Document:

FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT 

        THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is made
effective this 8th day of July, 2003 by and among LASALLE BUSINESS CREDIT, LLC,
successor by merger to LaSalle Business Credit, Inc., as Agent
(“Agent”) for STANDARD FEDERAL BANK NATIONAL ASSOCIATION
(“Lender”), MEDICAL TECHNOLOGY SYSTEMS, INC.
(“MTS”) and MTS PACKAGING SYSTEMS, INC. (“Packaging”,
and with MTS, each a “Borrower” and collectively, the
“Borrowers”. 

BACKGROUND 

            A.    
          Agent, Lender and Borrowers previously entered into that certain Loan and
          Security Agreement dated June 26, 2002 (as the same may be amended from time to
          time, the “Loan Agreement”). 

            B.    
          On or about October 15, 2002, MTS formed MTS Packaging Systems International
          Ltd., a company formed under the laws of England and Wales (the “UK
          Company”). 

            C.    
          MTS has transferred, or is in the process of transferring, to the UK Company
          accounts and inventory as described on Schedule 1 hereto
          having a value in excess of One Hundred Thousand Dollars ($100,000.00) (the
          “Transferred Assets”). 

            D.    
          Borrowers have requested that (1) the Agent and Lender consent to the formation
          of the UK Company, (2) notwithstanding the terms set forth in Sections
          12(o) and 13(d)) of the Loan Agreement, the UK Company be
          permitted to be a Guarantor under the Loan Agreement rather than a Borrower
          despite it having assets in excess of One Hundred Thousand Dollars ($100,000.00)
          in value; (3) notwithstanding any contrary provision of the Loan Agreement or
          any document relating thereto, the UK Company not be required to grant a
          security interest in any of its assets (including, without limitation, any
          intellectual property), and (4) notwithstanding any contrary provision of the
          Loan Agreement, or any document related thereto, the UK Company be permitted to
          maintain its assets in any location outside the United States as the UK Company
          may desire. 

            E.
              
          Agent, Lender and Borrowers also desire to amend the Loan Agreement in
          accordance with the terms and conditions set forth herein. 

            F.    
          Capitalized terms used herein and not otherwise defined shall have the meanings
          provided for such terms in the Loan Agreement. 

        NOW
THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 

            1.    
          Lender’s Consents and Agreements Regarding the UK
          Company. 

              
              (a)     
          Agent and Lender hereby consent and agree to the following with respect to the
          UK Company (notwithstanding any contrary provision of the Loan Agreement or any
          document related thereto): (i) MTS may form the UK Company as a wholly-owned,
          direct or indirect Subsidiary of MTS, (ii) the UK Company shall be a Guarantor
          under the Loan Agreement rather than a Borrower, despite the value of the UK
          Company’s assets exceeding One Hundred Thousand Dollars ($100,000.00),
          (iii) the UK Company shall not be required to grant a security interest in any
          of its assets, including, without limitation, any intellectual property, and
          (iv) the UK Company shall be permitted to maintain its assets in any location
          outside the United States as the UK Company may desire. Agent’s and
          Lender’s consent herein is contingent upon the execution and delivery to
          Agent of the following documents: 

              
                       (i)
              
          Certified copies of the formation and governing documents of the UK Company; 

              
                       (ii)      
          Continuing Unconditional Guaranty executed by the UK Company, in form and
          substance acceptable to Lender (the “Guaranty”); 

              
                       (iii)  
           
          Amendment to that certain Securities Pledge Agreement dated June 26, 2002
          executed by MTS, in form and substance acceptable to Lender; and 

              
                       (iv)     
          Original Stock Certificates of the UK Company and blank stock powers therefor. 

               
             (b)     
          Agent’s and Lender’s consent and agreement in this Amendment with
          respect to the UK Company is limited to the matters expressly set forth in
          Section 1(a) above. Nothing in this Amendment nor in any of
          the documents executed in connection herewith shall be deemed an obligation,
          agreement or commitment by Agent and/or Lender to agree to any other amendments
          or modifications to the Loan Agreement or any of the other Loan Documents,
          including, without limitation, any future deviation from the requirements set
          forth in Section 13(d) of the Loan Agreement. 

