PRIVATE AGREEMENT
ROYAL GOLD, INC.,
RAKOV PTY LTD,
SILVER & BARYTE ORES MINING CO. S.A.,
and
MIDAS S.A.
PRIVATE AGREEMENT
THIS PRIVATE AGREEMENT (the "Agreement"), is made and
entered into in Athens, Greece this 30th day of March, 1998,
by and between:
"ROYAL GOLD, INC.," a company incorporated under the
laws of Delaware, Colorado with its principal offices in Denver,
Colorado, Suite 1000, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, ▇▇▇ duly represented by ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman and
CEO of said company, to be referred to hereinafter as "ROYAL";
"RAKOV PTY LTD" a company incorporated under the laws
of Australia, (ACN 081 173 555) with its principal offices in
Sydney, Australia, ▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, duly represented by Mr. ▇▇▇ ▇▇▇▇▇▇, Director of said company,
to be referred to hereinafter as "RAKOV";
"SILVER & BARYTE ORES MINING CO. S.A." an anonymous company duly
organized and existing under the laws of Greece with principal
offices in Athens, Greece, 21A, Amerikis Str. duly represented by
Messrs. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, to be referred to
hereinafter as "S&B"; and
"MIDAS S.A.," an anonymous company duly organized and
existing under the laws of Greece with principal offices in
Athens, Greece, ▇▇▇▇▇▇ ▇▇▇. ▇▇, duly represented by
Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, to be referred to
hereinafter as "MIDAS."
A. WHEREAS S&B and the Greek Government have entered
into a lease agreement Nr. 12.967/6.2.1992 of the Notary Public
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter "The Lease"), which
entitles S&B to explore for and exploit, if mineable
reserves are found, gold and other minerals (other than
industrial minerals, silver and baryte) on ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and Antimilos (hereinafter
"The Area").
B. WHEREAS S&B has established MIDAS for the purpose of
carrying out the Lease through that company and S&B
has transferred the Lease to MIDAS.
C. WHEREAS MIDAS' Shareholders are today S&B holding a
percentage of 49.257% the share capital, i.e.
9,610 Shares and RGC (United Kingdom) Holdings Limited
(hereinafter to be referred to as "RGC") holding a percentage
of 50.743% of the share capital, i.e. 9,900 Shares.
D. WHEREAS RGC has already given notice to S&B that it is not
willing to participate any more in MIDAS and it will
transfer its Shares to S&B.
E. WHEREAS ROYAL and RAKOV have experience in the
exploitation and financing of precious metals in the
international market.
F. WHEREAS the parties hereto have agreed to cooperate in the
exploration, development and mining of precious metals
(gold and silver) in the Area, under the terms and
conditions of the Lease, and have adopted on July 18,
1997 the guidelines of this cooperation (hereinafter
"Heads of Agreement").
G. WHEREAS according to the Heads of Agreement the
cooperation of the Parties will be effected within the
framework of MIDAS.
H. WHEREAS ROYAL and RAKOV will establish a new company
(hereinafter to be referred to as "NEWCO"), and their
participation in MIDAS will be effected through that
company.
NOW THEREFORE, IT HAS BEEN AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. DEFINITIONS
As used hereinafter in the Agreement, the following expressions
shall have the following meanings:
1.1. "Affiliate" means any company or entity as to which a
Party or a Party's Shareholder:
(a) by the exercise of some power exercisable by it, without
the consent or concurrence of any other person,
can appoint or remove or prevent the appointment
or removal of all or a majority of the members of
the board of directors or equivalent body of that
company or entity; or
(b) controls directly or indirectly, more than half of the voting
power of that company or entity; or
(c) holds more than half of the issued share capital of that
company or entity.
1.2. "Agreement" means this agreement, as amended from
time to time.
1.3. "Annual Program and Budget" means a program for
carrying on the Business during a Fiscal Year and it
consists of:
(i) a business plan setting out in detail MIDAS's proposed
Exploration and marketing plans, finance arrangements,
capital expenditures and activities for carrying out the
Business during that Fiscal Year.
(ii) a budget specifying in detail the funds and the
funding arrangements required for carrying out
the Business for the specific Fiscal Year,
accompanied by an itemized list of all expenses
reasonably expected to be incurred in the
implementation of this business plan. A budget
will contain:
a. salaries, wages and reasonable oncosts of
MIDAS' employees and other persons for
the time directly engaged in the Business;
b. travel, living and relocation expenses of the
personnel engaged in the Business;
c. costs of purchase or hire and operation of plant
and equipment;
d. premiums paid on insurance effected pursuant to the
Agreement and all damages paid in settlement of claims
and expenses related thereto not recovered from insurers;
e. field office charges and expenses;
f. costs associated with securing or preserving the right to
carry out Exploration, Development and Mining Operations
according to the Lease;
g. costs incurred in complying with environmental protection
and rehabilitation requirements imposed by or pursuant to
the Lease or by a competent authority;
h. rental, fees, deposits, costs and expenses of whatever nature
incurred in maintaining, renewing or relinquishing the Lease;
i. all capital and operating costs; and
j. costs of specialist sources used in the Business;
1.4. "Area" has the meaning determined under Clause A hereinabove.
1.5. "Articles" means the articles of incorporation of MIDAS,
as amended from time to time.
