SHARE SALE AGREEMENT
Entered into by and between
Golden Falls Trading 565 (Proprietary) Limited and Pinnacle Resources,
Inc.
1. PARTIES
1.1 The parties to this agreement are
1.1.1 GOLDEN FALLS TRADING 565 (PROPRIETARY) LIMITED and
PINNACLE REOURCES INC. and
1.2 The parties agree as set out below.
2. INTERPRETATION
2.1 In this agreement and any appendices hereto, unless inconsistent
with or otherwise indicated by the context -
2.1.1 "The/this agreement" means this agreement together with all
appendices hereto;
2.1.2 "Business day' means a day on which trading is conducted on the
JSE Securities Exchange South Africa;
2.1.3 "Closing date" means the date on which all Conditions have been
fulfilled.
2.1.4 "the Company" or "Vanmag" or Vanadium and Magnetite Exploration
and Development (Pty) Ltd" means Vanadium an Magnetite Exploration and
Development (Pty) Lt registration number 1966/017215/07, a private
company duly incorporated in terms of the laws of the Republic of South
Africa;
2.1.5 "Conditions" means the conditions precedent to the transaction
contemplated by this agreement set out in clause 4.2;
2.1.6 "Disclosure Documents" means:
2.1.6.1 - The memoranda and articles of incorporation of Vanmag,
its minute book and share register; and
2.1.6.2 - any and all agreements to which either Vanmag is a
party or to which either of the Sellers is a party with respect to
their interests in the Company; and
2.1.6.3 - all audited financial statements and all financial and
corporate records of Vanmag;
2.1.6.4 - any and all geological or technical data or reports or
title deeds, mineral cessions, leases or other documents in respect of
any of the following properties in the possession of either the Sellers
or the Company.
2.1.6.4.1 Inhambane 802 LR
2.1.6.4.2 Portion 2 of the Farm Mozambique 807 LR
2.1.6.4.3 ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ LR
2.1.6.4.4 Commandodrift 228 KR
2.1.6.4.5 Gezond 235 KR
2.1.6.5 Any and all applications to or correspondence between
Vanmag and the Department of Minerals and Energy of the Republic of
South Africa and any permits previously issued to Vanmag in respect of
any of the properties referred to in 2.1.6.4;
2.1.7 "Due Diligence" means the due diligence investigation by the
Purchaser of the Disclosure Documents and the assets, liabilities,
business an affairs of Vanadium and Magnetite Exploration and
Development (Pty) Ltd as provided for in clause 5;
2.1.8 "Effective date" means the closing date;
2.1.9 "Parties" means the Sellers and the Purchaser;
2.1.10 "Seller" means Pinnacle Resources Inc., registration number 84-
1414869, a company duly incorporated under the laws of U.S.A. herein
represented by ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ by virtue of a resolution of the
board of directors of Pinnacle Resources, Inc., a ▇▇▇ of which is
annexed to this Agreement as Appendix 2; and
2.1.11 "Purchaser" means GOLDEN FALLS TRADING 565 (PROPRIETARY)
LIMITED, registration number 2006/033595/07, a private company duly
incorporated in terms of the laws of South Africa; herein represented
by ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ by virtue of a resolution of the board of
directors of the Purchaser, a copy of which is annexed to this
agreement as Appendix 1;
2.1.12 "Sale shares" means 18,667 eighteen thousand comma six hundred
sixty seven) ordinary shares in the share capital of Vanadium and
Magnetite Exploration and Development (Pty) Ltd hereby warranted by the
Seller as being no less than 93.3% of the total issued share capital of
the Company, of which 18,667 (eighteen thousand comma six hundred sixty
seven) shares are being sold to the Purchaser by Pinnacle Resources
Inc.
2.1.13 "Sale claims" means any and all claims on shareholder's loan
account which the Seller may have against Vanadium and Magnetite
Exploration and Development (Pty) Ltd.
