Exhibit 10.1
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT made as of the _27th_ day of
_______August_________, 2004.
BETWEEN:
AFRIORE INTERNATIONAL (BARBADOS) LIMITED, a corporation incorporated under
the laws of Barbados
(hereinafter referred to as "AfriOre (Barbados)")
- and -
WITS BASIN PRECIOUS MINERALS INC. a corporation incorporated under the
laws of State of Minnesota, U.S.A.
(hereinafter referred to as "WB")
- and -
KWAGGA GOLD (BARBADOS) LIMITED, a corporation incorporated under the laws
of Barbados
(hereinafter referred to as the "Corporation")
WHEREAS the Corporation is a corporation incorporated under the laws of
Barbados by certificate of incorporation dated August 18, 2003;
AND WHEREAS the authorized capital of the Corporation is as set forth in
Schedule A;
AND WHEREAS the issued and outstanding capital of the Corporation is as
set out in Schedule B;
AND WHEREAS the Corporation is the registered and beneficial owner of 100%
of the issued and outstanding ordinary shares in the capital of Kwagga (as
hereinafter defined);
AND WHEREAS WB has agreed to advance up to $3,500,000 to the Corporation
to fund, among other things, advances to Kwagga to pay Kwagga's expenses and, in
the event that WB advances such amount, it shall hold 50% of the issued and
outstanding Shares (as hereinafter defined);
AND WHEREAS the parties have entered into this Agreement for the purpose
of establishing certain rights and privileges relating to their ownership of
shares of the Corporation and in order to provide for the manner in which the
affairs of the Corporation and Kwagga shall be conducted and to provide for
their obligations with respect to the Corporation and Kwagga;
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
Article 1 INTERPRETATION
1.1 Definitions
Whenever used in this Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following words and terms
shall have the respective meanings ascribed to them as follows:
(a) "Act" means the Companies Act Cap. 308 of the Laws of Barbados, as
the same may be amended from time to time and any successor
legislation thereto, except where otherwise expressly provided;
(b) "Affiliate" means with respect to any person, a corporation,
partnership or other entity, controlled by, controlling or under
common control of such person;
(c) "Agreement" means this agreement and any supplemental agreement or
agreements hereinafter executed;
(d) "Ancillary Agreements" means the Kwagga Shareholders' Agreement and
the Operating Agreement, and all other agreements referred to
therein;
(e) "Associate" means any person which does not deal at arm's length
with the subject person;
(f) "Board" means the board of directors of the Corporation or Kwagga,
as applicable, at the relevant time;
(g) "Business Day" means any day of the year, other than a Saturday,
Sunday or any other day on which banks are closed in Minneapolis,
Minnesota, U.S.A., in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or in Johannesburg,
South Africa;
(h) "control" means, with respect to any corporation, the ownership of
shares of such corporation carrying more than 50% of the voting
rights attached to all outstanding shares of such corporation, which
voting rights are exercisable at the relevant time or the right to
so vote or to appoint greater than 50% of the directors of such
corporation other than through ownership of shares and "change of
control" means the transfer of control from one person to another;
(i) "Corporation" includes any successor to the Corporation resulting
from any merger, amalgamation, arrangement or other reorganization
of or including the Corporation or any continuance thereof under the
laws of any other jurisdiction;
(j) "dollars" or "$" means lawful currency of the United States of
America;
(k) "Encumbrances" means pledges, mortgages, charges, hypothecations,
liens, claims, security interests and encumbrances of any nature or
kind;
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(l) "Expenses" means all costs and expenses associated with, and other
amounts payable in respect of, the conduct of the Corporation's and
Kwagga's businesses, including, without limitation, amounts payable
by the Corporation to Kwagga pursuant to the Kwagga Shareholder's
Agreement and the 10% administrative charge payable by Kwagga to the
Operator pursuant to the Operating Agreement;
(m) "Kwagga" means Kwagga Gold (Proprietary) Limited;
(n) "Kwagga Shareholders' Agreement" means the shareholders agreement
between the Corporation and MCI Resources (Proprietary) Limited
respecting Kwagga, as the same may be amended from time to time;
(o) "Marketable Securities" means equity securities of an issuer with a
market capitalization of at least $15 million which are listed on an
established nationally recognized exchange in Canada, the United
States, France, the United Kingdom, Germany, Hong Kong, or Japan
which (i) do not represent in excess of 10% of the relevant issuer's
outstanding securities of the same class or a class into which such
securities are immediately convertible or exchangeable without cost
to the holder, (ii) have a Public Float of at least $5 million,
(iii) have had an aggregate trading volume for the 10 trading days
prior to distribution of at least $100,000, and (iv) are not subject
to any statutory, regulatory, contractual or other hold period or
resale restriction other than a restriction requiring the filing of
a notice only (without requiring any approval);
(p) "notice" includes any written notice, request, instruction, consent,
offer, acceptance, approval, designation or other communication to
be given by any party hereto to another party or the other parties;
(q) "Operating Agreement" means the Operating Agreement between the
Operator and Kwagga as the same may be amended from time to time;
(r) "Operator" means AfriOre (Pty) Limited;
(s) "Option A" has the meaning ascribed thereto in Section 2.6(a);
(t) "Option B" has the meaning ascribed thereto in Section 2.6(b);
(u) "person" means an individual, partnership, limited partnership,
corporation (including a business trust), joint stock corporation,
trust, unincorporated association, joint venture or other entity or
a foreign state or political subdivision thereof or any agency of
such state or subdivision;
(v) "Phase One" means the period of time ending on the earlier of:
(i) the date upon which the Corporation shall have incurred
Expenses and/or advanced loans to Kwagga for Kwagga to incur
Expenses aggregating $2,100,000; or
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(ii) the date upon which the Corporation shall have delivered
notice to WB pursuant to Section 2.4;
(w) "Phase Two" means the period commencing on the date upon which WB
shall have paid to the Corporation $1,400,000 pursuant to Section
2.5 and ending on the date upon which the Corporation and/or Kwagga
shall have incurred Expenses aggregating $1,400,000;
(x) "Phase Two Election Period" has the meaning ascribed there in
Section 2.5;
(y) "Prime Rate" means the weighted average of the rates of interest per
annum for the period of calculation as stated by the First National
Bank Main Office Johannesburg, South Africa, as being charged by it
on Rand denominated demand loans to its most creditworthy domestic
commercial customers;
(z) "Project Area" means the public or private land, usage rights and/or
mineral interests or rights located in the Republic of South Africa
within the area delineated on the map attached hereto as Schedule C;
(aa) "Public Float" means, in respect of a class of securities, the
market value of the securities of such class, excluding securities
that are beneficially owned, directly or indirectly, or over which
control or direction is exercised by persons or companies that alone
or together with their respective associates and Affiliates,
beneficially own or exercise control or direction over more than 10%
of the issued and outstanding securities of such class, provided
that securities that would be excluded because a portfolio manager
of a pension fund, mutual fund or non-redeemable investment fund
exercises control or direction over them need only be excluded if
the portfolio manager is an Affiliate of the issuer of those
securities;
(bb) "Report" means a detailed report prepared by or on behalf of Kwagga
setting out the Expenses incurred, the work carried out on, in or
under, or in respect of, the Project Area and the results of such
work since the last Report, if any;
(cc) "ROFR Percentage Interest" has the meaning ascribed thereto in
Section 9.4;
(dd) "Shareholder" means at any time any party to this Agreement who is
the beneficial owner of any Shares;
(ee) "Shareholder Claims" means, with respect to any Shareholder, all
advances which such Shareholder has made, and may from time to time
in the future make, to the Corporation, excluding all advances made
by WB pursuant to Section 2.1;
(ff) "Shareholding Interest" means, with respect to any Shareholder, the
percentage of Shares then held by such Shareholder together with any
Shareholder Claims in the same proportion as such percentage;
(gg) "Shares" means the issued and outstanding shares in the capital of
the Corporation and includes:
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(i) any shares or securities into which any Shares may hereafter
be converted, changed, reclassified, redivided, redesignated,
consolidated, subdivided or otherwise changed,
(ii) any shares in the capital of the Corporation which may
hereafter be created in connection with stock dividends or
otherwise, and
(iii) any shares of the Corporation or any successor or other body
corporate which may be received by the holders of Shares on a
reorganization, amalgamation, consolidation or merger,
statutory or otherwise;
(hh) "Stock Exchange" means any published securities market (being any
market or trading facility on which securities are listed and posted
for trading, traded or quoted (including the Toronto Stock Exchange,
the New York Stock Exchange, the American Stock Exchange or NASDAQ
(including the Bulletin Board)) if the prices at which they have
been traded on that market are regularly published in a newspaper or
business or financial publication of general and regular paid
circulation);
(ii) "Transfer" includes any sale, transfer, exchange, assignment,
conveyance, donation, gift, bequest, disposition or other
arrangement by which possession, legal title or beneficial ownership
passes from one person to another, whether or not voluntary and
whether or not for value, and any agreement to effect any of the
foregoing, and for the purposes of Section 2.17 and Section 9.1
only, includes any Encumbrance;
(jj) "Update Report" means a report prepared by or on behalf of Kwagga
setting out an update respecting the work carried out on, in, or
under, or in respect of, the Project Area during each calendar
quarter and the results thereof and the amount of Expenses incurred
during such quarter; and
(kk) "WB Advances" means the advances totalling $2,025,000 made by WB to
the Corporation prior to the date hereof and, the advance of $75,000
to be made by WB to the Corporation after the date hereof as
contemplated by Section 2.2, if so made.
Article 2 SHAREHOLDING INTERESTS, PURPOSE AND SCOPE
2.1 Phased Advances
WB shall have the right to acquire such number of Shares as shall
represent 50% of the issued and outstanding Shares by funding Expenses
totalling $3,500,000 in accordance with Sections 2.2 and 2.5.