1.6. "Auditors" means the auditors appointed by the Shareholders.
1.7. "Board" means the first after the Effective Date Board of
Directors of MIDAS who, until replaced, will be the ones
identified in Annexure A, attached hereto.
1.8. "Business" or "Operations" means all undertaking,
activities and operations and includes Exploration for and
exploitation of the Product within the Area; carrying out
all researches and studies required to complete a feasibility
study that might support an extension of credit
by an institutional lender (a "bankable feasibility study")
and Mine Development Plan; construction and commissioning of
facilities and, generally, the Development of the mine on the
Area in order to facilitate the carrying on of Mining
Operations; and the delivery of Product in such form and to
such delivery point as may be required by MIDAS from time to
time.
1.9. "Business Day" means a day on which banks are open for general
banking business in Greece, USA and Australia.
1.10. "Buyer" means the buyer at the buyout procedure described under
Clause 15.7.
1.11. "Clause" means any of the clauses of the Agreement.
1.12. "Commencement Date" means the 1st of September 1997.
1.13. "Confidential Information" means all information,
forms, specifications, processes, statements, formulae,
know-how, ideas, drawings, maps, data bases, concepts,
technology, manufacturing processes, industrial
marketing, commercial knowledge, chemical,
geochemical and other analysis and results, including
Exploration results, related to or developed in connection
with or in support of:
(a) the Operations, past, present or future;
(b) the organization, finance, customers, markets,
suppliers, intellectual property and know-how of MIDAS; or
(c) the operations and transactions of the Parties
concerning the Business or the shareholding of NEWCO or S&B in MIDAS;
Provided, however, that such confidential information
shall not include information which is in the public
domain or becomes part of the public domain through no
fault of any of the Parties herein.
1.14. "Contract" means the agreement between S&B and MIDAS for the
production and sale of silver as described in Clause 25.1.
1.15. "Default Notice" is the notice given to a Shareholder in
case of an Event of Default, as defined in Clause 12.1(a),
and in accordance with the procedure described in Clause
12.2.
1.16. "Defaulting Shareholder" and "Defaulting Party" has
the meaning described in Clauses 12.2(b) and 12.10,
respectively.
1.17. "Development" means the implementation and
commissioning, in accordance with the Agreement and
sound industry practices of any mine and/or processing
facilities for Product in the Area and includes, but is not
limited to the specification and/or design of all necessary
construction works, as well as the preparation, procurement,
construction, installation and commissioning of the necessary
infrastructure and all plant, machinery and equipment.
1.18. "Dilution Participating Interest" means that proportion
of a Shareholder's Participating Interest which it elects to
dilute to in accordance with Clause 11.11.
1.19. "Diluting Shareholder" means the Shareholder who has
elected to dilute its Participating Interest as per Clause
11.11.
1.20. "Directors" means the members of the Board.
1.21. "Earn-In Date" means the date upon which NEWCO has
wholly contributed to MIDAS or spent or advanced on
behalf of MIDAS, the Sum.
1.22. "Earn-In Period" means the period between the
Effective Date and the Earn-In Date.
1.23. "Effective Date" means the date the Agreement enters
into force as per Clause 3.3.
1.24. "Escrow Agent" means the person holding in escrow the
Shares corresponding to the capitalization of the Sum, as
described in the Escrow Agreement annexed hereto as
Annexure B.
1.25. "Escrow Agreement" means the agreement between the
Parties, as described under Clause 6.7 and annexed hereto
as Annexure B.
1.26. "Event of Default" has the meaning described in Clause
12.1.
1.27. "Expenses" means all costs and expenses of whatever
nature relating to the Business, including:
a. costs and expenses incurred during the Interim Period and
b. costs and expenses incurred after the Effective Date in
accordance with an approved Annual Program and Budget.
1.28. "Exploration" means the act of exploring for mineral
resources and the evaluation of such resources for the
Development of a mine.
1.29. "First Bidder" means the Shareholder making the higher offer
in the buyout procedure described in Clause 15.7.
1.30. "Fiscal Year" means a period of twelve consecutive
months beginning on July 1st of a calendar year and
ending on June 30th of the following year.
1.31. "General Manager" means the General Manager of
MIDAS, who shall be nominated by NEWCO subject to
Clause 8.7.
1.32. "Government" means responsible governmental or
statutory bodies, officials, departments, agencies or
authorities.
1.33. "Guarantee" means the guarantee of ROYAL and
RAKOV on behalf of NEWCO, as determined in Clause
18.
1.34. "Interim Period" means the period between the Commencement Date
and the Effective Date.
1.35. "International Stock Exchange" means any recognized
stock exchange based in Athens, London, Toronto or New York.
1.36. "Mining Operations" means that part of the Business
consisting of the mining of the Area on a commercial
basis and the processing and other treatment, storage and
delivery of Product.
1.37. "Mine Development Plan" means all of the plans and
studies, including a bankable feasibility study report,
required for financing and construction or preparation of
Mining Operations, to be submitted to the Board to make
an investment decision for the Mining Operations.
1.38. "Minimum Sum" means the sum of 1,700,000 US$ that
NEWCO is obliged to contribute to MIDAS, or to spend
or advance on behalf of MIDAS, according to Clauses 6.3
and 27.1.
1.39. "Minister of Development" means the Minister charged, inter alia,
with any issue in respect of the mines and the mining rights.