2.1.14 "Signature date" means the date upon which the parties sign
this agreement or, if signed on different dates, the date upon which it
is signed by the party who signs last;
2.1.15 "Vanmag Properties" means the properties referred to in clause
2.1.6.4 and specifically the old order prospecting rights or mining
rights in respect of all of them as defined in terms of the Minerals
and Petroleum Resources Development Act of 28 of 2002 that has been or
may be granted to Vanmag by the Department of Minerals and Energy of
the Republic of South Africa in respect of any number of the said
properties;
2.1.16 any reference to the singular includes the plural and vice
versa;
2.1.17 any reference to natural persons includes legal persons and
vice versa; and
2.1.18 any reference to a gender includes the other genders;
2.2 The clause headings in this agreement have been inserted for
convenience only and shall not be taken into account in its
interpretation.
2.3 If any proviso in a definition is a substantive provision
conferring rights or imposing obligations on any party, effect shall be
given to it as if it were a substantive cause in the body of the
agreement, notwithstanding that it is only contained in the
interpretation clause.
2.4 If any period is referred to in this agreement by way of reference
to a umber of days, the days shall be reckoned exclusively of the first
and inclusively of the last day, unless the last day fails on a day
other than a business day, in which case the last day shall be the next
succeeding business day.
3 INTRODUCTION
3.1 The Seller warrants to the Purchaser that it currently owns at
least 93 1/3% of the total issued and unencumbered voting share capital
of Vanmag.
3.2 The Purchaser has expressed its desire to acquire and the Seller
has agreed to sell the Sale Shares and the Sale Claims to the
Purchaser, in one indivisible transaction, subject to the terms and
conditions contained in this Agreement.
4. SALE AND PURCHASE AND CONDITIONS PRECEDENT
4.1 The Seller hereby sells to the Purchaser, who hereby purchases, as
one indivisible transaction, and with effect from the effective date,
the Sale shares and the Sale claims subject to the terms and conditions
contained in this agreement
4.2 This agreement, save for clause 5, 9 and 10 to 16 inclusive, which
shall come into force on the signature date, is subject to the
fulfillment of the following conditions precedent;
4.2.1 The delivery, by the Purchaser to the Seller, by not later
than 17h00, South African time, on Monday 2 April 2007, of written
notice to the effect that the Purchaser is satisfied with the result of
the Due Diligence and Metallurgical Report;
4.2.2 Assuming 4.2.1 has been satisfied then Purchaser shall
initiate the wire transfer of the next scheduled payment of
US$4,800,000 (four million eight hundred thousand US dollars) and
provide bank verification of such payment on or before 5 April 2007.
This payment and future payments shall be payable only into the banking
business account of Seller as follows:
Key Bank NA., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ABA #▇▇▇▇▇▇▇▇▇; Swift Code; keybus 33; For further Credit
to the account of: Pinnacle Resources, Inc; Acct #602 501 664 22.
4.3 If any of the Conditions is not fulfilled or waived in writing by
the Purchaser on or before the due date, this agreement shall terminate
and, save for clauses 10 to 16 inclusive, which will survive, have no
further clause or effect in law, and the status quo ante shall be
restored, except for the initial US$200,000.00 (two hundred thousand US
dollars) payment. Notwithstanding the foregoing the Purchaser and the
Seller may from time to time on one or more occasions extend the due
dates for the fulfillment of any of the Conditions by agreement in
writing.
5. DUE DILIGENCE INVESTIGATION
5.1 With effect from the commencement of business on the first
business day after the signature date of this Agreement and thereafter
for the period ending on the earlier to occur of (a) 17h00 South
African time on 30 March 2007 or (b) this agreement no longer having
any further cause or effect in law, the Seller undertake to the
Purchaser that they shall procure that the Company will allow the
Purchaser (through its duly authorized representatives and advisers)
during the hours between 08h00 and 17h00 on business days (and such
other times as are agreed to in writing by the Seller, acting
reasonably), to conduct a due diligence investigation in relation to
the Disclosure Documents and the assets, liabilities, business an
affairs of Vanadium and Magnetite Exploration (Pty) Ltd.