     2.        
            Agreement and Representation Regarding the UK Company.
          Borrowers do hereby represent and warrant that the UK Company is a wholly owned,
          direct or indirect, subsidiary of MTS. 

     3.        
             Definitions. 

             
                (a)     Section 1 of the Loan Agreement is hereby amended by
           adding the following definition: 

	 	
““Amortization
Difference” shall mean the following amounts as of the following dates: (a) One
Hundred Thirty-Eight Thousand Eighty Hundred Eighty-Nine and 34/100 Dollars ($138,889.43)
as of September 30, 2003, (b) Three Hundred Forty-Seven Thousand Two Hundred Twenty-Three
and 35/100 Dollars ($347,223.35) as of December 31, 2003, (c) Four Hundred Sixteen
Thousand Six Hundred Sixty-Eight and 02/100 Dollars ($416,668.02) as of March 31, 2004,
(d) Four Hundred Sixteen Thousand Six Hundred Sixty-Eight and 02/100 Dollars ($416,668.02)
as of June 30, 2004, (e) Two Hundred Seventy-Seven Thousand Seven Hundred Seventy-Eight
and 68/100 Dollars ($277,778.68) as of September 30, 2004 and (f) Sixty-Nine Thousand Four
Hundred Forty-Four Dollars and 67/100 ($69,444.67) as of December 31, 2004.” 

             
                (b)     The definition of “Debt
          Service Coverage Ratio” contained inSection 1 of the Loan Agreement is
          hereby deleted in its entirety and replaced with the following: 

	 	
““Debt
Service Coverage Ratio” shall mean, for any Person, with respect to any period of
determination, the ratio of (i) such Person’s net income after taxes for such
period (excluding any after-tax gains or losses on the sale of assets (other than the sale
of Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses), plus depreciation and amortization deducted in
determining net income for such period, plus tax benefits which offset any income
tax expense provisions deducted in determining net income for such period, minus
Unfinanced Capital Expenditures for such period plus the after-tax increase in LIFO
reserves, or minus  the after tax decrease in LIFO reserves, to (ii) such
Person’s current principal maturities of long-term debt and capitalized leases paid
or scheduled to be paid during such period, plus any prepayments on indebtedness
owed to any other Person (exclusive of trade payables and Revolving Loans) and paid during
such period, minus the Amortization Difference, plus, if the period of
determination ends on and is for such Person’s Fiscal Year, any Permitted Dividends
paid during such Fiscal Year.” 

              
              (c)     The definition of “Excess Cash Flow”
          contained in Section 1 of the Loan Agreement is hereby deleted in its entirety. 

            4.
               Repayment of Term Loan B. Section
          2(e)(iii) of the Loan Agreement is deleted in its entirety and
          replaced with the following: 

               	 	
                    “(iii)  Repayment of Term Loan B. The principal of Term Loan B shall be repaid
                    in (i) thirteen (13) equal and consecutive monthly installments of principal of
                    Eighty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars (83,333.33),
                    payable on the first day of each month during the period beginning on and
                    including July 1, 2002 and ending on and including July 1, 2003 and (ii) six (6)
                    equal and consecutive monthly installments of principal of One Hundred Fifty-Two
                    Thousand Seven Hundred Seventy Eight Dollars ($152,778.00), payable on the first
                    day of each month during the period beginning on and including August 1, 2003
                    and ending on and including January 1, 2004; provided  that, on January
                    1, 2004, the Borrowers shall also repay any other remaining principal balance of
                    the Term Loan B and interest accrued and unpaid thereon. If any such payment due
                    date is not a Business Day, then such payment shall be made on the next
                    succeeding Business Day, and such extension of time shall be included in the
                    computation of the amount of interest and fees due hereunder.” 

            5.
              Mandatory Prepayments of Term Loans. Section
          2(e)(v)(B) of the Loan Agreement is hereby deleted in its
          entirety and replaced with the following: 

        
                     “(B)
             Intentionally Deleted.”