1.40. "Notice of Dilution" means the notice given by the
Diluting Shareholder under Clause 11.11.1.
1.41. "Notice of Transfer" means the notice given by the
Transferring Shareholder under Clause 13.3.
1.42. "Panel" means the panel of experts appointed for the
resolution of the deadlocks as per Clause 15.2.
1.43. "Parcel" means the whole or part of the Participating
Interest which a Shareholder is interested to transfer as
per Clause 13.1.
1.44. "Participating Interest" means the proportion of a
Shareholder's direct share interest in MIDAS, which
include the Shares together with such Shareholder's
relevant proportionate Shareholders loan or advance
pursuant to funding of MIDAS as determined by the
various Annual Programs and Budgets and potentially by
the Mine Development Plan, as may be changed from
time to time.
1.45. "Party" means any of ROYAL or RAKOV or NEWCO
or MIDAS or S&B.
1.46. "Product" means gold and other associated metals and
minerals, provided for in the lease.
1.47. "S&B Lease" has the meaning determined in Clause 25.1.
1.48. "Seller" means the seller determined through the buyout
procedure described in Clause 15.7.
1.49. "Share(s)" means the issued shares in the capital of
MIDAS, at their par value.
1.50. "Shareholder" means NEWCO and S&B and any other
party which may acquire in the future a Participating
Interest in MIDAS and has signed the Agreement.
1.51. "Silver" means the silver produced in the course of
production of gold as described in Clause 25.1.
1.52. "Sum" means the amount of at least 5,000,000 US $,
which NEWCO has to contribute to MIDAS in order to acquire
50% of the Shares as determined in Clause 6.1.
1.53. "Team" means the team of independent experts for the
valuation of a Participating Interest, as provided for under
Clause 12.2.
1.54. "To encumber" means to mortgage, pledge, charge, assign as
security or otherwise burden.
1.55. "To transfer" means to sell, assign, transfer, convey or
otherwise dispose of, whether directly or indirectly.
1.56. "Transferring Shareholder" means a Shareholder
wishing to transfer a Parcel, as provided for under Clause
13.2.
2. THE BUSINESS
2.1. The Parties form hereby a joint venture for the purpose of
undertaking and carrying out the Business pursuant to the
terms and conditions of the Lease, the Agreement, the
Articles and the provisions of the applicable Greek
mining legislation.
2.2. Each of the Parties hereto warrants to the other to fulfill
all its obligations, duties and conditions each as related to
the Area and to observe any legislation applicable to the
operations hereunder.
2.3. As soon as NEWCO is established it will send to S&B a
letter by which it will be fully and unreservedly
undertaking any and all obligations related to NEWCO,
and provided for under the Agreement and the Lease.
2.4. NEWCO assumes no liability for any Expenses of
MIDAS incurred prior to the Commencement Date. Any
such obligations shall be for S&B's account.
3. STATUS OF THE LEASE
3.1. MIDAS has submitted to the Government, as of the 5th of
January 1998, the technical - financial study required by
article 5.1 of the Lease.
3.2. MIDAS has also submitted to the Government on 15.12.97, an
application for the extension of the exploration period that
is stipulated in article 4 of the Lease.
3.3. The Agreement (except for the Clauses determined under
Clause 26.1) will enter into force ("the Effective Date") as
follows:
3.3.1. In the event the two month period specified in article 5.1
of the Lease expires without any modification from the
Minister of Development, the Agreement will enter into
force on the day following the last day of this two month
period.
3.3.2. In the event the Minister of Development introduces
modifications to the technical - financial study, as he has
the right to do, then the Agreement will come into force
fifteen days after notification of such modifications,
provided NEWCO has been made aware of same as soon
as they are made known to MIDAS. Nevertheless, if the
conditions of the approval may be considered in good
faith to be overly burdensome, NEWCO is entitled to
withdraw from the Agreement by written notice given to
S&B within the above fifteen days period. In this
notification, NEWCO may determine that its withdrawal
shall become effective only if negotiations with the
Minister of Development to achieve a less burdensome
arrangement do not reach a positive result.
3.3.3. In the event the Minister instead of accepting the
technical - financial study, accepts MIDAS' application
for a least two year extension of the exploration period
stipulated in Article 4 of the Lease, then the Agreement
will enter into force upon the receipt of such notification
by MIDAS. The provisions of Clause 3.3.2 will apply mutatis
mutandis.
4. INTERIM PERIOD
4.1. During the Interim Period, the Parties will cooperate and
use their best endeavors in order to maintain the Lease in
good standing.
4.2. All Expenses incurred during the Interim Period are
deemed to be incurred for the benefit of MIDAS. These
amounts include costs incurred for further Exploration,
necessary costs for maintaining the Lease, as well as costs
and expenses incurred in relation with the application,
procedure and approval of either the technical financial study
(Clause 3.1.) or the extension of the Exploration period
(Clause 3.2.) and the execution -if necessary- of any relevant
modification to the Lease. MIDAS may determine to incur
certain Expenses during the Interim Period, in which event
Clause 4.5. will apply.
4.3. NEWCO is not obliged to contribute to the Expenses of
the Interim Period. Should it elect to contribute a certain
amount, this amount is deemed to be contributed towards the Sum.