2.2 Phase One
It is acknowledged and agreed that as of the date hereof WB has advanced
$2,025,000 to the Corporation. WB hereby irrevocably agrees to advance to
the Corporation an additional $75,000 on or prior to the later of July 30,
2004 or the date upon which Kwagga has obtained all required permits to
commence drilling of the second drill hole in the Project Area. Such WB
Advances have been, and will be, used to fund Expenses of the Corporation
and loans to Kwagga to fund Kwagga's Expenses, to be incurred prior to
June 20, 2006. Upon the complete advance of the $2,100,000 by WB, the WB
Advances shall be automatically converted into, and the Corporation shall,
within seven (7) days thereafter, issue and deliver to WB, such number of
Shares as shall represent 35% of the issued and outstanding Shares, after
giving effect to such issuance.
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2.3 Default by WB
In the event that:
(a) WB fails to advance the additional $75,000 referred to in Section
2.2 on or prior to the later of July 30, 2004 or the date upon which
Kwagga has obtained all required permits to commence drilling of the
second drill hole in the Project Area;
(b) thereafter Kwagga and AfriOre (Barbados) deliver written notice of
such default to WB; and
(c) WB fails to advance such amount within seven (7) days after WB's
receipt of such notice,
at any time thereafter, upon notice from AfriOre (Barbados) to WB, the WB
Advances shall be automatically sold by WB to AfriOre (Barbados) against
payment by AfriOre (Barbados) to WB of $1.00, whereupon this Agreement
shall terminate.
2.4 Early Termination of Phase One
In the event that after WB shall have advanced to the Corporation an
aggregate of $2,100,000 and prior to June 20, 2006:
(a) the Corporation elects to discontinue incurring Expenses prior to
the Corporation and Kwagga incurring Expenses aggregating
$2,100,000; or
(b) the Operator, in its discretion, elects to terminate the exploration
of the Project Area,
the Corporation shall deliver notice thereof to WB. Upon receipt of such
notice, WB shall have the right, exercisable by notice delivered to the
Corporation, to elect to direct the Corporation to purchase the Shares
referred to in Section 2.2 within seven (7) days after receipt of such
notice in consideration of the payment of an amount equal to the greater
of $1.00 and the balance of the WB Advances held by the Corporation and
Kwagga which have not been used to incur Expenses, whereupon this
Agreement shall terminate.
WB shall make such election within 30 days following the receipt by WB of
the foregoing notice from the Corporation and, in the event that WB does
not make such election within such period, the Corporation may retain the
unused portion of the WB Advances and WB shall retain the Shares referred
to in Section 2.2.
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2.5 Election to Proceed to Phase Two
Within 120 days prior to the anticipated date of completion of the
expenditure of $2,100,000 by the Corporation and/or Kwagga on Expenses,
the Corporation shall deliver to WB notice thereof, accompanied by a
Report. Within 120 days (the "Phase Two Election Period") following the
date of receipt by WB of the foregoing notice and Report, WB shall have
the right to subscribe for such number of Shares as shall represent 15% of
the number of issued and outstanding Shares after giving effect to such
issuance (such that each of AfriOre (Barbados) and WB shall then hold 50%
of the issued and outstanding Shares) by the payment to the Corporation of
$1,400,000 prior to the expiry of the Phase Two Election Period. Within
seven (7) days after the date of receipt of such subscription funds, the
Corporation shall issue and deliver to WB the foregoing Shares.
2.6 Election Not to Proceed to Phase Two
If, prior to the expiry of the Phase Two Election Period, WB elects not to
subscribe for the Shares pursuant to Section 2.5, it shall have the right,
by written notice delivered to the Corporation prior to the expiry of such
Phase Two Election Period to elect to:
(a) request that the Corporation purchase all of WB's Shares and
Shareholder Claims for a purchase price equal to $1,050,000 ("Option
A"). Upon exercise by WB of Option A, the Corporation (or its
designee) shall have the right, but not the obligation, to complete
such purchase within 180 days following its receipt of WB's notice.
The Corporation may exercise such right by delivering notice of its
intention to complete such acquisition; provided that such notice
shall have been delivered to WB and such purchase shall have been
completed within such 180 day period. Upon delivery by the
Corporation of such notice, a binding agreement of purchase and sale
between the Corporation and WB shall be constituted pursuant to
which the Corporation shall purchase, and WB shall sell, all of WB's
Shares and Shareholder Claims, if any, for the foregoing purchase
price. In the event that the Corporation elects not to or does not
purchase such Shares and Shareholder Claims within such 180 day
period, WB shall be deemed to have elected Option B effective as of
the date of delivery of WB's notice; or
(b) elect to reduce its Shareholding Interest ("Option B") on the
following basis:
(i) for each $30,000 of Expenses incurred by the Corporation
and/or Kwagga (without duplication) after the date of delivery
of WB's notice or, if WB fails to deliver such written notice,
the date of the expiry of the Phase Two Election Period, WB's
Shareholding Interest shall be reduced by 1% (such that after
$900,000 of Expenses having been incurred, WB's Shareholding
Interest shall be 5%);
(ii) commencing on the date of delivery of WB's notice:
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(A) its rights as a Shareholder hereunder shall terminate;
(B) it shall no longer be required to advance any funds to
the Corporation hereunder; and
(C) it shall not have the right to Transfer any of its
Shares or Shareholder Claims; and
(iii) in the event that its Shareholding Interest is reduced to 5%
or less, the Corporation shall deliver notice thereof to WB
and WB shall have the right, exercisable by notice to the
Corporation delivered within 120 days following the date of
WB's receipt of the Corporation's foregoing notice, to elect
to:
(A) participate thereafter as a Shareholder hereunder
based upon its Shareholding Interest, in which
event all of its rights and obligations hereunder,
as a Shareholder, shall be reinstated effective as
of the date of WB's election; or
(B) sell all of its Shares and Shareholder Claims to
AfriOre (Barbados) (or its designee) for $1.00.
In the event that WB does not exercise such right within
the 120 day period, referred to in this Section
2.6(b)(iii), it shall be deemed to have made the
election contained in Section 2.6(b)(iii)(B). In the
event that WB makes or is deemed to have made the
election contained in Section 2.6(b)(iii)(B), AfriOre
(Barbados) (or its designee) shall purchase, and WB
shall sell to AfriOre (Barbados) (or its designee), all
of its Shares and Shareholder Claims for $1.00. The
transaction of purchase and sale shall take place on
such date as AfriOre (Barbados) shall specify in notice
delivered to WB.
2.7 Deemed Option B Election
In the event that WB fails to elect either Option A or Option B within the
Phase Two Election Period or in the event that, after WB has elected to
proceed to subscribe for Shares in accordance with Section 2.5, it shall
have failed to have paid the $1,400,000 to the Corporation prior to the
expiry of the Phase Two Election Period, WB shall be deemed to have
elected Option B.
2.8 Subscription Price for Shares
All Shares issued to WB pursuant to:
(a) Section 2.2 shall be issued at a subscription price of $1.114286
each, representing a total of 1,884,615 Shares to be issued for a
gross subscription price of Cdn$100,000; and
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(b) Section 2.5 shall be issued at a subscription price of $0.8666 each,
representing a total of 1,615,385 Shares for an aggregate
subscription price of Cdn$1,400,000.
2.9 WB Advances
It is acknowledged and agreed that all of the WB Advances shall be:
(a) non-interest bearing and unsecured and shall only be repayable in
accordance with the provisions of, and to the extent provided for
in, this Agreement; and
(b) converted into Shares in accordance with, and subject to, Section
2.2 automatically and without any further act on the part of WB at
the subscription price referred to in Section 2.8.
2.10 Reports
Within 90 days following June 30 in each year during Phase One and Phase
Two, the Corporation shall cause Kwagga to deliver to WB a Report. Within
30 days following September 30, December 31 and March 31 falling within
each of Phase One and Phase Two, the Corporation shall cause Kwagga to
provide to WB an Update Report.
2.11 Election to Fund Subsequent Expenses
In the event that following completion of the Phase Two Election Period
or, if WB pays $1,400,000 pursuant to Section 2.5, Phase Two, the
Corporation requires funds to pay for Expenses (including funds which the
Corporation, in its capacity as a shareholder of Kwagga pursuant to the
Kwagga Shareholders Agreement, is required to advance to Kwagga):
(a) the Corporation shall deliver to each of the Shareholders notice of
the amount required, together with all supporting documentation,
including all applicable reports, programs and budgets, and any
applicable notice from Kwagga (and in this regard, in the event that
the Expenses relate to funds required to be advanced or paid to
Kwagga, the Corporation shall provide the Shareholders with as much
notice as practicable prior to the date upon which the Corporation
is required to elect to advance or pay such funds to Kwagga); and
(b) prior to the expiry of the Election Period (as such term is
hereinafter defined) following the date of delivery of such notice
each of the Shareholders shall, by notice to the Corporation and the
other Shareholder, elect to contribute to such Expenses in
proportion to its Shareholding Interest, in a lesser proportion or
not at all. If a Shareholder (in this Section 2.11, the
"Non-Contributor") elects to contribute to such Expenses less than
in proportion to its Shareholding Interest or not at all or fails to
make an election and the other Shareholder (in this Section 2.11,
the "Other Shareholder") contributes the deficiency, then the
Shareholding Interest of the Non-Contributor will be decreased and
the Shareholding Interest of the Other Shareholder will be increased
so that, after giving effect to such adjustment, the Shareholding
Interest of each Shareholder will be that percentage which is
equivalent to the aggregate amount it has contributed toward all
Expenses expressed as a percentage of the aggregate amount
contributed toward Expenses by all Shareholders. In the event that a
Shareholder elects to contribute to such Expenses less than in its
proportion to its Shareholding Interest or not at all and the Other
Shareholder elects not to contribute the deficiency, then the Other
Shareholder:
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(i) shall have the right to withdraw its election to contribute to
such Expenses by notice to the Corporation delivered within 30
days following its receipt of the Non-Contributor's election
or the expiry of the period referred to in clause (i) or (ii)
above, as applicable; or;
(ii) may contribute to such Expenses in accordance with its
election, in which event:
(A) the Shareholding Interest of the Non-Contributor
will be decreased and the Shareholding Interest of
the Other Shareholder will be increased so that,
after giving effect to such adjustment, the
Shareholding Interest of each Shareholder will be
that percentage which is equivalent to the
aggregate amount it has contributed toward all
Expenses expressed as a percentage of the
aggregate amount contributed toward Expenses by
all Shareholders;
(B) the Other Shareholder shall have the right to
cause the Corporation to reduce its expenditures
such that the Expenses proposed to be incurred
shall not exceed the amount of the Other
Shareholder's contribution; and
(C) in the event that the Expenses relate to amounts
to be advanced to Kwagga, the Other Shareholder
shall be entitled to elect, on the Corporation's
behalf, that the Corporation shall advance or pay
to Kwagga an amount not to exceed the Other
Shareholder's proposed contribution and/or to
cause the Corporation's nominees as directors of
Kwagga (or, on behalf of the Corporation in its
capacity as a shareholder of Kwagga, to) propose
that Kwagga's applicable budget be reduced in
order that the Corporation's shareholding interest
in Kwagga shall not be diluted as a result of the
Corporation's inability to fund the full amount
required.