            6.    
          Change in Financial Statements due to Deletion of Excess Cash
          Flow. Section 9(c) of the Loan Agreement is
          hereby deleted in its entirety and replaced with the following: 

               	 	
                    “(c)        Financial Statements.
                        The Borrowers shall deliver to Agent
                    the following financial information of MTS and its Subsidiaries, all of which
                    shall be prepared in accordance with GAAP consistently applied, shall be
                    accompanied by a compliance certificate in the form of Exhibit
                    B hereto, which compliance certificate shall include a
                    calculation of all financial covenants contained in this Agreement, and shall be
                    in form and content satisfactory to the Agent: (i) no later than thirty (30)
                    days after the end of each calendar month, copies of internally prepared
                    financial statements for such month, including, without limitation, balance
                    sheets and statements of income, retained earnings and cash flow
                    (“Financial Statements”), on a consolidated and consolidating
                    basis, together with (A) a cumulative statement of income from the first day of
                    the then current Fiscal Year to the last day of such month, (B) a report
                    comparing Capital Expenditures for such month against the capital budget
                    schedule attached hereto as Schedule 9(c) and identifying
                    all expected changes in the timing or amount of Capital Expenditures, along with
                    a comparison between the actual figures for such month, the comparable figures
                    for the prior year period (only with respect to the balance sheet and income
                    statement) and the comparable figures in the current year’s budget, along
                    with management commentary. Such Financial Statements and additional financial
                    information shall have been certified by the Chief Financial Officer of MTS to
                    be true, accurate and complete in all material respects; and (ii) no later than
                    forty-five (45) days after the end of each of the first three of MTS’s
                    fiscal quarters, unaudited quarterly consolidated internally prepared Financial
                    Statements, which Financial Statements shall have been certified by the Chief
                    Financial Officer of MTS to be true, accurate and complete in all material
                    respects; (iii) no later than ninety (90) days after the end of each Fiscal
                    Year, audited consolidated annual Financial Statements, with an unqualified
                    opinion by independent certified public accountants selected by MTS and
                    reasonably satisfactory to Agent, which Financial Statements shall be
                    accompanied by (A) a letter from such accountants substantially in the form of
                    Exhibit E attached hereto and (B) copies of any management
                    letters, reports or other detailed information concerning significant aspects of
                    MTS’s operations and financial affairs given to MTS or any of its
                    Subsidiaries by such accountants.” 

       
        7.      Financial Covenants. 

              
               (a)     
          Section 14(d) of the Loan Agreement is hereby deleted in
          its entirety and replaced with the following: 

               	 	
                     “(d)     
                     Capital Expenditure Limitations. MTS and its Subsidiaries
                    on a consolidated basis shall not make Capital Expenditures in excess of (i) Two
                    Million Six Hundred Thousand Dollars ($2,600,000.00) during the Fiscal Year
                    ending March 31, 2004, (ii) One Million Eight Hundred Thousand Dollars
                    ($1,800,000.00), plus the Carryover Amount during the Fiscal Year ending March
                    31, 2005 and (iii) One Million Eight Hundred Thousand Dollars ($1,800,000.00)
                    during any Fiscal Year thereafter. As used herein “Carryover
                    Amount” shall mean (A) an amount equal to the remainder of (1) Two
                    Million Six Hundred Thousand Dollars ($2,600,000.00), minus (2) the
                    actual amount of Capital Expenditures for the Fiscal Year ending March 31, 2004,
                    provided Term Loan B has been repaid in full on or prior to June 1, 2004 and (B)
                    zero, if Term Loan B has not been repaid in full on or prior to June 1,
                    2004.” 

            8.  
             Amendment Fee. Contemporaneously with the execution hereof,
          and in addition to all other sums due from Borrowers to Agent and/or Lender,
          Borrowers shall pay to Agent an amendment fee in an amount equal to Seven
          Thousand Five Hundred Dollars ($7,500.00) (the “Amendment
          Fee”). The Amendment Fee may be debited from any account of either
          Borrower maintained with Agent, Lender or LaSalle Bank or charged to the
          Revolving Loan. 

            9.
                     