4.4. To the extent that NEWCO seeks to apply against the
Sum any Expenses that it has incurred (or that it will
incur) during the Interim Period, NEWCO shall first
account to S&B for such Expenses, and shall secure
S&B's concurrence that such Expenses were or are
appropriate.
4.5. If the Agreement enters into force, MIDAS will be
reimbursed by NEWCO for the Expenses incurred by
MIDAS during the Interim Period and the reimbursement
amount will be computed towards the Sum.
4.6. If the Agreement is terminated following notice of NEWCO
as per Clauses 3.3.2. or 3.3.3. no Party is entitled to any
reimbursement for Expenses borne by it according to Clauses 4.2.
and 4.3.
4.7. During the Interim Period, RGC will transfer its Shares to
S&B, provided that the transfer is previously approved by the
Minister of Development.
5. PARTICIPATING INTERESTS
5.1. The Parties hereby acknowledge and agree that, subject to
the previous approval by the Minister of Development, according
to Clause 6.6, their Participating Interests in MIDAS following
the Earn-In Date shall be:
a. NEWCO: 19,510 Shares, which represent 50% of
MIDAS' issued share capital, and
b. S&B: 19,510 Shares which will represent 50% of MIDAS'
issued share capital together with the Parties' respective
proportionate Shareholder's loan, if any.
5.2 The Participating Interests may change from time to time,
in accordance with the provisions contained herein. The
Shareholder's loans do not affect the voting rights, which
are always based on the number of Shares held by a Shareholder.
6. CONTRIBUTION OF THE SUM
6.1 From the Effective Date, or even prior to it if NEWCO
elects to do so, the Expenses shall be funded exclusively
by NEWCO up to the amount of 5,000,000 US $ ("The
Sum") at a rate of at least 1,700,000 US $ per year as
determined in the Annual Programs and Budgets and
following the procedure described in Clauses 6.3 and 6.4.
Any Expenses incurred by NEWCO during the Interim
Period shall be credited against the Sum.
6.2 After the expenditure of the Sum as aforementioned,
Expenses shall be funded in the manner provided for in
Clause 7.
6.3 NEWCO shall, upon written notice of the General
Manager as per Clause 7.8, make advances to MIDAS
against future capital increases of MIDAS, to meet
Expenses until the date the aggregate of such advances
equals 1,700,000 US $ ("Minimum Sum"). The Shareholders shall,
promptly thereafter, cause MIDAS,
through its Shareholders' Meeting, to increase the
capital by the issue of 6.634 new Shares of nominal value of
1,000 drs each and at an issue price of 74,000 drs each.
Such capital increase will be covered exclusively by the
advances aggregating 1,700,000 US $ made by NEWCO.
6.4 If, after the contribution of the Minimum Sum, NEWCO
does not exercise its right to withdraw from the
Agreement under Clause 27.1, the balances of the Sum
required to be funded by NEWCO shall be met by way of
advances against further capital increases. On each
occasion that such advances reach 500,000 US $ or
higher, or at least every six months, the above advances
will be capitalized through a Shareholder's Meeting
decision, by the issue of such number of new Shares as
will arise from the division of the advances by the issue
price of 74,000 drs per Share. This procedure will continue
until the Sum is fully paid by NEWCO to
MIDAS, or otherwise advanced by NEWCO on behalf of
MIDAS. All such capital increases will be made through
the issue of Shares at an issue price of 74,000
drs each except the last increase for which the issue
price will be adjusted accordingly to reflect any
differences in currency rates between US $ and drachma.
The total number of Shares issued after the capitalization
of the Sum contributed to MIDAS will amount to
19,510.
6.5 Subject to Clauses 6.6 for legal and tax
reasons, the legal owner of the Shares issued afterthe
capital increases hereinabove mentioned will be
NEWCO, which nevertheless has not, until the Earn-In
Date, according to the Agreement, any right, except the
voting right, deriving from these Shares.
6.6 S&B, with the assistance and collaboration of NEWCO,
ROYAL and RAKOV, will proceed to file with the
Ministry of Development all applications necessary for
the approval of the acquisition by NEWCO of the Shares
in Escrow.
6.7 Escrow Agreement: For the purpose of Clause 6.5, and
in order to secure the rights of S&B, the Parties have
entered into an Escrow Agreement, which is attached to
the Agreement as Annexure B, and forms an integral part
thereof, by which the Shares, to be issued as per Clauses
6.3 and 6.4, will be held by the Escrow Agent until the
Sum is wholly funded by NEWCO.
7. FUNDING AFTER CONTRIBUTION OF THE SUM
7.1 After the funding of the Sum in MIDAS by NEWCO, the
Shareholders must ensure that MIDAS has sufficient
funds to carry on the Business from:
(a) further subscriptions of equity capital by the
Shareholders;
(b) cash generated by income earned;
(c) loans by the Shareholders to MIDAS;
(d) initial public offering or private placement of debt or
equity securities;
(e) floating of MIDAS in the International Stock Exchange;
or
(f) external borrowings by MIDAS.
7.2 All funding determined in the Annual Program and
Budget and approved by the Board to be necessary for the
proper running of MIDAS and agreed to be financed by
the Shareholders, shall be provided, after payment of the
Sum by NEWCO, by all Shareholders when and as
required, in cash, in proportion to their then existing
respective Participating Interests. In the event that a
Shareholder has made an advance of a loan to MIDAS
above its Participating Interest's requirement, such
surplus shall be offset against any cash call.