5.2 In order to facilitate the Due Diligence:
5.2.1 The Seller shall procure that the Company will, upon the
request of the Purchaser grant to the Purchaser and its authorized
representatives and advisors all necessary access to all relevant
records of the Company;
5.2.2 The Purchaser acknowledges and agrees that all knowledge and
information gained by the Purchaser during the Due Diligence shall be
the confidential and proprietary information of the Company, which
knowledge and information the Purchaser shall maintain as secret and
shall not be entitled to use or cause to be used, whether directly for
its benefit or indirectly through any subsidiary or associated entity
or any other person, during the period until this agreement becomes
final and unconditional, or permanently should this agreement be
cancelled or lapse due to the non-fulfillment of any of the Conditions,
other than for the activities contemplated hereunder, as required by
law or by the rue and regulations of any regulatory authority or stock
exchange having jurisdiction, or with the written consent of the
Company. The provisions of this section do not apply to information
which is or becomes part of the public domain other than through a
breach of the terms hereof; and
5.2.3 Neither the Purchaser, nor any of its agents, or
representatives will engage in any activity, legal or otherwise, that
would violate the strictest terms of non-circumvention, non-
competition, non-disclosure in such a manner as to jeopardize the
Seller rights to the underlying assets of Vanmag or any leases or
licenses in connection therewith.
6. WARRANTIES AND INDEMNITIES
6.1 The Seller gives the warranties set out in Appendix 3 hereto to
the Purchaser, on the basis that -
6.1.1 The Purchaser has entered into this agreement on the strength
of such warranties and on the basis that each warranty will be correct
as at the relevant dates set out in Appendix 3 hereto, notwithstanding
the due diligence investigations the Purchaser has undertaken
respecting the subject matter of such warranties; and
6.1.2 Each warranty shall be a separate and severable warranty and
shall in no way be limited or restricted by reference to or inference
from the terms of any other warranty or by any other words in this
agreement.
6.2 Save for the express warranties referred to in clause 6.1, the
Seller has given no other warranties (whether express or implied) or
made any representations to the Purchaser concerning the subject matter
of this agreement which are not contained in express terms in this
agreement.
7. CONSIDERATION AND PAYMENT
7.1. The purchaser price payable by the Purchaser to the Seller for
the sale shares and sale claims shall be the amount of
US$9,000,000.00(mine million US dollars);
7.2 The purchase price shall be apportioned firstly to the book value
of the sale claim, thereafter to the sale shares and is payable as
follows:
7.2.1 On the 26 January 2007 an amount of US$20,000.00 (two hundred
thousand US dollars) shall be paid by the Purchaser to the Seller.
7.2.2 A. An amount of US$4,800,000 (Four Million Eight Hundred
thousand US dollars) within 3 (three) days of notice of acceptance of
the due diligence in the Seller's account on or before the 10th April
2007.
B. The balance purchase price of US$4,000,000.00(four million
US dollars) on date of issuing of a new order mining right, as
contemplated in the MRPDA 20/2002, but in any event, no later than 10
April 2008.
8. DELIVERY
On date of payment referred to in 7.2.2(c) above the Seller will
deliver to the Purchaser;
8.1 A copy of a resolution by the board of directors of Vanadium and
Magnetite Exploration and Development (Pty) Ltd, approving the sale and
transfer of the Sale Shares, the cession of the Sale Claims and the
appointment of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ as the only director of
Vanadium and Magnetite Exploration and Development (Pty) Ltd, with
immediate effect; and
8.2 The share certificates in respect of the sale shares together with
duly signed transfer forms; and
8.3 Written cessions in respect of the sale claims; and
8.4 All books and records of Vanadium and Magnetite Exploration and
Development ty(Ltd).
9. THE PASSING OF RISK
On the closing date and upon delivery and payment in terms of clause
7.2, all risk in and benefit to the sale shares and sale claims shall
pass to the Purchaser.