For the purposes of this Section 2.11, the term "Election Period" means:
(x) 30 days, in the event that the amount obtained by multiplying the
aggregate amount of the Expenses referred to in the notice delivered
pursuant to Section 2.11(a) by WB's then Shareholding Interest does
not exceed $1,000,000;
(y) 60 days, in the event that the amount obtained by multiplying the
aggregate amount of the Expenses referred to in the notice delivered
pursuant to Section 2.11(a) by WB's then Shareholding Interest
exceeds $1,000,000 but does not exceed $5,000,000; or
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(z) 90 days, in the event that the amount obtained by multiplying the
aggregate amount of the Expenses referred to in the notice delivered
pursuant to Section 2.11(a) by WB's then Shareholding Interest
exceeds $5,000,000.
2.12 Failure to Fund Agreed-Upon Expenses
If a Shareholder elects to contribute to Expenses and thereafter fails to
pay its agreed upon share of such Expenses (in this Section 2.12, a
"Defaulting Shareholder") within 15 days of receiving an invoice therefor
or within the time required under any cash call submitted to the
Corporation by the Operator under the Operating Agreement, then:
(a) unless an advance under Section 2.12(b) is made, the Shareholding
Interest of the defaulting Shareholder will be decreased and the
Shareholding Interest of the other Shareholder (in this Section
2.12, the "Non-Defaulting Shareholder") will be increased on the
following basis:
(i) the Non-Defaulting Shareholder shall be deemed to have
contributed to the Corporation 200% of the amount of the
Expenses not paid by the Defaulting Shareholder; and
(ii) after giving effect to the foregoing, the Shares and
Shareholder Claims of each Shareholder will be that percentage
which is equivalent to the aggregate amount it has contributed
or has been deemed to have contributed toward all Expenses
expressed as a percentage of the aggregate amount contributed
and deemed to have been contributed toward Expenses by all
Shareholders; or
(b) the Non-Defaulting Shareholder may elect, in lieu of the adjustment
pursuant to Section 2.12(a) and by notice to the Defaulting
Shareholder, to advance the amount of the defaulted payment and
treat the amount advanced, together with any accrued interest, as a
loan bearing interest calculated monthly not in advance from the
30th day after the date of the advance at a rate equivalent to the
Prime Rate plus 5% per annum until paid out of the Defaulting
Shareholder's proportionate share of dividends or distributions
hereunder. Each Shareholder hereby grants to the other a lien upon
its proportionate share of dividends or other distributions
hereunder to secure any loan under this Section 2.12(b), including
interest which has accrued thereon, and legal fees and all other
reasonable costs and expenses incurred in enforcing the lien which
shall be payable by the Defaulting Shareholder.
2.13 Adjustments
Any adjustment of the Shareholding Interest of a Shareholder under Section
2.6(b), 2.11 or 2.12 will:
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(a) be effected by a transfer for the sum of $1.00 to the non-diluting
Shareholder of that number of Shares held by the diluting
Shareholder as is necessary to reflect the adjustments of the
Shareholding Interests; and
(b) concurrently and automatically effect the same adjustment to the
Shareholder Claims, which adjustment shall be effected by the
assignment for the sum of $1.00 to the non-diluting Shareholder of
that portion of such Shareholder Claims as is necessary to effect
the adjustments of the Shareholder Claims on the same basis as the
adjustment made to the number of Shares held by the diluting
Shareholder.
For the purposes of the foregoing calculation of the Shareholding Interest
of each Shareholder:
(x) the WB Advances and the amount paid by WB for its subscription for
Shares pursuant to Section 2.5 shall be excluded for the purposes of
Sections 2.11 and 2.12;
(y) "non-diluting Shareholder" means, for the purposes of:
(1) Section 2.6(b), AfriOre (Barbados) or its designee;
(2) Section 2.11, the "Other Shareholder"; and
(3) Section 2.12, the "Non-Defaulting Shareholder", and
(z) "diluting Shareholder" means, for the purposes of:
(1) Section 2.6(b), WB;
(2) Section 2.11, the "Non-Contributor"; and
(3) Section 2.12, the "Defaulting Shareholder".
2.14 Shareholder's Entitlements and Obligations
Each Shareholder will bear all Expenses and be entitled to all dividends
and other distributions (including the net proceeds of the disposition of
any of the Corporation's assets) from the Corporation in proportion to its
respective Shareholding Interest.
2.15 Compliance
Each Shareholder whether beneficial or of record agrees that it shall vote
and act as a Shareholder and in all other respects shall use its best
efforts to take all such steps as may reasonably be within its power to:
(a) cause the Corporation and Kwagga to comply with and act in the
manner contemplated by the provisions of this Agreement, and the
Ancillary Agreements, as applicable;
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(b) implement to its full extent the provisions of this Agreement; and
(c) cause its respective nominee, to the extent, if any, which may be
permitted by law, as a director of the Corporation and Kwagga so to
act.
2.16 No Representative Actions
Each Shareholder hereby agrees that it shall not apply to any court to
have the Corporation or Kwagga wound up for any cause whatsoever, nor will
it resort to or make use of rights of dissent under the Act or any other
applicable legislation.
2.17 Privity
This Agreement shall be binding upon all persons executing this Agreement
and upon all persons, who may after the date hereof, become Shareholders
and agree to become bound hereby. The directors and/or Shareholders shall
not approve any Transfer of Shares other than to an existing Shareholder,
until the transferee has executed an agreement agreeing to be bound by the
terms and conditions of this Agreement and all other Ancillary Agreements
to which the transferring Shareholder is a party or bound by and upon such
execution such transferee shall thenceforth be bound by the provisions of
this Agreement and such Ancillary Agreements as fully as though an
original party hereto, and shall be subject to the duties and obligations,
and may exercise each and every right of a party hereunder.
Article 3 BOARD OF DIRECTORS and shareholders meetings
3.1 Qualification and Quorum
Subject to Section 3.7, the Corporation shall initially have a Board
consisting of three (3) directors, all of whom shall be nominated by
AfriOre (Barbados). Immediately following the date upon which WB shall
become a Shareholder, the Board shall be reconstituted to consist of six
(6) directors, of whom three (3) shall be nominated by AfriOre (Barbados)
and three (3) shall be nominated by WB. If a director ceases to be a
director for any reason (a "retiring director"), the Shareholders shall
fill the vacancy thereby created by forthwith electing that individual who
is nominated by the Shareholder who nominated the retiring director. Until
the vacancy is filled, the directors shall not transact any business or
exercise any of their powers or duties except those necessary to elect
such new director and/or preserve the business and assets of the
Corporation and Kwagga. If the Shareholder entitled to do so fails for any
reason to nominate an individual to fill such vacancy within thirty days
after such vacancy arises, the remaining directors shall be entitled to
transact all business and exercise all of their powers and duties
notwithstanding such vacancy.
3.2 Chairman of the Board
A director who is nominated by the Shareholder which owns the greatest
number of outstanding Shares from time to time shall be appointed the
Chairman of the Board; provided that in the event that all of the
Shareholders hold an equal number of Shares, then a director nominated by
AfriOre (Barbados) shall be appointed Chairman of the Board. The Chairman
of the Board shall act as chairman at all meetings of the Board, if
present, and, as such, shall not be entitled to a second or casting vote
in the event of any equality of votes among the members of the Board.
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3.3 Nominees
The Shareholders hereby agree to vote at all meetings of the Shareholders
of the Corporation and to act in all other respects in connection with the
corporate proceedings of the Corporation so as to ensure that the nominees
of the parties provided for in Section 3.1 are elected, appointed and
maintained in office from time to time as members of the Board.
3.4 Meetings of the Board
The Board shall meet prior to the date of each meeting of the board of
directors of Kwagga but in any event no less frequent than once every
quarter during the term of this Agreement at such place as the directors
may agree upon from time to time, otherwise at ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, for the
purpose of reviewing the results of the operations of the Corporation.
Meetings of the directors may be called by the Chairman of the Board upon
not less than fourteen (14) days notice (unless, in the case of an
emergency, in which case the meeting may be called on 2 days notice). The
Board shall also meet within 21 days of receipt by the Corporation and the
other Shareholder of a request for a meeting by a Shareholder.
Notice of all Board meetings shall be given by the Chairman of the Board
(or, where applicable, the Shareholder requesting the same), which notice
shall specify the time and place of, and the agenda for, each Board
meeting, and a description of any business required to be specified under
subsection 80(2) of the Act. Notice of a Board meeting may be waived if
each Shareholder is represented at the meeting by at least one of its
nominees and all the nominees present at the meeting agree upon the waiver
and upon the proposed agenda.