Contributions by the Shareholders to funding may be
provided as loans or by way of subscription for shares,
provided that the Shareholders at all times provide their
respective contributions in the same way.
7.3 Loans made in accordance with Clause 7.1(c) will be
made in proportion to the Shareholders' respective
Participating Interests and on such terms and conditions
(including terms and conditions concerning times for
repayment of principal and interest and rate ofinterest) as
are agreed from time to time by the Shareholders and the
Board, provided that all such loans and any securities
shall be subordinated to any external borrowings and
securities thereof.
7.4 Funding by an initial public offering or private placement
of debt or equity securities as per Clause 7.1(d), will be
effected on terms and conditions decided by the Board
and the General Assembly of the Shareholders, and the
resulting dilution shall be borne by the Shareholders in
proportion to their Participating Interests at the time of
the transaction.
7.5 Subject to obtaining any governmental approvals
that may be required and to any special conditions any
Shareholder may wish to set before it grants its
consent/agreement, the Shareholders may unanimously
agree to float MIDAS in an International Stock Exchange as
provided for under Clause 7.1(e) for the purpose of raising
enough funds to finance the Development or the commencement
or expansion of the Mining Operations, or even the Exploration.
7.6 The Shareholders must ensure that a commercially
prudent debt to equity ratio is maintained by MIDAS,
provided that any Shareholders loans or advances pursuant to this
Clause shall be included in equity.
7.7 The Mine Development plan shall include adequate
funding through the commencement of commercial
production.
7.8 The General Manager shall give written notice to each
Shareholder of all calls for funding hereunder or for
written assurances of availability thereof, in which notice
the manner of furnishing the same shall be specified, and
each Shareholder shall furnish its proportionate share of
such funding, as called for by the General Manager,
promptly and in any event within 30 days following
receipt of such notice.
7.9 If any Shareholder fails for any reason to furnish its
proportionate contribution to the funding of MIDAS
under this Clause within the time required, or within an
extension of such time as may be set by the Board,then
the other Shareholders, at their option, may either:
(a) furnish any such deficiency, as a loan payable on demand
by the Shareholder in default, who shall be
liable to pay interest to the other Shareholder(s)
on the amount in default at the rate per annum,
which is two (2%) percentage points above the
Libor Rate for one-year maturities, as adjusted
from time to time, commencing from the date of
payment by the other Shareholders furnishing
such deficiency; or
(b) elect to treat the failure of the Defaulting
Shareholder as an Event of Default, in accordance with Clause 12.
8. MANAGEMENT OF MIDAS
8.1 The General Manager shall be responsible for the
execution of the Board's decisions concerning the
management and administration of MIDAS.
8.2 All operations relevant to the management and
administration shall be conducted by the General
Manager in accordance with the decisions and directions
of the Board, as defined in Clause 9, in a careful and
workmanlike manner, in full compliance with all laws,
ordinances, rules, regulations, orders and directives of
any and all Government having jurisdiction over the
Business, and in accordance with the provisions of the
Lease and the Agreement. The General Manager shall
not make any profit through being General Manager, but
shall be compensated for his/her services by MIDAS as
provided for hereinafter.
8.3 Two signatures to be specified by the Board shall be
required on all binding documents executed in the name
of MIDAS. Such documents shall include, indicatively
and not by way of limitation, contracts for goods, services
and personnel as well as any other document necessary or
advisable for the conduct of the Business. The General
Manager shall use procedures and manuals approved by
the Board for the procurement of goods and services.
8.4 The General Manager shall be responsible for and ensure
that all Exploration / mining rights of MIDAS under the
Lease are and remain in good standing by taking all
actions necessary to that effect. S&B, together with
ROYAL and RAKOV, have undertaken to provide to the
General Manager all reasonable assistance that may be
required or requested under this Clause 8.4.
8.5 The General Manager shall carry out or cause to be
carried out, at the expense of MIDAS and for the
protection of MIDAS, such minimum amounts of
insurance cover as may be required by applicable law, or
such greater amounts as may be approved by the Board
from time to time.
8.6 The General Manager shall also be responsible for and
do, either himself or through personnel hired for this
purpose, the following:
8.6.1 Draw up and submit to the Board for its approval, at least
3 months before commencement of each Fiscal Year,
a draft of a proposed Annual Program and Budget for the
following Fiscal Year. Such proposed Annual Program
and Budget shall be the first part of the five-year rolling
business plan provided for in Clause 8.6.2.
8.6.2 Draw up and submit to the Board for its consideration, a
draft of a proposed five year rolling business plan at the
time provided in Clause 8.6.1.
8.6.3 Draw up and submit to the Board for its approval, the
relevant feasibility study and Mine Development Plan,
when appropriate.
8.6.4 Hire and dismiss the personnel of MIDAS, provided that
the compensation of such personnel is not greater than
50% of the compensation of the General Manager. To
the extent that the General Manager seeks to hire or
dismiss more highly compensated personnel, he shall do
so only with the concurrence of the Board.
8.6.5 Provide to the Shareholders monthly reports on
the status of Business.