10. BREACH
Should the Seller on the one hand or the Purchaser on the other hand
("the party in default") breach any term, condition, undertaking,
warranty or representation contained in this agreement and fail to
remedy such breach within 14 (fourteen) days (or such longer period as
the parties may agree on) after receipt of a written notice from the
other party ("the Innocent party"), requiring such breach to be
remedied, and such breach occurs before the closing date and cannot be
remedied by the payment of compensation for damages arising from such
breach, then, without prejudice to any other rights that it may have in
terms hereof or in aw, the innocent party shall be entitled to
forthwith cancel this agreement on written notice thereof to the party
in default. If a breach is not material and can be remedied by the
payment of compensation for damages arising from such breach or occurs
after the closing date, then the innocent party's remedies in respect
thereof shall be limited to a monetary claim, and the innocent party
shall not be entitled to resile from this agreement. Any claim between
the parties shall in any event be limited to the amount of the purchase
consideration received if as to the Seller; and purchase consideration
that remains unpaid, if as to the Purchaser.
11. NOTICES AND DOMICILIA
11.1 The parties choose as their respective addresses set out in this
clause for all purposes arising out of or in connection with this
agreement, at which addresses all processes and notices arising out of
or in connection with this agreement, its breach or termination may
validly be served upon or delivered to the parties.
11.2 For the purposes of clause 11.1 the parties' respective addresses
shall be -
11.2.1 The Purchaser at:
1st Floor, Lobby 4
Bank Form Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile number: 012 346 8289
11.2.2 The Seller at:
Suite 260, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇
Facsimile number: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇.
11.3 Or at such other physical street addresses of which the party
concerned may notify the other/s in writing.
Any notice given in terms of this agreement shall be in writing and
shall -
11.3.1 If delivered by hand be deemed to have been duly received by
the addressee on the date of delivery; and
11.3.2 If transmitted by facsimile be deemed to have been received
by the addressee on the first business day following the date of
dispatch
11.4 Notwithstanding anything to the contrary contained or implied in
this agreement, a written notice or communication actually received by
one of the parties from another, including by way of facsimile
transmission, shall be adequate written notice or communication to such
party.
12 WHOLE AGREEMENT
Save as otherwise agreed in writing, this agreement constitutes the
whole agreement between the parties as to the subject matter hereof,
and no agreements, representations or warranties between the parties
regarding the subject matter hereof other than those set out herein,
are binding on the parties.
13. VARIATION
No addition to or variation, consensual cancellation or novation of
this agreement and no waiver of any right arising from this agreement
or its breach or termination, shall be of any force or effect, unless
reduced to writing and signed by all the parties or their duly
authorized representatives.
14. APPLICABLE LAW
This agreement and its interpretation shall be governed by the laws of
South Africa and the parties submit and consent to the jurisdiction of
the South African courts for the purpose of adjudicating which may
arise between the parties.
15. RELAXATION
No latitude, extension of time or other indulgence which may be given
or allowed by any party to the other parties in respect of the
performance of any obligation hereunder, and no delay or forbearance in
the enforcement of any right of any party arising from this agreement,
and no single or partial exercise of any right by any party under this
agreement, shall in any circumstances be construed to be an implied
consent or election by such party or operate as a waiver or a novation
of or otherwise affect any of the party's rights in terms of or arising
from this agreement or estop or preclude any such party from enforcing
at any time and without notice, strict and punctual compliance with
each and every provision or term hereof.
16. COSTS
Each party shall be responsible for its own costs incidental to the
negotiation, execution and implementation of this agreement.
17. SIGNATURE IN COUNTERPARTS AND BY FACSIMILE
This agreement may be signed I identical counterparts and communicated
by facsimile transmission, and the faxed copies of the signed documents
together will constitute the original of this agreement.
SIGNED ON THIS 23rd DAY OF JANUARY 2007 AT PRETORIA.
WITNESSES:
/s/▇▇▇▇ ▇ ▇▇▇▇▇▇ ____________________
------------------------------------
PINNACLE RESOURCES, INC. ____________________
SIGNED ON THIS 23rd DAY OF JANUARY 2007 AT PRETORIA.