          Release. Borrowers and each Guarantor acknowledge and agree that
          it has no claims, suits or causes of action against Agent or Lender and hereby
          remises, releases and forever discharges Agent, Lender, their officers,
          directors, shareholders, employees, agents, successors and assigns from any
          claims, suits or causes of action whatsoever, in law or equity, which either
          Borrower or any Guarantor has or may have arising from any act, omission or
          otherwise, at any time up to and including the date of this Amendment. 

            10.
                     
          Additional Documents; Further Assurances. Borrowers shall execute
          and deliver to Agent, or to cause to be executed and delivered to Agent, at the
          sole cost and expense of Borrowers, from time to time, the Guaranty and any and
          all other documents, agreements, statements, certificates and information as
          Agent shall reasonably request to evidence or effect the terms of the Loan
          Agreement, as amended, or any of the Other Agreements, as amended, or to enforce
          or protect Agent’s interest in all Collateral. All such documents,
          agreements, statements, certificates and information shall be in form and
          content acceptable to Agent. 

            11.
                     
          Further Agreements and Representations. Each Borrower does
          hereby: 

               
                  (a)     
          ratify, confirm and acknowledge that, as amended hereby, the Loan Agreement and
          all Other Agreements are valid, binding and in full force and effect; 

               
                  (b)     
          covenant and agree to perform all obligations of such Borrower contained herein,
          in the Loan Agreement and in the Other Agreements, as amended hereby; 

               
                  (c)     
          acknowledge and agree that as of the date hereof, such Borrower has no defense,
          set-off, counterclaim or challenge against the payment of any sums owing under
          the Loan Agreement or any of the Other Agreements or the enforcement of any of
          the terms or conditions thereof; 

               
                  (d)     
          represent and warrant that no Default or Event of Default exists under the Loan
          Agreement; 

               
                  (e)     
          acknowledge and agree that nothing contained herein and no actions taken
          pursuant to the terms hereof is intended to constitute a novation of the Loan
          Agreement or any of the Other Agreements, and does not constitute a release,
          termination or waiver of any of the liens, security interests, rights or
          remedies granted to Agent therein, which liens, security interests, rights and
          remedies are hereby ratified, confirmed, extended and continued as security for
          the Liabilities as amended; and 

               
                  (f)     
          acknowledge and agree that such Borrower’s failure to comply with or
          perform any of its covenants, agreements or obligations contained in this
          Amendment shall constitute an Event of Default under the Loan Agreement and each
          of the Other Documents as amended. 

            12.
               
          Fees, Costs, Expenses and Expenditures. Each Borrower agrees to
          pay all of Agent’s expenses in connection with the review, preparation,
          negotiation, documentation and closing of this Amendment and the consummation of
          the transactions contemplated hereunder, including, without limitation, fees,
          disbursements, expenses and disbursements of counsel retained by Agent and all
          fees related to filings, recording of documents and searches, whether or not the
          transactions contemplated hereunder are consummated. 

            13.
                     
          Inconsistencies. To the extent of any inconsistency between the
          terms and conditions of this Amendment and the terms and conditions of the Loan
          Agreement or the Other Agreements, the terms and conditions of this Amendment
          shall prevail. All terms and conditions of the Loan Agreement and the Other
          Agreements not inconsistent herewith shall remain in full force and effect and
          are hereby ratified and confirmed by Borrowers. 

            14.
                     
          Binding Effect. This Amendment shall be binding upon and inure to
          the benefit of the parties hereto and their successors and assigns. 

            15.
                     
          Governing Law. This Amendment shall be governed by and construed
          in accordance with the laws of the Commonwealth of Pennsylvania. 

            16.
                     
          Headings. The headings of the articles, sections, paragraphs and
          clauses of this Amendment are inserted for convenience only and shall not be
          deemed to constitute a part of this Amendment. 

[SIGNATURES ON
FOLLOWING PAGE] 

        IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the day and year first above written. 

	 	 	 
	 	MEDICAL TECHNOLOGY SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MTS PACKAGING SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	LASALLE BUSINESS CREDIT, LLC,
        successor by merger to LaSalle Business Credit, Inc., as Agent for Standard Federal Bank National Association	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	STANDARD FEDERAL BANK NATIONAL ASSOCIATION	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 

RATIFICATION AND
CONFIRMATION OF GUARANTY 

        The
undersigned, intending to be legally bound hereby, (1) acknowledge and agree to the
foregoing Amendment, (2) agree to be bound by the foregoing Amendment including, without
limitation, by Section 4 thereof and (3) agree that those certain
Continuing Unconditional Guaranty Agreements from each of the undersigned to Agent dated
June 26, 2002 are in full force and effect. 