A quorum for any Board meeting will be present if one nominee of each
Shareholder is present or participating by telephone. If a quorum is
present at the meeting, the Board will be competent to exercise all of the
authorities, powers and discretions bestowed upon it under this Agreement.
No business other than the election of a chairman, if any, and the
adjournment or termination of the meeting will be transacted at any
meeting unless a quorum is present at the commencement of the meeting but
the quorum need not be present throughout the meeting. If within half an
hour from the time appointed for a meeting, a quorum is not present, the
meeting will, at the election of those nominees who are present:
(a) be dissolved; or
(b) be adjourned to the same place but on a date and at a time, to be
fixed by the chairman of the meeting before the adjournment, which
will be not less than seven days (unless, in the case of an
emergency, in which case the meeting will be not less than 24 hours
following the date for which the meeting was called) following the
date for which the meeting was called. Notice of the adjourned
meeting will be given to the nominees of all Shareholders forthwith
after the adjournment of the meeting. If at the adjourned meeting, a
quorum is not present within half an hour from the time appointed,
the nominee or nominees present and entitled to attend and vote at
the meeting, will constitute a quorum.
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No material item of business will be transacted at a Board meeting unless
the item appears on the agenda or at least one nominee of each Shareholder
is present and those nominees unanimously agree to the item being added to
the agenda.
Except with respect to decisions referred to in Section 6.1 or requiring
unanimity hereunder:
(x) the Board will decide every matter submitted to it by simple
majority with the nominee or nominees of each Shareholder
being entitled to cast collectively that number of votes which
is equal to the Shareholding Interest percentage of the
Shareholder he or they represent; and
(y) in case of a tie vote, any Shareholder may refer the matter to
dispute resolution pursuant to Section 11.2.
The chairman of the meeting will appoint a secretary for the meeting. The
secretary for the meeting will take minutes of that meeting and will
circulate copies of the minutes, signed by the chairman and secretary, to
each nominee within 14 days after the meeting.
Any decision made by obtaining the consent in writing of all of the
directors will be as valid as a decision made at a duly called and held
meeting of the Board.
Each Shareholder will bear the expenses incurred by its nominees in
attending meetings of the Board unless otherwise approved by both
Shareholders.
The Board may establish such other rules of procedure, not inconsistent
with this Agreement, as the Board deems fit.
3.5 Authority
Subject only to any constraints specifically imposed by this Agreement,
the Board shall be responsible and have authority for the supervision and
management of the business and affairs of the Corporation and shall have
such other authority as is set out in this Agreement; provided,
notwithstanding the foregoing, each Shareholder reserves the right to
require its nominee on the Board to comply with instructions in exercising
the aforesaid responsibilities, including, complying with this Agreement,
but failure of any director to comply with such instructions shall not
affect or invalidate any result or decision of the Board.
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3.6 Meetings of Shareholders
The Shareholders of the Corporation shall meet at least annually at such
place as the Shareholders may unanimously agree upon from time to time,
otherwise Toronto, Ontario. The Shareholders shall also meet within 30
days of receipt by the Corporation and the other Shareholder of a request
for a meeting by a Shareholder (unless, in the case of an emergency, in
which case the meeting may be called on 24 hours notice or on waiver of
notice). Notice of each Shareholder meeting shall be given by the
President (or, where applicable, the Shareholder requesting the same) at
least 21 and no more than 50 days before such meeting, which notice shall
specify the time and place of, and the agenda for, such Shareholder
meeting. Notice of a Shareholder meeting may be waived if each Shareholder
is represented at the meeting and all Shareholders present agree upon the
waiver and upon the proposed agenda.
A quorum for any Shareholder meeting will be present if all of the
Shareholders are present or participating by telephone. If a quorum is
present at the meeting, the Shareholders will be competent to exercise all
of the authorities, powers and discretions bestowed upon them under this
Agreement. No business other than the election of a chairman, if any, and
the adjournment or termination of the meeting will be transacted at any
meeting unless a quorum is present at the commencement of the meeting but
the quorum need not be present throughout the meeting. If within half an
hour from the time appointed for a meeting, a quorum is not present, the
meeting will be adjourned to the same day 2 weeks thereafter, at the same
time and place. Notice of the adjourned meeting will be given to all
Shareholders forthwith after the adjournment of the meeting. If at the
adjourned meeting, a quorum is not present within half an hour from the
time appointed, the Shareholder present and entitled to attend and vote at
the meeting will constitute a quorum.
No material item of business will be transacted at a Shareholder meeting
unless the item appears on the agenda or unless all Shareholders
unanimously agree to the item being added to the agenda.
Except with respect to decisions referred to in Section 6.1 or requiring
unanimity hereunder:
(x) the Shareholders will decide every matter submitted to them by
simple majority vote; and
(y) in case of a tie vote, any Shareholder may refer the matter to
dispute resolution pursuant to Section 11.2.
The chairman of the meeting will appoint a secretary for the meeting. The
secretary for the meeting will take minutes of that meeting and will
circulate copies of the minutes, signed by the chairman and secretary, to
each Shareholder within 14 days after the meeting.
Any decision made by obtaining the consent in writing of both Shareholders
will be as valid as a decision made at a duly called and held meeting of
the Shareholders.
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Each Shareholder will bear the expenses incurred by it in attending
meetings of the Shareholders unless otherwise approved by both
Shareholders.
The Shareholders may establish such other rules of procedure, not
inconsistent with this Agreement, as the Shareholders deem fit.
3.7 Proportionate Representation
If a Shareholder's Shareholding Interest is reduced to less than 25% but
remains at least 17% or greater, then such Shareholder will be entitled to
nominate only one director of the Corporation. A Shareholder whose
Shareholding Interest is so reduced to less than 17% will cease to be
entitled to nominate any directors of the Corporation. Any such
Shareholder shall cause its nominee(s) to resign to the extent necessary
to give effect to the foregoing.
3.8 Meetings by Tele-Conference Call
It is agreed that meetings of the Board and the Shareholders may be held
by tele-conference call and any director or Shareholder, as applicable,
may participate in any meeting of the Board or the Shareholders by means
of a tele-conferenced call so long as, in each such case, all those
participating in the meeting can hear each other.
Article 4 KWAGGA
4.1 Representation on Kwagga Board
Commencing following the date upon which WB shall have become a
Shareholder and at all times thereafter and provided that WB:
(a) shall not then be in default of any of its obligations hereunder;
(b) shall have previously elected to contribute to all Expenses in
proportion to its Shareholding Interest;
(c) shall not then be a defaulting Shareholder; and
(d) shall have not exercised Option A or Option B,
WB shall have the right to cause the Corporation to nominate such number
of individuals as directors of Kwagga as shall be equal to the number of
directors of Kwagga which the Corporation is entitled to nominate
multiplied by WB's then Shareholding Interest, provided that if such
number is a fraction, the number of individuals which it shall be entitled
to nominate shall be reduced to the next lowest whole number. At any time
when a representative of WB is acting as a director of Kwagga, the
Shareholders shall meet prior to each meeting of the board of directors of
Kwagga to discuss all matters proposed to be considered at such meeting of
the board of directors of Kwagga, and, subject to Section 13.12, the
Corporation shall cause Kwagga to provide to each such Shareholder all
information, data and statements as may be necessary or desirable to
assist such Shareholder to consider and make a reasoned decision
concerning all of such matters. The Shareholders shall discuss such
matters and determine by simple majority vote how the Corporation's
nominees as directors of Kwagga shall be directed to vote on each matter
to be considered at such board of directors meeting of Kwagga. In the case
of a tie vote, notwithstanding clause (y) of Section 3.6, AfriOre
(Barbados) shall have a casting vote.
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4.2 Corporation's Shareholding in Kwagga
It is acknowledged and agreed that:
(a) as of the date hereof, the Corporation is the sole shareholder of
Kwagga;
(b) it is intended that up to a 28% shareholding interest in Kwagga will
be transferred and/or issued to one or more Empowerment Companies
(as such term is defined in the Kwagga Shareholders' Agreement); and
(c) such transaction may be completed without the approval of any of the
Shareholders.
Article 5 SHAREHOLDERS
5.1 Information Provided to Shareholders
Subject to Section 13.12, the Corporation and Kwagga shall provide to any
Shareholder such information, data and statements as such Shareholder may
from time to time reasonably request relating to any business, financial
affairs and operations of the Corporation and Kwagga including, without
limitation, such information as may be required by such Shareholder to be
furnished relating to income or other taxes.
5.2 Keep Shares Free and Clear of Encumbrances
Each Shareholder covenants and agrees to keep the Shares and Shareholder
Claims owned beneficially or of record by it free and clear of all
Encumbrances (other than those Encumbrances created by this Agreement,
which are hereby expressly authorized and permitted). Notwithstanding the
foregoing, each Shareholder shall be entitled to pledge its Shares to any
third party lender provided that in entering into such Encumbrance, such
lender agrees to be bound by the terms and conditions of this Agreement
and all Ancillary Agreements to which such Shareholder is a party, in the
place and stead of such Shareholder should it wish to realize upon all or
any part of any Shares constituting security for any indebtedness or
liability of a Shareholder and further provided that such security shall
only be granted for the purposes of obtaining financing in respect of
project financing for Kwagga provided to the Corporation and/or Kwagga.