WITNESSES:
/s/ ____________________
------------------------------------
GOLDEN FALLS TRADING 565 ____________________
(PROPRIETARY) LIMITED
APPENDIX 1
RESOLUTION: GOLDEN FALLS TRADING 565 (PROPRIETARY) LIMITED
EXTRACTS FROM THE MINUTES OF A EETING OF THE BOARD OF DIRECTORS OF
GOLDEN FALLS TRADING 565 (PROPRIETARY) LIMITED ("THE COMPANY") HELD AT
PRETORIA ON 23RD JANUARY 2007.
RESOLVED:
1. That the company enters into a share sale agreement with Pinnacle
Resources Inc. in respect of the sale shares and sale claims in
Vanadium and Magnetite Exploration and Development (Pty) Ltd materially
in accordance with the terms and conditions of the draft agreement
submitted to the board and approved by the board.
2. That ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ be and is hereby authorized and
empowered to negotiate and settle the final terms of the agreement
referred to in the previous resolution and to sign the same with or
without modification as he in his sole ad absolute discretion may
determine. Any agreement signed by the said ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Abonsma
purporting to act under authority of this resolution, shall
conclusively be deemed against the company to be the agreement
authorized in terms of this and the aforegoing resolution.
CERTIFIED A TRUE COPY
___________________________________
DIRECTOR
APPENDIX 2
RESOLUTION: PINNACLE RESOURCES INC.
EXTRACTS FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF
PINNACLE RESOURCES INC. ("THE COMPANY") HELD AT PRETORIA ON 23RD JANUARY
2007.
RESOLVED:
1. That the company enters into a share sale agreement with GOLDEN
FALLS TRADING 565 (PROPRIETARY) LIMITED in respect of the sale shares
and sale claims in Vanadium and Magnetite Exploration and Development
(Pty) Ltd materially in accordance with the terms and conditions of the
raft agreement submitted to the board and approved by the board.
2. That ▇▇. ▇▇▇▇ ▇ ▇▇▇▇▇▇ be and is hereby authorized and empowered to
negotiate and settle the final terms of the agreement referred to in
the previous resolution and to sign the same with or without
modification as he in his sole and absolute discretion may determine.
Any agreement signed by the said Mr. Gen ▇. ▇▇▇▇▇▇ purporting to act
under authority of this resolution, shall conclusively be deemed
against the company to be the agreement authorized in terms of this ad
the aforegoing resolution.
CERTIFIED A TRUE COPY
____________________________
DIRECTOR
APPENDIX 3
SIGNED TERM SHEET
APPENDIX 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES BY THE SELLER
1. INTERPRETATION
In this appendix, unless inconsistent with or otherwise indicated by
the context, any words or phrases defined in the agreement to which
this appendix is attached, shall have the meanings assigned to such
words and phrases in that agreement and the following words and phrases
shall have the following meanings.
1.1 "the/this agreement" means the agreement to which this document is
attached as an appendix;
1.2 "applicable laws" means all laws, statutes, by-laws, ordinances,
regulations, orders, legal provisions and other measures having the
force of law, to the extent that it is applicable to the Seller or the
Company or any of its subsidiaries;
The following warranties are the warranties referred to in the
agreement. Unless expressly stated otherwise, these warranties are
given as at both the signature date and the closing date.
2. REPRESENTATIONS AND WARRANTIES RESPECTING THE SELLER
2.1 The Seller has full right, power and authority to sell the sale
shares and sale claims as contemplated by this agreement. They have
waived their respective rights of pre-emption in respect of the sale
shares and sale claims to the extent required, alternatively they
hereby waive same.
2.2 The execution, delivery and performance of this agreement by the
Seller.
2.2.1 has been duly authorized on the part of the Seller;
2.2.2 does not violate or result I the breach of the laws of any
jurisdiction applicable to the Seller or pertaining thereto or of its
constating documents.
2.3 The agreement has been duly executed and delivered by the Seller
and constitutes a legal, valid and binding obligation of this Seller
enforceable against it in accordance with its terms.