	 	 	 
	 	MEDICATION MANAGEMENT TECHNOLOGIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MEDICATION MANAGEMENT SYSTEMS, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 
	 	MEDICAL TECHNOLOGY LABORATORIES, INC.	 
	 	 	
	 	By:	
	 
	 	Name/Title:	
	 
	 	 	 	 

Schedule 1 

Transferred Assets 

Various items of inventory and
related accounts.LETTER OF INTENT

Exhibit 10.1

[Kinross Gold Corporation Letterhead]

 

 

October 8, 2003

 

Board of Directors

Crown Resources Corporation

 4251 Kipling Street, Suite 390

Wheat Ridge, CO 80033

LETTER OF INTENT

 

 

Gentlemen:

          Members of management of our respective companies have been discussing the possibility of a strategic transaction in which Kinross Gold Corporation ("Kinross") would acquire the business and assets of Crown Resources Corporation ("Crown") other than Crown's interest in Solitario Resources Corporation (the "Acquisition").  Crown has stated its belief that members of its board of directors, executive management team and certain principal stockholders (collectively, the "Stockholders") support, in principle, the transaction proposed by this Letter of Intent (this "Letter") and that the Stockholders are willing, as a part of a definitive agreement with respect to the Acquisition, to enter into a Voting Agreement with respect to the approval of the proposed transaction by the stockholders of Crown.

          As a result of these discussions, Kinross is interested in proceeding with the acquisition of Crown.  Except for the provisions of Section B, which are intended to be binding on the parties, and the obligation to work in good faith to pursue the transaction contemplated hereby, the terms of Kinross' proposal as outlined below are preliminary and non-binding on either party.  The complete terms of the proposed transaction between the parties will be set forth in a definitive agreement to be executed by the parties hereto.

Section A

          The following numbered paragraphs in this Section A express the understanding of the undersigned parties with respect to the matters described in them, but are expressly understood not to constitute a complete statement of, or a legally binding agreement or commitment on the part of, either of the parties with respect to the matters described in them.

1.      Acquisition of Crown.  Subject to the terms and conditions set forth below, Kinross will complete the Acquisition  for a fixed exchange ratio of 0.2911 shares of Kinross common stock for each share of Crown common stock outstanding immediately prior to the closing of the Acquisition (the "Exchange Ratio").  If there are convertible notes or warrants or options to acquire Crown common stock outstanding at the time of the Acquisition, Kinross shall acquire such rights in connection with the Acquisition or agree that such rights shall thereafter represent the right to convert to or to acquire, as the case may be, shares of Kinross common stock, all  based on the Exchange Ratio set forth above and the existing terms of such rights; provided that, the holders of any convertible notes agree to convert such notes into shares of Kinross common stock immediately following the Acquisition.  No fractional shares shall be issued.  The Exchange Ratio has been calculated based on there being no more than 45,059,048 shares of Crown outstanding on a fully diluted basis, assuming (i) the conversion of all convertible notes and other convertible rights, (ii) the exercise for cash of all outstanding options, and (iii) the cashless exercise of all outstanding warrants based on a market price of Crown common stock of no more than $2.25 per share, and it shall be a condition to the Acquisition that such number is not exceeded (other than by exercises of warrants for cash or based on a market price higher than $2.25 per share.)

2.     Spinout of Solitario.  In connection with the consummation of the Acquisition, Crown will dividend or otherwise distribute to its stockholders its interest in Solitario Resources Corporation.  The Exchange Ratio has been agreed to based on the assumption that such distribution will occur.

3.     Form of Transaction.  It is contemplated that the transaction will be structured as a "tax-free" reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and the receipt of an appropriate legal opinion with respect to the "tax free" nature of the transaction will be a condition to Crown's obligation to consummated the Acquisition.

