), to each Holder a Default Payment for each 30-day period (or portion thereof) during the Listing Period from and after such failure, refusal or inability to so list the Registrable Securities until the Registrable Securities are so listed and (2) within 30 calendar days following the Filing Date, then the Call Options shall become immediately exercisable. (B) In the event that shares of Common Stock of the Company are delisted from, or are no longer approved for trading on, the Approved Market at any time following the Closing Date and remain delisted or not approved for trading for 7 consecutive calendar days, then (1) the Call Options shall become immediately exercisable and (2) at the option of each Holder and to the extent such Holder so elects, the Company shall on 2 business days notice either (x) pay in cash or Common Stock (as provided in Section 2(b)(iv) to such Holder a Default Payment for each 30-day period that the shares are delisted or (y) require the Company to repurchase the Registrable Securities held by such Holder, in whole or in part, at Mandatory Repurchase Price (as defined above); provided, however, that such Holder 6 7 may revoke such request at any time prior to receipt of payment of such Default Payments or Mandatory Repurchase Price, as the case may be. (iii) Blackout Periods. In the event any Holder is unable to sell Registrable Securities under the Registration Statement for more than (A) ten (10) consecutive days or (B) an aggregate of thirty (30) days in any 365 day period ("SUSPENSION GRACE PERIOD") including without limitation by reason of a suspension of trading of the Common Stock on the Approved Market, any suspension or stop order with respect to the Registration Statement or the fact that an event has occurred as a result of which the prospectus (including any supplements thereto) included in such Registration Statement then in effect includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, or the number of shares of Common Stock covered by the Registration Statement is insufficient at such time to make such sales, then the Call Options shall become immediately exercisable. In addition, the Company shall pay in cash or Common Stock (as provided in Section 2(b)(iv)) to each Holder a Default Payment for each 30-day period (or portion thereof) from and after the expiration of the Suspension Grace Period or, in the alternative, at any time following the expiration of the Suspension Grace Period, a Holder shall have the right but not the obligation to have the Company repurchase its Registrable Securities at the price and on the terms set forth in Section 2(b)(i)(B) above. (iv) Default Payment Terms; Status of Unpaid Default Payments. All Default Payments (which payments shall be pro rata on a per diem basis for any period of less than 30 days) required to be made in connection with the above provisions shall be paid at any time upon demand, and whether or not a demand is made, by the tenth (10th) day of each calendar month for each partial or full 30-day period occurring prior to that date. Such Default Payments shall be payable in cash or Common Stock, as determined by each Holder in its sole discretion. If the Holder elects to be paid in Common Stock, the Holder shall be entitled to that number of shares of Common Stock, as shall equal to the amount of such Default Payment multiplied by a fraction, the numerator of which is one and the denominator of which is equal to the average of the Market Price for the three (3) business days prior to, but not including, the date upon which such payments are due. Unless the Company shall receive written notice to the contrary from the respective Holder, the Default Payments shall be in cash. (v) Mandatory Repurchase Price for Default. In the event that the Company fails or refuses to pay any Default Payment provided for in the foregoing paragraphs (i) through (iv) when due, (A) the Call Options shall become immediately exercisable and (B) at any Holder's request and option the Company shall purchase all or a portion of the Registrable Securities held 7 8 by such Holder (with Default Payments accruing through the date of such purchase), within five (5) days of such request, at a purchase price equal to the Mandatory Repurchase Price; provided that such Holder may revoke such request at any time prior to receipt of such payment of such purchase price. (vi) Cumulative Remedies. Each Default Payment triggered by an Interfering Event provided for in the foregoing paragraphs (i) through (iii) shall be in addition to each other Default Payment triggered by another Interfering Event; provided, however, that in no event shall the Company be obligated to pay to any Holder Default Payments in an aggregate amount greater than 1% of the value of the outstanding Registrable Securities based upon the Market Price for any 30-day period (or portion thereof). The Default Payments, mandatory repurchases and the triggering of the ability of the Holders to exercise Call Options provided for above are in addition to and not in lieu or limitation of any other rights the Holders may have at law, in equity or under the terms of the Transaction Documents, including without limitation the right to specific performance. Each Holder shall be entitled to specific performance of any and all obligations of the Company in connection with the registration rights of the Holders hereunder. (vii) Certain Acknowledgments. The Company acknowledges that any failure, refusal or inability by the Company described in the foregoing paragraphs (i) through (iii) and paragraph (v) will cause the Holders to suffer damages in an amount that will be difficult to ascertain, including without limitation damages resulting from the loss of liquidity in the Registrable Securities and the additional investment risk in holding the Registrable Securities. Accordingly, the parties agree that it is appropriate to include in this Agreement the foregoing provisions for Default Payments, mandatory repurchases and the triggering of the ability of the Holders to exercise the Call Options in order to compensate the Holders for such damages. The parties acknowledge and agree that the Default Payments, mandatory repurchases and the triggering of ability of the Holders to exercise of the Call Options set forth above represent the parties' good faith effort to quantify such damages and, as such, agree that the form and amount of such Default Payments and mandatory repurchases and the triggering of the ability of the Holders to exercise of the Call Options are reasonable and will not constitute a penalty. The parties agree that the provisions of this clause (vii) consist of certain acknowledgments and agreements concerning the remedies of the Holders set forth in clauses (i) through (iii) and paragraph (v) of this paragraph; nothing in this clause (vii) imposes any additional default payments and mandatory repurchases for violations under this Agreement. (c) If the Holder(s) intend to distribute the Registrable Securities by means of an underwriting, the Holder(s) shall so advise the Company. Any such underwriting may only be administered by investment bankers reasonably satisfactory to the Company. 