2.4 No legal proceedings are pending or threatened against the Company
or any of its subsidiaries and the Seller is unaware of any basis for
the institution of any proceedings leading to its dissolution or
winding-up or its subjection to bankruptcy or to any other laws
governing the affairs of insolvent persons
2.5 The sale shares an sale claims are owned by the Seller with a good
and marketable title thereto free of any lien, pledge, hypothec,
notarial or other bond, cession in security or other encumbrance or
pre-emptive rights or right of first refusal of whatsoever nature.
3. LEGAL PROCEEDINGS
3.1 The Company or any of its subsidiaries -
3.1.1 is not a party to any judicial, quasi-judicial,
administrative or arbitration proceedings, and to the best of the
Seller's knowledge no such proceedings are pending or have been
threatened;
3.1.2 is not in default under or with respect to any agreement,
judgment, order, award, writ, interdict, decree or any similar
pronouncement of any court or other tribunal or administrative
authority having jurisdiction;
3.1.3 is not engaged in any dispute with any third party or
authority having jurisdiction or any body representing or claiming to
represent any of its employees, or is any such dispute pending or
threatened against it;
3.1.4 is not threatened with or party to any proceedings for, nor has
the Seller taken any steps towards, its winding-up or judicial
management (provisional or final).
3.2 The Seller is not aware of, nor has it any reason to suspect, any
fact or circumstance which might give rise to any proceedings or
default referred to or contemplated in this clause.
4. TAXES
4.1 No queries have been addressed to Vanadium and Magnetite
Exploration and Development (Pty) Ltd or any of its representatives by
any tax official ad nor have any tax objections or appeal been lodged
by Vanadium and Magnetite Exploration and Development (Pty) Ltd which
have not been fully disposed of.
4.2 Vanadium and Magnetite Exploration and Development (Pty) Ltd is
not a party to any agreement with the Commissioner for Inland Revenue
bearing upon or relating to the manner or circumstances in which tax
will or might be levied on it, including without limiting the
generality of the aforegoing any agreement with the Commissioner for
Inland Revenue of the nature referred to in the Income Tax Act of 1962.
4.3 Vanadium and Magnetite Exploration and Development (Pty) Ltd has
duly and punctually paid all taxes, levies and duties which it has
become liable to pay, and in particular without limiting the generality
of the aforegoing, its assessments for tax incurred before the
signature date which are due for payment after the signature date shall
have been paid or adequate provisions or reserves for tax shall have
been established therefore.
4.4 Vanadium and Magnetite Exploration and Development (Pty) Ltd has
properly ad punctually submitted all returns and provided all
information required for tax purposes and none of such returns are
disputed by the Commissioner for Inland Revenue or any other authority.
5. ASSETS AND LIABILITIES
5.1 The only assets of Vanadium and Magnetite Exploration and
Development (Pty) Ltd are the Vanmag Properties and those reflected in
the Financial Statements.
5.2 The only liabilities of Vanadium and Magnetite Exploration and
Development (Pty) Ltd are the claims of the Seller on shareholder's
loan account that are being sod to the Purchaser in terms of this
agreement.
6 DISCLOSURE
6.1 Neither this agreement nor the Disclosure Documents contain any
untrue statement of a material fact in respect of the Seller or
Vanadium and Magnetite Exploration and Development (Pty) Ltd.
6.2 There is no material fact or circumstance relating to the affairs
of the Seller or Vanadium and Magnetite Exploration and Development
(Pty) Ltd which has not been disclosed to the Purchaser and which, if
disclosed to the Purchaser, might reasonably be expected to influence
the decision of the Purchaser to purchase the sale shares on the terms
contained in this agreement, and to perform the obligations on its part
contained in this agreement
7. ENVIRONMENTAL
The Seller hereby warrants to the Purchaser that as of the date of this
agreement the Seller is unaware that there is any environmental
obligations and/or liabilities regarding the Vanmag Properties, other
than the mining carried out on the abovementioned properties by Vanmag
for which an existing rehabilitation bond is provided for by Vanmag.