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Article 6 SHAREHOLDER MATTERS
6.1 Matters Requiring Special Consent
Except as otherwise provided in this Article 6, notwithstanding any other
provision of this Agreement, and in addition to any other consent required
by the Act, the Corporation shall not and, to the extent applicable, shall
cause Kwagga not to, incur any obligation, and no decision shall be made
or caused to be made nor any action taken or caused to be taken by or on
behalf of the Corporation or, to the extent applicable, Kwagga, except:
(x) from the date hereof until the expiry of the Phase Two Election
Period, with the prior consent of WB; or
(y) thereafter, with the prior consent of the Shareholders holding at
least 70% of the outstanding Shares,
with respect to any of the following matters:
(a) the amendment or termination of, or supplement to, or waiver of any
material provision of the Ancillary Agreements and any other
material agreements to which the Corporation or Kwagga may be a
party;
(b) the entering into of any contract, agreement or commitment out of
the ordinary course of the Corporation's business, the acquisition
of any additional business, the making of any material changes to
the Corporation's or Kwagga's business or the termination or
suspension of any material part of the Corporation's or Kwagga's
business;
(c) the conduct of any business other than as set forth in Section 8.1;
(d) the selection of, or any change in, the accountants or auditors of
the Corporation;
(e) the entering into of any contract, agreement or commitment with, or
the providing of financial assistance whether by guarantee or
otherwise, to any Shareholder or any Affiliate or Associate of any
Shareholder;
(f) the creation or assumption of any Encumbrance in any of the assets
of the Corporation, except pursuant to an operating line of credit
or other Encumbrances approved by the Board;
(g) the issue of Shares in the capital of the Corporation or any shares
of Kwagga or the issue of any rights convertible into Shares or any
shares of Kwagga or any options to purchase Shares or any shares of
Kwagga (except as contemplated by Article 2);
(h) the issue of any obligations, charges, debts or other instruments
convertible into Shares or shares of Kwagga or involving any right
to vote as a shareholder of the Corporation or as a shareholder of
Kwagga;
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(i) the creation, acquisition, disposition or liquidation of any
subsidiary of the Corporation or the entering into or termination of
any joint venture or partnership or any other business or interest
that the Corporation or Kwagga may have therein after the date
hereof which would materially affect the business of the Corporation
or Kwagga;
(j) the redemption or purchase by the Corporation of any of its issued
and outstanding Shares or any of the shares of Kwagga;
(k) the taking or instituting of proceedings for the winding-up,
reorganization or dissolution of the Corporation or Kwagga;
(l) any guarantee or other incurring of liability for the obligations of
any third party;
(m) the non-fulfilment or breach of the provisions of any agreement to
which it is a party, including, without limitation, the Ancillary
Agreements;
(n) the advancing of or loaning of funds to invest in any other person,
company or other entity;
(o) the borrowing of any funds, except pursuant to an operating line of
credit approved by the Board;
(p) the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Corporation or Kwagga;
(q) the filing of Articles of Amendment amending the Articles of the
Corporation or of Kwagga and any enactment, revocation or amendment
of any by-law of the Corporation or of Kwagga;
(r) the approval of the acquisition by the Corporation of any shares in
the capital of Kwagga; and
(s) the approval of the exercise by the Corporation of its rights under
section 19.7 of the Kwagga Shareholders Agreement.
6.2 Approval of Kwagga Budgets and Programs and Property Acquisitions
Notwithstanding any other provision of this Agreement, the Corporation
shall not and, to the extent applicable, shall cause Kwagga not to, incur
any obligation, and no decision shall be made or caused to be made nor any
action taken or caused to be taken by or on behalf of the Corporation or,
to the extent applicable, Kwagga, except with the prior consent of the
Shareholders holding at least 50% of the outstanding Shares (in addition
to any other consent required by the Act) with respect to any of the
following matters:
(a) the approval by the Corporation, in its capacity as a shareholder of
Kwagga, of any budget and program of Kwagga respecting exploration,
development and/or mining work to be conducted in, on or under the
Project Area or any feasibility or pre-feasibility study in respect
of the Project Area; and
20
(b) the approval by the Corporation as a shareholder of Kwagga to the
acquisition by Kwagga of additional land, usage rights and/or
mineral interests or rights within or outside of the Project Area by
Kwagga.
In the case of a tie vote, notwithstanding clause (y) of Section 3.6,
AfriOre (Barbados) shall have a casting vote.
6.3 Deemed Consent
Any consent in writing signed by two members of the Board nominated by a
particular Shareholder shall, for the purposes of this Agreement, be
deemed to constitute the consent of that Shareholder to the matters
contained therein, and any matter recorded in the minutes of a meeting of
directors or Shareholders as having been approved or agreed upon in
accordance with this Agreement, by resolution or otherwise, shall, for the
purposes of this Agreement, be deemed to have been consented to by a
particular Shareholder if the minutes are signed, in the case of a meeting
of directors, by two members of the Board nominated by that Shareholder
and, in the case of a meeting of Shareholders, by that Shareholder. For
greater certainty, it is acknowledged and agreed that the provisions of
this Section 6.3, only apply to consents of Shareholders for the purposes
of this Agreement and not to consents or resolutions required to be given
or passed pursuant to the Act.
Article 7 DISTRIBUTIONS
7.1 Distribution
The Corporation shall, and shall cause Kwagga to, only distribute cash
surpluses, including dividends, if any, in accordance with the
distribution policy set by the Board, from time to time. Such distribution
policy shall be consistent with and based upon the same principles as the
distribution of cash surplus under the Kwagga Shareholders Agreement.
Article 8 OPERATION AND FINANCING
8.1 Business
The business of the Corporation shall be restricted solely to holding a
shareholding interest in Kwagga and the doing of all such acts and things
as are incidental to the Corporation so acting and, for greater certainty,
the Corporation shall not engage or be engaged in any other business or
undertaking whatsoever.
8.2 Operations
The business of Kwagga shall be undertaken and implemented in accordance
with the Ancillary Agreements.
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8.3 Books and Records
Proper books of account shall be kept by the Corporation and Kwagga and
entries shall be made therein of all matters, terms, transactions and
things as are usually written and entered into books of account in
accordance with international accounting standards (IAS) and each of the
Shareholders and its authorized representatives shall have free access at
all times to examine them and shall at all times furnish to the other
correct information, accounts and statements of and concerning all
transactions pertaining to the Corporation and Kwagga without any
concealment or suppression. At the fiscal year end of the Corporation and
at such other times as may reasonably be requested by either of the
Shareholders, the Corporation, at its expense, shall cause an audit of the
books and accounts of the Corporation and Kwagga to be completed and, for
such purposes, such auditor shall have access to all books of account,
records, vouchers, cheques, papers and documents of or which may relate to
the Corporation and Kwagga, including those of the Shareholders to the
extent to which such books, records, vouchers, cheques, papers and
documents relate to the Corporation and Kwagga.
8.4 Financial Statements
Annual audited financial statements in respect of the Corporation and
Kwagga consisting of:
(a) statements of income and changes in financial position for such
fiscal year or quarter, as the case may be, and
(b) a balance sheet as at the end of such fiscal year or quarter, as the
case may be,
shall be prepared by the Corporation and Kwagga and delivered to the
Shareholders within 90 days after the end of each fiscal year.
8.5 Bank Accounts
The Corporation and Kwagga shall maintain a bank account at such bank or
trust company as the Board shall determine from time to time in accordance
with this Agreement. All bank accounts shall be kept in the name of the
Corporation and Kwagga and all cheques, bills, notes, drafts or other
instruments shall require the signatures of such individuals as the Board
may from time to time determine. All monies received from time to time for
the account of the Corporation and Kwagga shall be deposited immediately
into those bank accounts for the time being in operation in the same
drafts, cheques, bills or cash in which they are received and all
disbursements on account of the Corporation and Kwagga shall be made by
cheque drawn on such bank or trust company.
Article 9 RESTRICTIONS ON TRANSFER
9.1 Restriction
Except as expressly provided in this Agreement, no Shareholder shall
Transfer any of its Shares (or Shareholder Claims) held from time to time
by such Shareholder without the prior written consent of the other
Shareholder(s). No Shareholder shall Transfer any of its Shares or
Shareholder Claims unless both Shares and Shareholder Claims are
transferred contemporaneously to the same transferee and after such
Transfer the Shareholder holds an equal proportion of all the then
outstanding Shares and Shareholder Claims.
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9.2 Transfers to Affiliates
Section 9.1 shall not prohibit a Shareholder from Transferring all, but
not less than all, of the Shares and Shareholder Claims held by such
Shareholder to an Affiliate of such Shareholder, provided that such
Affiliate complies with Section 2.15. Notwithstanding the foregoing, where
a Shareholder Transfers its Shares and Shareholder Claims to an Affiliate,
the transferring Shareholder shall at all times after such Transfer to the
Affiliate be jointly and severally liable with such Affiliate for the
observance and performance of the covenants and obligations of the
Affiliate under this Agreement, shall cause the Affiliate to remain an
Affiliate of the transferor so long as the Affiliate shall have any
registered or beneficial interest in the Shares and shall indemnify the
other Shareholders against any loss, damage or expense incurred as a
result of the failure by the Affiliate to comply with the provisions of
this Agreement.
9.3 Requirement for Assumption Agreement for New Shareholders
In addition to any other conditions or restrictions set out in this
Agreement, it shall be a condition of the issuance or Transfer of any
Shares and Shareholder Claims that the issuee or transferee, if not
already bound by this Agreement, complies with Section 2.15. In addition,
if the issuee or transferee is other than an individual, it shall be a
further condition of such issuance or Transfer that the Persons which
directly and indirectly Control the issuee or transferee shall comply with
Section 2.15.
9.4 Rights of First Refusal
If any Shareholder proposes to sell any Shares and Shareholder Claims (in
this Section 9.4 the "Offered Securities") to a Person or group of Persons
(other than an Affiliate thereof), such Shareholder (the "Selling
Shareholder") shall give notice (a "Sale Notice") to the Corporation and
to each of the other Shareholders (collectively, for the purposes of this
Section 9.4, the "Subject Shareholders") setting forth the terms of the
proposed sale including the number of the Offered Securities and the
minimum price, stated in a dollar amount and payable exclusively in cash,
at which such securities will be sold (in each case, the "Offer Price").
In the event that the Selling Shareholder shall have received a bona fide
offer (in this Section 9.4, a "Third Party Offer") to purchase the Offered
Securities from a Person or group of Persons (other than an Affiliate)
which the Selling Shareholder wishes to accept, a copy of such offer shall
accompany the Sale Notice and if the consideration includes consideration
other than cash, a valuation prepared in accordance with the provisions of
the last paragraph of this Section 9.4.