4.     Regulatory Filings.  It is contemplated (i) that Kinross will be obligated to file a registration statement with respect to the issuance of its common stock to Crown stockholders, (ii) that Crown will be obligated to file a proxy/information statement with respect to obtaining stockholder approval of the Acquisition and (iii) that Solitario may be required to file documents with the SEC in connection with the spinout described in Paragraph 2 of Section A.  Kinross and Crown agree to cooperate and work in good faith to complete and obtain the effectiveness of such filings and other regulatory filings as may be necessary in connection with the Acquisition as expeditiously as commercially reasonable.

5.     Negotiation of Definitive Agreement.  Kinross and Crown agree to proceed promptly to negotiate in good faith a definitive agreement, and other documents contemplated hereby (collectively the "Definitive Agreement"), which will reflect more specifically the understandings outlined in this Letter as well as other matters, issues, terms and/or conditions not contained herein.  The Definitive Agreement shall, among other terms:

     (a)     contain such terms, conditions, covenants, representations, warranties, indemnifications, and other provisions as each of the parties believes are necessary or appropriate to safeguard the respective interests of the parties; and

     (b)     provide that the obligations of the parties to consummate the transaction shall be subject to a number of conditions, including (i) effectiveness of the registration statement of Kinross and the completion of the SEC review of the proxy/information statement of Crown; (ii) approval of the Definitive Agreement by the stockholders of Crown; (iii) conversion, to the extent practicable, of all of Crown's outstanding convertible obligations, warrants, options, and other purchase rights into shares of common stock of Crown or shares of common stock of Kinross in connection with the completion of the Acquisition; (iv) receipt of any required approvals from governmental and regulatory agencies on terms reasonably acceptable to the parties; (v) receipt of all necessary consents from third parties; and (vi) the lack of any material adverse change with respect to the financial condition, business operations or prospects of Crown or Kinross.

6.     Conditions to Kinross' Obligations.  The obligations of Kinross are subject to satisfaction of the following:

     (a)     confirmation of the ownership by Crown of the Buckhorn Mountain Project;

     (b)     confirmation that the status of the Buckhorn Mountain Project is not materially different than the disclosure contained in the periodic reports of Crown filed with the SEC or the information provided to Kinross to date;

     (c)     confirmation that the fully diluted capital stock of Crown, calculated as set forth in Paragraph 1 of this Letter, which assumes the cashless exercise of outstanding warrants, does not exceed 45,059,048 shares based on a market price of Crown common stock of no more than $2.25 per share;

     (d)     confirmation that the liabilities of Crown, contingent or otherwise, do not exceed those set forth on the June 30, 2003 balance sheet of Crown included in its periodic reports filed with the SEC, plus liabilities incurred since such date in the ordinary course of Crown's business, consistent with past practices, and "change of control," "golden parachute," or other termination payments in accordance with the policies of Crown that may be triggered by the Acquisition or the termination of employees in connection therewith (all such change in control or termination payments not to exceed, in the aggregate, $1.1 million); 

     (e)     confirmation that all aspects of the reorganization in connection with the bankruptcy proceeding filed by Crown on or about March 8, 2002, have been complied with and completed and that all of Crown's liabilities or obligations that predated such proceeding (except for those expressly assumed by Crown and reflected on Crown's June 30, 2003, balance sheet) have been satisfied or discharged in full in such proceeding; and

     (f)     the execution of Voting Agreements acceptable to Kinross by Solitario Resources Corporation, Zoloto Investors, LP, and the members of the Board of Directors of Crown.

7.     No Conversion of Derivatives Owned by Crown Senior Lenders.  Crown and Kinross acknowledge that in addition to the Crown voting common stock owned by the Crown Senior Lenders, the Senior Lenders own Crown 10% Secured Convertible Promissory Notes and Crown Warrants (collectively the "Derivative Securities").  Notwithstanding any provision of this Letter, the Definitive Agreement and the Stockholder and Voting Agreement contemplated by this Letter or any related agreement to the contrary, in no event shall the Senior Lenders be compelled to convert Derivative Securities into Crown common stock as part of the transactions contemplated by this Letter.  Kinross and Crown agree to cooperate and work in good faith to provide for a structure that provides advantageous tax and economic consequences for Kinross, Crown and the other stockholders and rights holders of Crown.