8 9 (d) The Company shall enter into such customary agreements for secondary offerings (including a customary underwriting agreement with the underwriter or underwriters, if any) and take all such other reasonable actions reasonably requested by the Holders in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities. In the event that the offering in which the Registrable Securities are to be sold is deemed to be an underwritten offering or an Investor selling Registrable Securities is deemed to be an underwriter, the Company shall: (i) make such representations and warranties to the Holders and the underwriter or underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in secondary offerings; (ii) cause to be delivered to the sellers of Registrable Securities and the underwriter or underwriters, if any, opinions of independent counsel to the Company, on and dated as of the effective day (or in the case of an underwritten offering, dated the date of delivery of any Registrable Securities sold pursuant thereto) of the Registration Statement, and within ninety (90) days following the end of each fiscal year thereafter, which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Holders and the underwriter(s), if any, and their counsel and covering, without limitation, such matters as the due authorization and issuance of the securities being registered and compliance with securities laws by the Company in connection with the authorization, issuance and registration thereof and other matters that are customarily given to underwriters in underwritten offerings, addressed to the Holders and each underwriter, if any. (iii) cause to be delivered, immediately prior to the effectiveness of the Registration Statement (and, in the case of an underwritten offering, at the time of delivery of any Registrable Securities sold pursuant thereto), and at the beginning of each fiscal year following a year during which the Company's independent certified public accountants shall have reviewed any of the Company's books or records, a "comfort" letter from the Company's independent certified public accountants addressed to the Holders and each underwriter, if any, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with secondary offerings; such accountants shall have undertaken in each such letter to update the same during each such fiscal year in which such books or records are being reviewed so that each such letter shall remain current, correct and complete throughout such fiscal year; and each such letter and update thereof, if any, shall be reasonably satisfactory to the Holders. 9 10 (iv) if an underwriting agreement is entered into, the same shall include customary indemnification and contribution provisions to and from the underwriters and procedures for secondary underwritten offerings; (v) deliver such documents and certificates as may be reasonably requested by the Holders of the Registrable Securities being sold or the managing underwriter or underwriters, if any, to evidence compliance with clause (i) above and with any customary conditions contained in the underwriting agreement, if any; and (vi) deliver to the Holders on the effective day (or in the case of an underwritten offering, dated the date of delivery of any Registrable Securities sold pursuant thereto) of the Registration Statement, and at the beginning of each fiscal quarter thereafter, a certificate in form and substance as shall be reasonably satisfactory to the Holders, executed by an executive officer of the Company and to the effect that all the representations and warranties of the Company contained in the Purchase Agreement are still true and correct except as disclosed in such certificate; the Company shall, as to each such certificate delivered at the beginning of each fiscal quarter, update or cause to be updated each such certificate during such quarter so that it shall remain current, complete and correct throughout such quarter; and such updates received by the Holders during such quarter, if any, shall have been reasonably satisfactory to the Holders. (e) The Company shall make available for inspection by the Holders, representative(s) of all the Holders together, any underwriter participating in any disposition pursuant to a Registration Statement, and any attorney or accountant retained by any Holder or underwriter, all financial and other records customary for purposes of the Holders' due diligence examination of the Company and review of any Registration Statement, all SEC Documents (as defined in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement, provided that such parties agree to keep such information confidential. (f) The Company shall file a Registration Statement with respect to any newly authorized and/or reserved shares within thirty (30) business days of the authorization or reservation of same and shall use its best efforts to cause such Registration Statement to become effective within ninety (90) days of such filing. If the Holders become entitled, pursuant to an event described in clause (ii) or (iii) of the definition of Registrable Securities, to receive any securities in respect of Registrable Securities that were already included in a Registration Statement, subsequent to the date such Registration Statement is declared effective, and the Company is unable under the securities laws to add such securities to the then effective Registration Statement, the Company shall promptly file, in accordance with the procedures set forth herein, an additional Registration Statement with 10 11 respect to such newly Registrable Securities. The Company shall use its best efforts to (i) cause any such additional Registration Statement, when filed, to become effective under the Securities Act, and (ii) keep such additional Registration Statement effective during the period described in Section 5 below. All of the registration rights and remedies under this Agreement shall apply to the registration of such newly reserved shares and such new Registrable Securities, including without limitation the provisions providing for Default Payments contained herein. 3. Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance with registration pursuant to this Agreement shall be borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder. 4. Registration on Form S-3; Other Forms. If eligible to use Form S-3 or comparable or successor form, the Company shall use such form to register the Registrable Securities. In the event that the Company is ineligible to use such form, the Company will use such form as the Company is eligible to use under the Securities Act. 5. Registration Period. In the case of the registration effected by the Company pursuant to this Agreement, the Company will use its best efforts to keep such registration effective until the earlier to occur of (i) sales are permitted of all Registrable Securities without registration under Rule 144(k) or (ii) all Registrable Securities shall have been sold pursuant to such registration. 6. Indemnification. (a) The Company Indemnity. The Company will indemnify each Holder, each of its officers, directors and partners, and each person controlling each Holder, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any state securities law or in either case, any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to a Holder to the 11 12 extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or the underwriter (if any) therefor and stated to be specifically for use therein. The indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld). (b) Holder Indemnity. Each Holder will, severally and not jointly, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, partners, and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each other Holder (if any), and each of their officers, directors and partners, and each person controlling such other Holder(s), against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, and will reimburse the Company and such other Holder(s) and their directors, officers and partners, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein, and provided that the maximum amount for which such Holder shall be liable under this indemnity shall not exceed the net proceeds received by such Holder from the sale of the Registrable Securities. The indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld). (c) Procedure. Each party entitled to indemnification under this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim in any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Article except to the extent that the Indemnifying Party is materially and adversely affected by such failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each 12 13 Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom. 7. Contribution. If the indemnification provided for in Section 6 herein is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein (other than by reason of the exceptions provided therein), then each such Indemnifying Party, in lieu of indemnifying each of such Indemnified Parties, shall contribute to the amount paid or payable by each such Indemnified Party as a result of such losses, claims, damages or liabilities as between the Company on the one hand and any Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of such Holder in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of any Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by such Holder. In no event shall the obligation of any Indemnifying Party to contribute under this Section 7 exceed the amount that such Indemnifying Party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 6(a) or 6(b) hereof had been available under the circumstances. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Holders or the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraphs shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this section, no Holder or underwriter shall be required to contribute any amount in excess of the amount by which (i) in the case of any Holder, the net proceeds received by such Holder from the sale of Registrable Securities or (ii) in the case of an underwriter, the total price at which the Registrable Securities purchased by it and distributed to the public were offered to the public exceeds, in any such case, the amount of any damages that such Holder or underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 13 14 8. Survival. The indemnity and contribution agreements contained in Sections 6 and 7 and the representations and warranties of the Company referred to in Section 2(d)(i) shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, or the underwriting agreement, (ii) any investigation made by or on behalf of any Indemnified Party or by or on behalf of the Company, and (iii) the consummation of the sale or successive resales of the Registrable Securities. 9. Information by Holders. Each Holder shall reasonably promptly furnish to the Company such information regarding such Holder and the distribution and/or sale proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. The intended method or methods of disposition and/or sale (Plan of Distribution) of such securities as so provided by such Investor shall be included without alteration in the Registration Statement covering the Registrable Securities and shall not be changed without written consent of such Holder, except that such Holder may not require an intended method of disposition which violates applicable securities law. 10. Transfer or Assignment. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The rights granted to the Investors by the Company under this Agreement to cause the Company to register Registrable Securities may be transferred or assigned (in whole or in part) to a transferee or assignee of such Registrable Securities; provided that such transfer or assignment shall be for at least .25% of the shares of Common Stock outstanding and that the rights granted under this Agreement may not be assigned to a transferee who has acquired the Registrable Securities from an Investor pursuant to an effective registration statement and who is not an affiliate (as defined in the Act) of the Company; further provided in each case that the Company must be given written notice by the such Investor at the time of or within a reasonable time after said transfer or assignment, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned; and provided further that the transferee or assignee of such rights agrees in writing to be bound by the provisions of this Agreement. 11. Miscellaneous. (a) Remedies. The Company and the Investors acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. (b) Jurisdiction. The Company and each of the Investors (i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court, the New York State courts and other courts of the United States sitting in New York County, New 14 15 York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such suit action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each of the Investors consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this paragraph shall affect or limit any right to serve process in any other manner permitted by law. (c) Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The addresses for such communications shall be: to the Company: Sunshine Mining and Refining Company 5956 Sherry Lane Suite 1621 Dallas, Texas 75225 Attention: William Davis Facsimile: (214) 265-0324 with copies to: Prager, Metzger & Kroemer, PLLC 2626 Cole Avenue Suite 900 Dallas, Texas 75204 Attention: Steven C. Metzger, Esq. Facsimile: (214) 523-3838 to the Investors: To each Investor at the address and/or fax number set forth on Schedule I of this Agreement with copies to: Kleinberg, Kaplan, Wolff & Cohen, P.C. 551 Fifth Avenue New York, New York 10176 Facsimile: (212) 986-8866 Attention: Stephen M. Schultz, Esq. 15 16 Any party hereto may from time to time change its address for notices by giving at least 10 days' written notice of such changed address to the other parties hereto. (d) Indemnity. Each party shall indemnify each other party against any loss, cost or damages (including reasonable attorney's fees) incurred as a result of such parties' breach of any representation, warranty, covenant or agreement in this Agreement and the enforcement of this indemnity. (e) Waivers. No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. The representations and warranties and the agreements and covenants of the Company and each Investor contained herein shall survive the Closing. (f) Execution. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, it being understood that all parties need not sign the same counterpart. (g) Publicity. The Company agrees that it will not disclose, and will not include in any public announcement, the name of any Investor without its express written approval, unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. The Company agrees to deliver a copy of any public announcement regarding the matters covered by this Agreement or any agreement or document executed herewith to each Investor and any public announcement including the name of an Investor to such Investor, prior to the publication of such announcements. (h) Entire Agreement. This Agreement and the agreements and documents contemplated hereby contain the entire understanding and agreement of the parties, and may not be modified or terminated except by a written agreement signed by both parties. (i) Governing Law. This Agreement and the validity and performance of the terms hereof shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware applicable to contracts executed and to be performed entirely in such State. (j) Severability. The parties acknowledge and agree that the Investors are not agents, affiliates or partners of each other, that all representations, warranties, covenants and agreements of the Investors hereunder are several and not joint, that no Investor shall have any responsibility or liability for the representations, warranties, agreements, acts or omissions of any other Investor, and that any rights granted to "INVESTORS" hereunder shall be enforceable by each Investor hereunder. (k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY. 16 17 (l) Titles. The titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Signature page follows 17 18 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. SUNSHINE MINING AND REFINING COMPANY By: ------------------------------------- Name: Title: INVESTORS: STONEHILL INSTITUTIONAL PARTNERS, L.P. By: ------------------------------------- Name: John Motulsky Title: General Partner STONEHILL OFFSHORE PARTNERS LIMITED By: Stonehill Advisors LLC By: ------------------------------------- Name: John Motulsky Title: Managing Member ELLIOTT INTERNATIONAL, L.P. By: Elliott International Capital Advisors, Inc. Attorney-in-Fact By: ------------------------------------- Name: Paul E. Singer Title: President 18 19 THE LIVERPOOL LIMITED PARTNERSHIP By: Liverpool Associates, Ltd. General Partner By: ------------------------------------- Name: Paul E. Singer Title: President Signature page to Sunshine Mining and Refining Company Registration Rights Agreement 19 20 SCHEDULE I INVESTORS Stonehill Institutional Partners, L.P. Stonehill Offshore Partners Limited c/o Stonehill Capital Management LLC 126 E. 56th Street, 9th Floor New York, New York 10022 Attention: John Motulsky Facsimile: (212) 838-2291 with a copy to: Proskauer Rose LLP 1585 Broadway New York, New York 10036 Attention: Lawrence Budish, Esq. Facsimile: (212) 969-2900 The Liverpol Limited Partnership Elliott International, L.P. c/o Elliott Management Corporation 712 Fifth Avenue New York, New York 10019 Attention: Dan Gropper Facsimile: (212) 974-2092 with copies to: Kleinberg, Kaplan, Wolff & Cohen, P.C. 551 Fifth Avenue, 18th Floor New York, New York 10176 Attention: Lawrence D. Hui, Esq. Facsimile: (212) 986-8866 -----END PRIVACY-ENHANCED MESSAGE-----