8.6.6 Permit and facilitate the inspection by any Shareholder,
through its authorized representatives or recognized
chartered accountants of all the books, maps,
correspondence, directives, drawings, invoices, reports,
memos and any other document of the General Manager,
related to and connected with the Business. Any
Shareholder shall be entitled to make copies of any of the
said documents. To this purpose, the General Manager
shall be obligated to maintain the documents and the
written material of MIDAS for a period of seven (7) years
or longer, if the relevant laws so require.
8.6.7 Keep, or cause to be kept, comprehensive, true and
accurate records and accounts of the Business, the
General Manager's performance of his/her duties under
the Agreement, all property, real and personal belonging
to, and of all transactions entered into by or on behalf of
MIDAS, the costs and expenses relating to the
Operations, and such other matters as may be required
from time to time by the Board.
8.6.8 Ensure that MIDAS adheres to and implements each
approved Annual Program and Budget.
8.6.9 Ensure that the Directors receive sufficient management
and financial information and reports to allow them to
evaluate the carrying out of the Business and the
proposed Annual Program and Budget.
8.6.10 Ensure that MIDAS allows, after receiving reasonable
notice, a Director or his or her representative, and a
representative of any Shareholder, to visit and inspect the
premises and any property of MIDAS; to inspect and take
copies of the documents relating to the Business and
MIDAS' affairs, including its books of account; and to
discuss MIDAS' affairs, finance and accounts, with
MIDAS' officers, employees and Auditors, at all
reasonable times.
8.6.11 To the extent possible, after having given consideration to
the requirements of the Business, to use the services of
one geologist/mining engineer seconded to MIDAS by S&B; or, if this is
not possible, to allow one of S&B's geologists/mining engineers, who will
be on S&B's payroll, to observe and participate in the
Exploration and Mining Operations.
8.6.12 Keep MIDAS' assets in good condition.
8.6.13 Ensure that MIDAS complies with all requirements of
Government relating to the Business.
8.6.14 Perform all duties specifically delegated to
him/her by the Board.
8.7 Until the Sum has been paid, the General Manager is to
be appointed by the Board upon NEWCO's proposal, and
may be dismissed by the Board upon written request of
either NEWCO or any Director. Following the payment
of the Sum, the Board on an annual basis will appoint the
General Manager, without any obligation to appoint the one, if any,
proposed by NEWCO.
9. BOARD
9.1 The Board will be responsible for the management and
administration of MIDAS. The Board will indicatively
and not by way of limitation, decide upon the following
matters:
9.1.1 the voluntary relinquishment of all or any part of the
Lease according to the terms and conditions of the Lease;
9.1.2 undertakings vis-a-vis the Government which materially
increase the obligations of MIDAS with respect to the
Business;
9.1.3 approval, revision and amendments of the Annual
Programs and Budgets and the relevant Mine Development Plan;
9.1.4 terms and conditions of external borrowing and terms and
conditions of any Shareholder loans;
9.1.5 the hiring and dismissal of the General Manager, subject to
Clause 8.7, as well as the delegating of material powers and
responsibilities to the General Manager;
9.1.6 mortgages and other encumbrances on real property or
mining rights of MIDAS;
9.1.7 guarantees of MIDAS on behalf of third parties;
9.1.8 release of any debt owing to MIDAS or compromise of
any claim vested in MIDAS;
9.2 As from the Effective Date, the Board of MIDAS shall
consist of eight (8) Directors, four (4) Directors proposed
by NEWCO and four (4) proposed by S&B. The first
Directors shall be the ones identified in Annexure A. In
addition to the Directors, each Shareholder may, upon
prior approval of the Board, bring to all such meetings
such technical and other advisers as it may deem
appropriate. Until the Sum has been paid, the Chairman
of the Board of MIDAS shall be selected from among the
Directors proposed by NEWCO; the Vice-Chairman shall
be selected from among the directors proposed by S&B.
9.3 All costs associated with any technical or other advisors
brought to such meetings and other expenses incurred by
a Shareholder with regards to such meetings shall be
borne individually by each Shareholder and shall not be
regarded as Expenses, unless the Board previously agrees
otherwise.
9.4 The meetings of the Board shall be held at such times as
the Board shall determine, provided that the Board shall
meet at least once a month in order to meet the minimum
number of Board meetings required by law.
All costs and expenses associated with a meeting of the
Board incurred by or on behalf of a Director, mentioned
in Clause 9.2, will be borne individually by the
Shareholder that nominated such Director.
9.5 Except as otherwise specifically provided in the
Agreement, each meeting of the Board shall be convened
and held in accordance with the Articles and applicable
law. No meeting may be called on less than fifteen (15)
days advance written notice unless the Directors
otherwise mutually agree. Such request and notice shall
include an agenda setting forth in sufficient detail all
matters to be discussed and decided. A matter not
included in an agenda for a meeting shall not be
considered without the prior unanimous consent of all
Directors. Any Director failing to attend any meeting
properly called for or failing to vote with respect to any
item properly included on the agenda of any meeting
shall be bound by any decision properly made at such
meeting with respect to any matter properly considered at
such meeting or with respect to any item properly
included on the agenda, as the case may be. Meetings
shall be held in Athens or such other place as the
Directors may decide from time to time.
9.6 Under Greek law as it currently stands, it is not possible
for the Board to adopt decisions through circulating
resolutions. If in the future such possibility is acceptable,
decisions will be taken also by circulating resolutions.