Section B

          Upon execution of this Letter by Crown, the following numbered paragraphs under this Section B will constitute the legally binding and enforceable agreement of Kinross and Crown, in recognition of the costs to be borne by each party in pursuing this transaction and further in consideration of their mutual undertakings as to the matters described therein.

1.     Stockholder and Voting Agreement.  Crown agrees to submit to the board of directors of Solitario Resources Corporation and to Zoloto Investors LP the form of Voting Agreement attached hereto as Exhibit A and to use reasonable commercial efforts, subject to applicable legal and fiduciary considerations, to cause such entities to execute such Voting Agreement.

2.     Access to Information and Confidentiality.  Crown will give to Kinross, and to its employees, counsel, accountants, and other representatives, access to all properties, books, contracts, documents and records with respect to their affairs as Kinross may reasonably request in connection with the proposed transaction.  The parties to this Letter agree that all confidential information that such party or any of their respective officers, directors, employees, counsel, accountants, or other representatives may now possess or may hereafter obtain relating to the other party shall be held in confidence under the provisions of the Mutual Nondisclosure Agreement of even date herewith.

3.     Conduct of Business.  Crown agrees that from and after the date of this Letter and until the earlier to occur of the Closing or the termination of this Letter, Crown shall conduct its business in the ordinary course consistent with its normal operations, will use reasonable efforts to preserve the assets and goodwill and value of its business and will not:

     (a)     sell or contract to sell any interest in its assets outside the ordinary course of business;

     (b)     lease, license, transfer, pledge, mortgage, hypothecate or otherwise dispose of any of its assets, except in the ordinary course of business and the dividend or distribution of its interest in Solitario Resources Corporation to its stockholders;

     (c)     issue any capital stock or the right to acquire any capital stock except for the issuance of capital stock pursuant to the exercise of presently exercisable options, warrants or convertible obligations; or

     (d)     enter into any transaction outside the ordinary course of business.

4.     Negotiation with Others.

     (a)     Crown agrees that from and after the date of this Letter until the termination hereof, or the earlier termination of the understandings and agreements contained in this Letter, neither Crown nor any of its officers, directors, stockholders or agents, will directly or indirectly:

          (i)     enter into any transaction with any party other than Kinross relative to a merger or consolidation or any disposition of the assets of Crown or any interest in its business, its capital stock or any part thereof; or

          (ii)     solicit or encourage submission of inquiries, proposals or offers from any other party relative to a merger or consolidation or any potential disposition of Crown's business or its assets or capital stock or any part thereof.

     (b)     Notwithstanding anything to the contrary contained in this Letter, in response to an unsolicited offer, inquiry or proposal, Crown and any of Crown's officers and directors (i) may participate in discussions or negotiations with, review information from, and, subject to compliance with the last sentence of this Subsection (b), furnish non-public information to any third party (a "Potential Acquiror") that has made such offer, inquiry or proposal relative to a merger or consolidation or any disposition of the assets of Crown or any interest in its business, its capital stock or any part thereof (collectively an "Alternative Acquisition") and/or (ii) may approve or accept an unsolicited Alternative Acquisition and may make or authorize any statement, recommendation or solicitation in support of an unsolicited Alternative Acquisition, in each case only if the Crown board of directors determines in good faith (A) that, in the case of subclause (i), such Alternative Acquisition proposal is or is reasonably likely to be or become, or, in the case of subclause (ii) such Alternative Acquisition proposal is, more favorable to  Crown and its shareholders than the proposal from Kinross described in this Letter and (B) following consultation with outside legal counsel, that the failure to participate in such discussions or negotiations, review such information or furnish such information regarding, or approve or accept, the Alternative Acquisition would violate the Crown Board's fiduciary duties under applicable law.  In such event, Crown shall promptly advise Kinross in writing of any bona fide discussions regarding a possible Alternative Acquisition, the material terms and conditions of any such Alternative Acquisition and the identity of the Potential Acquiror.  Crown shall (i) keep Kinross informed of the status and terms of any such inquiry and Alternative Acquisition proposal and (ii) provide to Kinross as soon as practicable after receipt of delivery thereof with copies of all correspondence and other written material sent or provided to Crown from the Potential Acquiror that describes any of the terms or conditions of a proposed Alternative Acquisition.  If Crown proposes to enter into an agreement in connection with an Alternative Transaction, it shall first provide Kinross with the written material described in the preceding sentence and a reasonable period of time (which shall not be less than two (2) business days) during which Kinross may propose changes to the Acquisition proposed by this Letter for consideration by the Crown Board of Directors.  Crown may not furnish any of its non-public information to a Potential Acquiror unless it has previously furnished or provided access to, or promptly thereafter furnishes or provides access to, such information to Kinross.