Upon notice of the proposed sale being given, each of the Subject
Shareholders will have the right to purchase up to its ROFR Percentage
Interest of the Offered Securities at the applicable Offer Price, by
giving notice of acceptance to the Selling Shareholder within 90 days of
receipt of the Sale Notice (for the purposes of this Section 9.4, the
"Acceptance Period"). Such notice shall set out the number of Offered
Securities the Subject Shareholder wishes to purchase. The delivery of a
notice of acceptance to the Selling Shareholder shall constitute a binding
agreement of purchase and sale between the applicable Subject Shareholder
and the Selling Shareholder upon the terms set forth in the Sale Notice in
respect of the number of Offered Securities set out in such notice of
acceptance, subject to allocation among all purchasing Subject
Shareholders in the manner set out under this Section 9.4 and subject to
receipt by the Selling Shareholder of offers to purchase all, but not less
than all, of the Offered Securities.
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The sale of the Offered Securities shall be completed in accordance with
the terms set forth in the Sale Notice on a day to be agreed upon by the
purchasing Subject Shareholder(s) and the Selling Shareholder but, in no
event, more than 45 Business Days after the expiry of the Acceptance
Period. If the Subject Shareholders do not give notice of acceptance prior
to expiry of the Acceptance Period which would result in the purchase of
all, but not less than all, of the Offered Securities, the Selling
Shareholder will have the right to sell the Offered Securities to any
Person or Persons until the 120th day after expiry of the Acceptance
Period for a price not less than the applicable Offer Price. If the
Offered Securities are not sold within the period referred to in the
previous sentence of this paragraph, the rights of first offer with
respect to the Offered Securities will be revived.
Subject to the remaining provisions of this section, each of the Subject
Shareholders shall have the right to purchase up to its ROFR Percentage
Interest of the Offered Securities, as nearly as may be without division
into fractions. If a Subject Shareholder wishes to purchase a number of
Offered Securities that is other than its ROFR Percentage Interest of the
Offered Securities, it shall, in the notice of acceptance of the Sale
Notice, specify the number of Offered Securities that it wishes to
purchase. If more than one of the Subject Shareholders wishes to purchase
Offered Securities, the Offered Securities shall be allocated to the
purchasing Subject Shareholders in accordance with the next paragraph of
this section (provided that, for greater certainty, Subject Shareholders
have given notice of acceptance prior to the expiry of the Acceptance
Period which would result in the aggregate purchase of all of the Offered
Securities).
For the purposes of this Section 9.4, the "ROFR Percentage Interest" of a
Subject Shareholder means the proportion that the total number of the
Shares held by such Subject Shareholder as at the close of business on the
date upon which the Sale Notice is given, bears to the total number of
Shares held by all of the Subject Shareholders as at such date, expressed
as a percentage.
For the purposes of this section, where the offer under the Sale Notice
has been accepted by more than one Subject Shareholder, the Offered
Securities to be purchased by the Subject Shareholders shall, unless
otherwise agreed by each of the purchasing Subject Shareholders, be
allocated among the purchasing Subject Shareholders as follows:
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(a) each Subject Shareholder shall be entitled to purchase, as an
initial allocation, that number of Offered Securities indicated in
its acceptance of the Sale Notice, up to its ROFR Percentage
Interest of the Offered Securities; and
(b) in the event that the determination of the entitlement of the
Subject Shareholders in accordance with clause (x) above shall have
resulted in the allocation of the Offered Securities which is less
than the aggregate number of Securities that the Selling Shareholder
wishes to sell (for the purposes of this Section 9.4, the "Initial
Allocation"), each Subject Shareholder who shall have specified the
desire to purchase a number of Securities which is greater than its
ROFR Percentage Interest (for the purposes of this Section 9.4, each
an "Excess Purchaser") shall purchase, as an additional allocation,
that number of the Offered Securities calculated as follows (as
nearly as may be without division into fractions):
Number of the Offered
Securities that such Excess
Purchaser specified it would
purchase in excess of its
ROFR Percentage Interest of
the Offered Securities Number of Offered Securities
---------------------------- X minus number of Purchased
Aggregate number of Offered Shares in Initial Allocation
Securities that all Excess
Purchasers specified they
would purchase in excess of
their aggregate ROFR
Percentages of the Offered
Securities
In the event that, as a result of the default by one or more of the
Subject Shareholders who have agreed to purchase Offered Securities, less
than all of the Offered Securities have been sold in accordance with the
terms set forth in the Sale Notice on the date of closing, the Selling
Shareholder will have the right to sell all of the Offered Securities to
any Person or Persons until the 90th day after the scheduled closing date
for a price not less than the applicable Offer Price, and shall not be
required to sell any of the Offered Securities to any of the Subject
Shareholders.
Any valuation of non-cash consideration included in a Third Party Offer
shall be, in the case of:
(x) Marketable Securities included as consideration, calculated based on
the weighted average closing price of those securities on the Stock
Exchange, on which such securities trade the highest volume, for the
twenty trading days ended at the close of business on the day prior
to the delivery of the Sale Notice; and
(y) other non-cash consideration, based on a valuation prepared by a
qualified business valuator selected by the Selling Shareholder who
is independent of the Selling Shareholder, the offeror under the
Third Party Offer and the Corporation.
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9.5 Non-Compliant Transfers
Any Transfer or attempted Transfer of Shares and/or Shareholder Claims in
violation of any provision of this Agreement shall be void, and the
Corporation shall not record such Transfer on its books or treat any
purported transferee of such Shares and/or Shareholder Claims as the owner
of such Shares and/or Shareholder Claims for any purpose.
9.6 Shareholder Consent to Transfers
To the extent that the organization or constating documents of the
Corporation or any applicable law, requires that shareholder approval be
obtained in such regard, each Shareholder covenants and agrees that it
will consent to any Transfer of Shares and/or Shareholder Claims by a
Shareholder that is expressly permitted by this agreement within 10
Business Days following receiving a request therefor (including passing or
signing all requisite resolutions) and will not withhold or delay the
giving of such consent.
9.7 Compliance with the Act
It is acknowledged and agreed that all Transfers of Shares shall be
subject to compliance with the Act, including section 179 of the Act, as
amended.
Article 10 CLOSING PROCEDURES
10.1 Time and Place of Closing
The closing of any purchase and sale of the WB Advances or any Shares and
Shareholder Claims to be effected pursuant to Section 2.3, 2.4 or 2.6
shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇ L.L.P. at a date and
time that is mutually acceptable to the seller and purchaser thereof, or,
if no date and time for closing are so agreed upon, the time for closing
shall be 10:00 a.m. (Toronto time) (the "Time of Closing") on the Business
Day designated by the purchaser thereof within the time periods permitted
hereunder, if any, for the completion of such purchase and sale.
10.2 Payment and Delivery
At the Time of Closing of any purchase and sale of the WB Advance or any
Shares and Shareholder Claims (the "Purchased Interest") pursuant to
Section 2.3, 2.4 or 2.6, the purchaser of the Purchased Interest (the
"Purchaser") shall deliver to the seller of the Purchased Interest (the
"Seller") the consideration required to be paid pursuant to Section 2.3,
2.4 or 2.6, as the case may be, less an amount withheld equal to the face
amount of any indebtedness of the Seller to the Corporation (such net
amount being hereinafter referred to as the "Purchase Price"). The
Corporation shall co-operate in all reasonable ways to effect and
facilitate the purchase and sale of the Purchased Interest. At the Time of
Closing:
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(a) the Sellers shall deliver or cause to be delivered to the Purchaser:
(i) the certificates representing the Shares forming part of the
Purchased Interest, duly endorsed by the Seller for transfer
or accompanied by appropriate transfers duly executed by the
Seller;
(ii) all promissory notes, other evidences of indebtedness, loan
agreements and all other similar documentation relating to the
WB Advances or the Shareholder Claims forming part of the
Purchased Interest;
(iii) assignments (in form and content reasonably satisfactory to
the Purchaser and its solicitors) of the WB Advances or the
Shareholder Claims forming part of the Purchased Interest; and
(iv) a representation and warranty executed by the Seller in favour
of the Purchaser that the Purchased Interest is owned of
record and beneficially by the Sellers with a good and
marketable title thereto, free and clear of any Encumbrance of
any kind; and
(b) the Purchaser shall deliver to the Seller a certified cheque or bank
draft payable to or to the order of the Seller in payment of the
Purchase Price.
In any case where a Seller sells all of its Purchased Interest to another
Shareholder, the Purchaser shall use its reasonable efforts to obtain the
release of any guarantee of the indebtedness or other obligations of the
Corporation granted by the Seller, and, in the event the Purchaser is
unable to obtain such release, it shall indemnify and hold harmless the
Seller from and against any liability, loss, cost or expense in relation
to such guarantee arising following the transfer of the Purchased Interest
of the Seller.
10.3 Default of Seller
If the Seller is not present at the place of closing at the Time of
Closing, or is present but fails for any reason whatsoever to comply with
Section 10.2 or any other relevant requirements hereof, in addition to and
without limitation to any other rights it may have at law, the Purchaser
may make payment of the amount payable pursuant to Section 10.2(b) by
depositing such amount into a special interest-bearing account at a branch
of the Corporation's bank in the name of the Seller. Such deposit shall
constitute valid and effective payment of such amount to the Seller even
though the Seller has voluntarily encumbered or disposed of any the
Purchased Interest to be sold and notwithstanding the fact that a
certificate or certificates representing any Shares or promissory notes
evidencing any Shareholder Claims forming part of the Purchased Interest
may have been delivered to any pledgee, transferee or other Person.