The Shareholders will make every effort to facilitatethe
deliberation and decision-making process through written
and verbal communications prior to the holding of the
Board's meetings.
9.7 All the decisions on the Board shall be made by simple
majority of the Directors present or lawfully represented
at the meeting.
10. SHAREHOLDERS' GENERAL ASSEMBLY
10.1 The Shareholders' General Assembly shall convene at
least once a year and as often as is required, if decisions
need to be made that can only be made by the
Shareholders. Such meetings shall be called by the
Chairman of the Board, or by a Shareholder as provided
in the Articles and the law. Written notice to that
effect must be given to the Shareholders at least twenty
(20) days prior to the date of the meeting.
10.2 Before the Earn-In Date, all decisions of the
Shareholders' General Assembly, which are required by
law to be taken by an increased majority shall require
unanimous consent of the votes represented at the
General Assembly and entitled to vote at that time.
10.3 After the Earn-In Date, the above-described decisions
shall be taken by the increased majority determined by
applicable law.
11. ANNUAL PROGRAMS AND BUDGETS
11.1 Within thirty (30) days following the Effective Date, and
on or before April 1 of each calendar year, the General
Manager shall prepare and submit to the Board for
approval its proposed Annual Program and Budget for the
Operations to be conducted during the Fiscal Year
commencing on the 1st of July of the following year,
together with a five-year rolling business plan for the
Board's consideration.
11.2 Each proposed Annual Program and Budget prepared by
the General Manager shall specify, in reasonable detail,
all Operations which the General Manager recommends
to be carried out during the period covered thereby
together with the General Manager's best estimate of the
costs and expenditures for such Operations. The
proposed Budget shall be broken down in firm budget
items and contingent budget items. Indirect expenditures
shall be specified in separate categories with an
explanation of the allocation principles and the
assumptions made by the General Manager.
11.3 Each Annual Program and Budget shall include
provisions for adequate funding for the corresponding
period. As regard Shareholders' contributions, absent
unanimous consent of the Shareholders, Annual Programs
and Budgets may not provide for more than 10,000,000
US $ per year, nor for less than 1,700,000 US $ per year,
during the Earn-In Period, nor for less than 1,000,000 US
$ per year after the Earn-In Date.
11.4 All Expenses to be incurred by the General Manager
shall, unless the Board directs otherwise, be specified in
the proposed Annual Program and Budget in Drachmas,
notwithstanding that the General Manager may incur
certain or all of the Expenses in some other currency.
11.5 The Board shall, if thought fit, approve with or without
amendments each proposed Annual Program and Budget
submitted by the General Manager. Each proposed
Annual Program and Budget shall be sent to each
Director thirty (30) to forty-five (45) days prior to the
meeting of the Board at which same will be presented for
consideration and approval.
11.6 If the Board does not approve the Annual Program and
Budget, in total or in part, the General Manager shall
prepare and circulate to the Board a revised Annual
Program and Budget. In the event the Annual Program
and Budget and any revision thereof, is not approved by
the 1st of July, then the Annual Program and Budget of
the previous Fiscal Year shall be carried forward, and the
General Manager shall continue to incur and discharge
Expenses consistent with the levels set forth in such
Annual Program and Budget, until the Annual Program and
Budget for that Fiscal Year is finally
approved by the Board upon which time the one of the
previous Fiscal Year shall cease to apply and the new
one will be implemented. For example,
if the Annual Program and Budget for the Fiscal Year
ended June 30, 1999 permits spending at the level of
1,000,000 US $ and then the Board does not timely
approve an Annual Program and Budget for the fiscal
Year beginning on July 1st, 1999, the General Manager may
continue to incur Expenses during such latter Fiscal Year,
at the level of 1,000,000 US $.
11.7 If in the course of a Fiscal Year, any modification of or
amendment to the approved Annual Program and Budget
becomes necessary or desirable, the General Manager or a
Director may submit new or revised proposals to the
Board for a decision by the Board to amend or modify. If
no decision to amend or modify can be reached, then the
approved Annual Program and Budget to which
amendments or modifications were proposed will
continue in effect without the proposed amendments or
modifications.
11.8 All Annual Programs and Budgets proposed by the
General Manager and approved by the Board shall
contain adequate provision for the discharge of all
obligations and commitments vis-a-vis the Government,
if any, in respect of the Lease.
11.9 Subject to the delegation of powers by the Board, the
General Manager is authorized to carry out all Operations
contained in an approved Annual Program and Budget
and to make expenditures and incur liabilities up to the
amounts of the respective items of the approved Budget
(but not in excess of such amounts, unless specifically
authorized).
11.10 In the event of any emergency, the General Manager may
take such action, and make such expenditures as may be
necessary, in the General Manager's reasonable
judgment, for the protection of life and property, whether
or not such expenditures are included in an approved
Annual Program and Budget, and the General Manager
shall promptly notify the Shareholders of the particulars
of such emergency and of the steps taken to overcome
same.
11.11 Dilution.
11.11.1 Following the Earn-In Date, at any time until the
Annual Program and Budget and/or the Mine
Development Plan Budget (the "Budget") is approved,
any Shareholder (herein called "Diluting Shareholder")
may elect not to contribute the whole or part of its
budgeted proportionate contribution to the Budget. Such
election shall be made by the Diluting Shareholder by
written notice to the other Shareholder prior to the
approval of the Budget (the "Notice of Dilution"). Such
notice must specify the amount of the contribution which
the Diluting Shareholder is committed to make.