5.     Break-up Fees.  

     (a)     In the event that Crown does not complete the Acquisition with Kinross as a result of entering into any agreement with any other party (or group as that term is defined in 13(d) of the Securities Exchange Act of 1934, as amended) within six months of the date of this Letter relating to the possible acquisition of Crown or Crown's business, or 25% or more of its assets or its stock, Crown agrees to pay a break-up fee to Kinross of $2,000,000, plus the documented, reasonable, third party expenses of Kinross incurred in connection with the transaction contemplated by this Letter to that date.

     (b)     In anticipation of the transaction contemplated hereby, Crown intends, at Kinross' request, to make a regularly scheduled payment of interest in cash rather than in its common stock.  If a definitive agreement with respect to the transaction contemplated hereby is not executed on or before November 15, 2003, for any reason other than the failure of one or more of the conditions set forth in Paragraph 6 of Section A, the decision of Crown not to proceed with the Acquisition contemplated by this Letter, or a breach of the obligations of Crown hereunder,  Kinross will purchase Crown common stock for $2.25 per share in an aggregate amount of $407,000, the approximate amount of the interest payment.

6.     Costs. The parties agree that each will be solely responsible for and bear all of its own respective expenses incurred at any time in connection with pursuing or consummating this Letter and the transactions contemplated by this Letter, including but not limited to fees and expenses of business brokers, legal counsel, accountants and other facilitators and advisors, except as otherwise specifically set forth herein.  Each of the parties represent and warrant that they are not a party to or subject to any agreement for the payment of finder or similar fees in connection with the execution of this Letter, the execution of the Definitive Agreement , or the consummation of the transactions contemplated thereby.

7.     Effectiveness and Termination.  This Letter is subject to, and shall not be effective or binding prior to, the approval of this Letter by the board of directors of Kinross and Crown, provided however, that, if either board of directors has not approved this Letter on or before the close of business on Tuesday, October 14, 2003, this Letter shall be terminated.  In the event that a Definitive Agreement has not been executed by November 15, 2003, either Kinross or Crown may terminate this Letter.  Upon termination, this Letter shall have no force and effect and the parties shall have no further obligations under this Letter, except for the obligations set forth in paragraphs 2 (as to confidentiality), 5 and 6 of Section B, which shall survive the termination of this Letter.

8.     Governing Law.  This Letter shall be governed by and construed in accordance with the laws of the State of Washington applicable to contracts made and to be performed wholly therein.

9.     Press Release.  Kinross and Crown shall issue a joint press release concerning this Letter (which press release shall have been approved by the parties and their respective legal counsel) no later than 8:00 a.m. Eastern Standard Time on the day following the execution of this Letter by both parties.

 

          If you agree with the foregoing general terms as the basis of negotiation, please sign below.   The targeted date for the execution of a definitive agreement is October 31, 2003.  This proposal is effective from the date of this letter to 5:00 P.M. EST, October 8, 2003, at which time and date the terms of this proposal expire.

          We look forward to working together towards completion of a Acquisition.  If you have any questions or would like to discuss the contents of this letter further, please feel free to contact me at (416) 365-5123.

 

 

 

KINROSS GOLD CORPORATION

/s/ John W. Ivany

John W. Ivany 

AGREED TO AND ACCEPTED AS OF THE DATE OF THIS LETTER:

Crown:

CROWN RESOURCES CORPORATION

By: /s/ Christopher E. Herald

Christopher E. Herald

Duly Authorized Officer

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