10.4 Sale Effective
If the required amount is deposited pursuant to Section 10.3 into a
special account at a branch of the Corporation's bank in the name of the
Seller, then from and after the date of such deposit and even though the
Purchased Interest, has not been delivered to the Purchaser, the purchase
and sale of the Purchased Interest shall be deemed to have been fully
completed and all right, title, benefit and interest, both at law and in
equity, in and to the Purchased Interest and shall conclusively be deemed
to have been transferred and assigned to and become vested in the
Purchaser and all right, title, benefit and interest, both at law and in
equity, of the Seller, or of any transferee, assignee or other Person
having any interest, legal or equitable, therein or thereto, whether as
shareholder or creditor of the Corporation or otherwise, shall cease and
determine; provided, however, that the Seller shall be entitled to receive
the amount so deposited with interest thereon and the delivery of all
releases or indemnities contemplated by Section 10.2.
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10.5 Power of Attorney
If the Seller is not present at the place of closing at the Time of
Closing or is present but fails for any reason whatsoever to comply with
Section 10.2 or any other relevant requirement hereof, the Seller hereby
irrevocably constitutes and appoints any director of the Corporation
nominated by the Purchaser as its attorney in fact as agent for, in the
name and on behalf of the Seller, to execute and deliver in the name of
the Seller all such assignments, transfers, deeds and instruments as may
be necessary to effectively transfer and assign to the Purchaser or its
nominee or nominees on the books of the Corporation the Shares, the WB
Advance and any Shareholder Claims forming the Purchased Interest. Such
appointment and power of attorney, being coupled with an interest, shall
not be revoked by the insolvency, bankruptcy, dissolution, liquidation or
other termination of the existence of the Seller or by the incapacity of
the Seller, and the Seller hereby ratifies and confirms all that such
attorney may lawfully do or cause to be done by virtue of the provisions
of this Section 10.5.
10.6 Remedies
In addition to and without limiting any remedy that may be available at
law or in equity or under this Agreement to the Seller, in the event that
a Person who is obligated to purchase the Purchased Interest in accordance
with this Agreement defaults in the performance of its obligation to
complete such purchase, the Seller may, at its option, by notice in
writing to the defaulting Person, terminate all its obligations relating
to such purchase and, upon the giving of such notice in accordance with
the provisions of this Section 10.6, such obligations shall be terminated
without prejudice to the continued effectiveness of this Agreement.
Article 11 ARBITRATION
11.1 Best Efforts to Settle Disputes
If any controversy, dispute, claim, question or difference (a "Dispute")
arises with respect to this Agreement or its performance, enforcement,
breach, termination or validity, the parties will use their best efforts
to settle the Dispute. To this end, they will consult and negotiate with
each other, in good faith and understanding of their mutual interests, to
reach a just and equitable solution satisfactory to all parties.
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11.2 Special Committee
Except as expressly provided in this Agreement, if the parties do not
reach a solution pursuant to Section 11.1 within a period of fifteen (15)
Business Days following the first notice of the Dispute by any party to
the other, then, upon notice by any party to the other, the Dispute shall
be referred to a special committee consisting of the Chief Executive
Officer of each of the Shareholders. Such special committee shall meet as
soon as possible after referral of the Dispute to it, and the members
thereof shall negotiate with each other, in good faith and understanding
of the mutual interest of the Shareholders, and reach a just and equitable
solution satisfactory to all Shareholders.
11.3 Arbitration
Except as is expressly provided in this Agreement, if the parties do not
reach a solution pursuant to Section 11.2 within a period of 15 Business
Days following the first notice of the Dispute by any party to the other,
then upon notice by any party to the other, the Dispute will be finally
settled by arbitration in accordance with the provisions of the UNCITRAL
Arbitration Rules in effect on the date of this Agreement (the "Rules").
The Rules are deemed to be incorporated by reference into this Section
11.3. If there is a conflict between the provisions of this Agreement and
the provisions of the Rules, the provisions of this Agreement shall
prevail. The arbitration shall be based upon the following:
(a) the arbitration tribunal will consist of one arbitrator. The
arbitrator shall be appointed by mutual agreement of the parties, or
in the event or failure to agree within 10 Business Days following
delivery of the notice to arbitrate, any party may apply to the
President of the London Court of International Arbitration to
appoint an arbitrator. The arbitrator shall be disinterested in the
Dispute, shall have no connection with any party to the Dispute,
shall have experience in the minerals industry and shall be
qualified by education and training to pass upon the particular
matter to be decided;
(b) the arbitrator will be instructed that time is of the essence in the
arbitration proceeding and, in any event, the arbitration award must
be made within 30 days of the submission of the Dispute to
arbitration;
(c) after notice is given to refer any Dispute to arbitration, the
parties will meet within 15 Business Days of delivery of the notice
and will negotiate in good faith any changes in these arbitration
provisions or the rules of arbitration which are herein adopted, in
an effort to expedite the process and otherwise ensure that the
process is appropriate given the nature of the Dispute and the
values at risk;
(d) the arbitration will take place in London, England, or such other
location as may be agreed upon by the parties to the Dispute. No
party to the Dispute shall be required to give general discovery of
any documents, but may be required only to produce specific,
identified documents which are relevant to the Dispute. Article 15.2
of the UNCITRAL Administration Rules shall not apply. The
arbitration shall be the sole and exclusive forum for resolution of
the Dispute. The parties hereby agree to submit themselves to the
jurisdiction of the arbitration tribunal and waive any right to
immunity that they may otherwise have;
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(e) the arbitration award will be given in writing and will be final and
binding on the parties, not subject to any appeal, and will deal
with the question of costs of arbitration and all related matters;
(f) judgment upon any award may be entered in any court having
jurisdiction or application may be made to the court for a judicial
recognition of the award or an order of enforcement, as the case may
be; and
(g) all Disputes referred to arbitration (including the scope of the
agreement to arbitrate, any statute of limitations, set-off claims,
conflict of laws rules, tort claims and interest claims) will be
governed by the substantive law of Ontario.
Article 12 PROJECT Area
12.1 Abandonment
It is acknowledged and agreed that Kwagga may elect at any time or from
time to time to abandon portions of the Project Area held by it and, in
such event, such abandoned land, usage rights and/or mineral interests
shall no longer form part of the Project Area or, subject to Section 12.3,
be subject to this Agreement.
12.2 Additional Properties
It is acknowledged and agreed that it is intended that additional public
or private land, usage rights and/or mineral interests or rights within
the Project Area may be acquired by Kwagga after the date hereof as part
of the Expenses. Upon any such acquisition, such lands, interests and
rights shall be deemed to be part of the Project Area for the purposes
hereof.
12.3 Non-Competition
AfriOre (Barbados) and WB each agree that for a period of 5 years from the
date of this Agreement, neither WB, AfriOre (Barbados) nor any of their
respective Affiliates (regardless of whether such person is its Affiliate
on the date hereof), or officers or directors will directly or indirectly
acquire, lease or otherwise obtain or control any interest located in the
Project Area (including any portions of the Project Area abandoned from
time to time), or conduct any exploration, development or production
activities in the Project Area, except in accordance with the provisions
of this Agreement.
12.4 Acquisitions Within the Project Area
If, notwithstanding the prohibition contained in Section 12.3, AfriOre
(Barbados) or WB or any of their respective Affiliates, officers or
directors acquire, lease or otherwise obtain or control any land, usage
rights or mineral or other interests or rights within the Project Area
within 5 years from the date of this Agreement, WB or AfriOre (Barbados),
as the case may be, shall notify the Corporation thereof within the 30
days immediately following the date of such transaction and WB or AfriOre
(Barbados), as the case may be shall (or WB or AfriOre (Barbados) shall
cause its applicable Affiliate, officer or director to) convey the same to
Kwagga or its nominee in the manner that the Corporation directs as soon
as practicable thereafter, in consideration of the payment by Kwagga to
WB, AfriOre (Barbados) or such Affiliate, officer or director, as the case
may be, of an amount equal to the direct out of pocket cost of acquisition
thereof or of similar land or interests from the government of the
Republic of South Africa pursuant to applicable legislation in force at
the time of such acquisition.
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12.5 Survival
The provisions of this Article 12 shall survive the termination of this
Agreement.
Article 13 GENERAL PROVISIONS
13.1 Share Certificates
The parties hereto covenant and agree that all outstanding certificates
representing the Shares held by such parties, and every certificate
representing the Shares hereafter issued, shall have endorsed thereon in
legible characters a notation to the effect that the Shares represented by
such certificates are subject to the terms of this Agreement, and that a
copy of this Agreement may be examined at the head office of the
Corporation.
13.2 Severability
If any provision of this Agreement will be determined by an arbitrator or
any court of competent jurisdiction to be illegal, invalid or
unenforceable, that provision will be severed from this Agreement and the
remaining provisions will continue in full force and effect.
13.3 Partnership
Nothing contained in this Agreement shall be deemed in any way or for any
purpose to constitute any party hereto a partner or agent or legal
representative of any other party to this Agreement in the conduct of any
business or otherwise or a member or a joint venture of joint enterprise
with any other party to this Agreement, or to create any fiduciary
relationship among them.
13.4 Carrying on Business
The Corporation covenants and agrees to carry on its business and its
operations and those of Kwagga in accordance with the provisions of this
Agreement and to take no action which would constitute a contravention of
any of its terms or provisions. The Corporation shall maintain a true copy
of this Agreement at its head office for examination as provided in this
Agreement.
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13.5 Termination
This Agreement shall continue in full force and effect from the date
hereof until terminated by the earlier to occur of the following:
(a) an instrument in writing signed by all of the Shareholders of the
Corporation; or
(b) the filing of Articles of Dissolution or the winding-up or
dissolution of the Corporation; or
(c) if one Shareholder acquires all of the issued and outstanding Shares
following the completion of Phase One.
13.6 Notice
Any notice, direction or other communication given under this Agreement
will be in writing and given by delivering it or sending it by facsimile
or other similar form of recorded communication addressed to:
(a) AfriOre (Barbados) at:
Ground Floor, Tuscany Office Park V
▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇ ▇▇ ▇▇ ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
32
(b) WB at:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ M5H 2R7
Attention: President President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
And a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Brand, LLP
3300 ▇▇▇▇▇ Fargo Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) the Corporation at:
Ground Floor, Tuscany Office Park V
▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇ ▇▇ ▇▇ ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ and ▇▇▇▇ LLP
Barristers And Solicitors
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such communication will be deemed to have been validly and effectively
given and received if personally delivered, on the date of such delivery
if such date is a Business Day and such delivery was made prior to 4:00
p.m. (Toronto time) and otherwise on the next Business Day, or if
transmitted by facsimile or similar means of recorded communication on the
Business Day following the date of transmission. Any party hereto may
change its address for service form time to time by notice given in
accordance with the foregoing and any subsequent notice will be sent to
such party at its changed address.
33
13.7 Waiver
(a) No waiver of any of the provisions of this Agreement will be deemed
to constitute a waiver of any other provision (whether or not
similar); nor will such waiver be binding unless executed in writing
by the party hereto to be bound by the waiver.
(b) No failure on the part of any party hereto to exercise, and no delay
in exercising any right under this Agreement will operate as a
waiver of such right; nor will any single or partial exercise of any
such right preclude any other or further exercise of such right or
the exercise of any other right.
13.8 Entire Agreement
This Agreement and the Schedules annexed hereto constitute the entire
agreement between the parties hereto and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of
the parties hereto (including, without limitation, the Heads of Agreement
entered into on June 4, 2003, as amended, among AfriOre (Barbados), Kwagga
and WB's predecessor in interest, Hawk Precious Minerals Inc.). There are
no representations, warranties, covenants, conditions or other agreements,
express or implied, collateral, statutory or otherwise, between the
parties hereto in connection with the subject matter of this Agreement
except as specifically set forth herein and therein and no party hereto
has relied or is relying on any other information, discussion or
understanding in entering into and completing, the transactions
contemplated in this Agreement (and the Ancillary Agreements).
13.9 Amendment
This Agreement and the Schedules annexed hereto may only be amended,
supplemented or otherwise modified by written agreement signed by all of
the parties hereto.
13.10 Time of the Essence
Time shall be of the essence of this Agreement.
13.11 Governing Law
(a) This Agreement will be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
(b) Without derogating from the obligations of the parties to submit to
arbitration pursuant to Section 11.3, each of the parties
irrevocably attorns and submits to the non-exclusive jurisdiction of
the courts of Ontario and WB hereby appoints Fasken ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇ and AfriOre (Barbados) hereby appoints Tau Capital, ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇, as its agent for the
service of any process with respect to any matter arising under or
related to this Agreement.
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13.12 Confidentiality and Public Statements
(a) Subject to the provisions of this Section 13.12, the terms and
conditions of this Agreement and all documents, records data and
information (including Update Reports and Reports) obtained or
created by Kwagga or the Corporation as contemplated by this
Agreement or any Ancillary Agreement or otherwise related to the
business of Kwagga and/or the Project Area (including the results of
any work carried out thereon) (in this Section 13.12, "confidential
information") shall be the exclusive property of Kwagga and the
Corporation and shall be maintained on a confidential basis by WB.
(b) WB agrees to take reasonable measures to ensure that all
confidential information that it holds or obtains shall be
maintained and kept in a safe place sufficient to ensure that the
same is not available for inspection or study by any person that is
not so authorized by AfriOre (Barbados).
(c) WB agrees to take reasonable measures to ensure that any
representative, consultant, independent contractor or employee of WB
that had or may have had access to confidential information shall
not communicate, either orally or in writing, such confidential
information to any other person without the written permission of
AfriOre (Barbados).
(d) The following data and information shall not be considered
confidential for the purposes hereof:
(i) information and data that at the time such information and
data were obtained or created by a party were available to the
public;
(ii) information and data that, after such information and data
were obtained or created by a party, are published or
otherwise become available to the public through no fault of
either party; or
(iii) information and data received from a third party that is not
legally required to hold such information and data in
confidence.
(e) WB acknowledges and agrees that other than its right to receive
Update Reports and Reports, it shall have no rights to receive any
other information or reports respecting work carried out on the
Project Area, to examine any documents, records, data or information
respecting the Project Area or to have access to or the right to
inspect the Project Area or the work carried out thereon, therein or
thereunder.
(f) Except as otherwise permitted herein, WB shall not, directly or
indirectly, make any disclosure of confidential information or
otherwise give out, disseminate or provide any publicity or press
release regarding the Corporation, Kwagga and/or the Project Area
(including the results of any work carried out thereon, therein or
thereunder) without the prior written consent of AfriOre (Barbados).
The requirement for consent shall not apply to a disclosure to an
attorney, accountant, underwriter, banker or consultant that has a
bona fide need to be informed, subject to compliance with Section
13.12(c).
35
(g) In the event that WB is required to disclose any confidential
information to any governmental agency, a stock exchange or the
public in order to comply with applicable securities laws, rules or
regulations or the rules of any applicable stock exchange or trading
facility:
(i) such disclosure shall be limited to the minimum level of
disclosure required in the circumstances;
(ii) a verbatim transcript of any such disclosure intended to be
made by WB shall be delivered to AfriOre (Barbados) at least 3
business days prior to the date of such disclosure (which date
of disclosure shall be specified in writing to AfriOre
(Barbados) at the time of delivery of such transcript); and
(iii) WB shall amend such disclosure in accordance with AfriOre
(Barbados)'s reasonable direction delivered to WB at least one
(1) business day prior to the date of disclosure referred to
in Section 13.12(g)(ii), subject to compliance with applicable
rules and regulations.
Without limiting the generality of the foregoing, WB shall use its
best efforts to ensure that any copies of this Agreement, any
Ancillary Agreement or any other confidential information filed with
any governmental agency or stock exchange are filed on a strictly
confidential basis and shall not be made available to or otherwise
accessible by the public. It is acknowledged and agreed that AfriOre
Limited may act as AfriOre (Barbados)'s representative in connection
with the foregoing.
(h) Notwithstanding the other provisions hereof, it is acknowledged and
agreed by WB that the location and legal description of the Project
Area shall be kept strictly confidential and not disclosed to any
person, including disclosure otherwise permitted pursuant to Section
13.12(g). WB covenants and agrees to use best efforts to comply with
the foregoing covenant, including, without limitation, making all
applications to all applicable regulatory authorities to obtain such
orders or rulings as may be required in order to ensure that WB is
not required to disclose the exact location or legal description of
the Project Area, including in any reports required to be filed
pursuant to National Instrument 43-101 promulgated by Canadian
securities regulators or pursuant to the Securities Act of 1933 or
The Securities Exchange Act of 1934, in any offering memorandum or
prospectus used or filed by WB, in any title opinions filed by WB
and in any oral, written or electronic disclosures to any persons,
including underwriters, agents or financiers.
(i) WB shall indemnify and hold harmless the Corporation, AfriOre
(Barbados) and Kwagga from any and all loss or damage (including,
but not in any way limited to, legal costs on a solicitor and own
client basis) which may arise from the unauthorized disclosure or
use of any confidential information.
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(j) WB acknowledges the confidential information is proprietary and
confidential and that the Corporation, AfriOre (Barbados) and Kwagga
may be irreparably damaged if any of the provisions contained in
this Section 13.12 are not performed by WB in accordance with the
terms set out and therefore WB agrees that the Corporation, AfriOre
(Barbados) and/or Kwagga, in addition to and without limiting any
other rights or remedies that the Corporation AfriOre (Barbados)
and/or Kwagga may have, will have the right to an immediate
injunction or other available equitable relief in any court of
competent jurisdiction, enjoining any threatened or actual breach of
the provisions of this Section 13.12 by WB. WB agrees that the
existence of this right to an immediate and undefended injunction or
other available equitable relief will not preclude the Corporation,
AfriOre (Barbados) and/or Kwagga from pursuing any other rights and
remedies at law or in equity which the Corporation AfriOre
(Barbados) and/or Kwagga may have, including recovery of damages.
(k) In the event that there is a change of control of AfriOre Limited:
(i) the provisions of Subsections 13.12(e), (g) and (h) shall
terminate;
(ii) thereafter WB shall be entitled to examine all records, data
and information respecting the work carried out in, on or
under the Project Area and to have access to and the right to
inspect the Project Area and the work carried out thereon, at
its sole risk during normal business hours upon reasonable
prior notice to Kwagga; and
(iii) thereafter any data or information which WB is required to
disclose in order to comply with applicable securities laws,
rules or regulations or the rules of any applicable stock
exchange or trading facility shall not be considered
confidential for the purposes hereof.
(l) The provisions of this Section 13.12 shall survive the termination
of this Agreement and the Transfer of any Shares by WB.
13.13 Payments
All payments required to be paid pursuant to this Agreement shall be made
by certified cheque or bank draft payable in immediately available funds
in Toronto, Canada.
13.14 Successors and Assigns
This Agreement will become effective when executed by the parties hereto
and after that time will be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns.
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13.15 Interpretation
Unless the context otherwise requires, words used in this Agreement
importing either the masculine or neuter gender include the masculine,
feminine and neuter genders and words importing the singular include the
plural and vice versa.
13.16 Headings
Headings are inserted in this Agreement for convenience of reference only
and shall not affect the interpretation hereof.
13.17 Paramountcy
To the extent permitted by law, the provisions of this Agreement shall
supersede and override the provisions of the articles and by-laws and
memorandum of association of the Corporation and Kwagga.
13.18 Counterparts
This Agreement may be executed in any number of counterparts and all such
counterparts taken together will be deemed to constitute one and the same
instrument, and further, this Agreement may be executed by facsimile
signatures.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on
_______________________________, 2004.
AFRIORE INTERNATIONAL (BARBADOS) LIMITED
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
WITS BASIN PRECIOUS MINERALS INC.
Per: /s/ ▇. ▇▇▇▇▇ White
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KWAGGA GOLD HOLDINGS (BARBADOS) LIMITED
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
38