11.11.2 The Board will examine the Budget, taking into
consideration the Notice of Dilution. Should the
approved Budget provide for the Diluting Shareholder's
contribution to be more than the amount the Diluting
Shareholder is committed to pay, then the following
dilution mechanism will apply:
DPI = (A+B):C
Whereas:
DPI means = Dilution Participating Interest
A means = the total amount of Participating Interest
already financed by the Diluting Shareholder up to the date of Notice of
Dilution
B means = the amount the Diluting Shareholder is
committed to contribute to the relevant Budget
C means = the total amount of all Participating
Interests already financed by all Shareholders plus the total amount to be
contributed to the relevant Budget by all Shareholders.
For the purposes of this Clause 11.11.2, S&B will be
deemed to have also contributed an amount equal to the
Sum. By way of example, if the first Program and Budget after
the Earn-In Date calls for expenditure of 10,000,000 US
$, or 5,000,000 US $ for S&B and 5,000,000 US $ for
NEWCO and S&B agreed to be committed to only 2,000,000 US $,
the dilution mechanism will operate as
follows:
A for S&B = 5,000,000 US $ (This is the deemed value
of S&B's contribution to the joint venture. This is the
amount that was matched by NEWCO to earn 50% of
the share capital of MIDAS.)
B = 2,000,000 US $ (Amount S&B is willing to be
committed to contribute.)
C = 20,000,000 US $ (NEWCO and S&B's previous
contributions plus the total amount of the new Program
and Budget.)
DPI = (A+B) : C
DPI = (5+2) : 20 = 7 : 20 = 35%
11.11.3 Thereafter, the Shareholders shall adjust the respective
Participating Interests to reflect the result of the various
Participating Interests after dilution. In the event hat a
Participating Interest consists of both Shares and
Shareholders loans, the respective portion of Sharesand
Shareholders loans shall be adjusted on a pro rata basis
such that at all times the Shareholders hold bothShares
and Shareholders loan in proportion to their respective
Participating Interest as the same may be adjusted
pursuant to this Clause 11.11.
11.11.4 This Clause 11.11 does not prevent any Director from
voting against the Budget.
12. DEFAULT
12.1 The following events are Events of Default under this
Agreement:
(a) the Transfer or encumbrance of all or any Shares
or
Participating Interest by a Shareholder except in
accordance with the Agreement;
(b) a breach of a material provision of the
Agreement;
(c) a petition in bankruptcy or a winding-up petition (except
for the purposes of reconstruction) in respect of a
Shareholder, ROYAL or RAKOV, filed by or
against it, and such petition is not withdrawn or
dismissed within thirty (30) days after its filing; or
(d) a Shareholder, ROYAL or RAKOV shall make an
assignment for the benefit of its creditors; or
(e) a receiver or compulsory administrator is appointed for a
Shareholder or ROYAL or RAKOV or its assets,
and such appointment is not discharged within
thirty (30) days; or
(f) a Shareholder or ROYAL or RAKOV ceases to carry on
its business; or
(g) a Shareholder fails to make contributions to funding of
MIDAS as provided in Clause 7.
12.2. If a Shareholder is responsible for an Event of Default, as
such are listed above, the other Shareholder may:
(a) put such Shareholder in default by giving it notice in
writing, setting out the default ("Default Notice")
to this Shareholder; and
(b) if default is not cured within thirty (30) days from such
Default Notice, the non-Defaulting Shareholder
may select a team of independent experts (the
"Team"), consisting of one mining engineer and
one accounting firm. Such Team shall be subject
to the approval of the Shareholder in default (the
"Defaulting Shareholder") with regards to the
expertise of its member in the subjects at issue as
well as their complete independence from all
Shareholders. This approval, however, shall not
be unreasonably withheld. In the event the
Shareholders cannot agree on the Team within
thirty days, the Chairman of the Technical
Chamber of Greece (TEE) shall be requested to appoint the
mining engineer and to appoint one of the top six
accounting firms in Greece, provided such firm is
totally independent from each Shareholder. Once
the selection process is completed, the non-
Defaulting Shareholder shall give a copy of the
Default Notice to the Team, which within
sixty (60) days shall at the cost of the Defaulting
Shareholder present its estimate of the value of
the Participating Interest held by the Defaulting
Shareholder at the time of default.
12.3 In making a valuation of the Participating Interest held by
the Defaulting Shareholder, the Team will:
(a) assume that a reasonable time is available in which to
obtain a sale of the Participating Interest in the
open market; and
(b) have regard to the following factors (in addition to any
other factors which the Team believes should be
properly taken into account), based on the best
information available at the time:
(i) prospects of the Business;
(ii) the value, at a specified capitalization rate appropriate to
the Business, of the estimated future maintainable
earnings of MIDAS;
(iii) the yield which an open-market investor would
reasonably require in an acquisition of the
Participating Interest;
(iv) the net tangible assets of MIDAS as disclosed in the
audited accounts for the last preceding Fiscal Year
or, if no audited accounts of MIDAS are available,
as disclosed in the latest management accounts of
MIDAS;
(v) the comments and recommendations made by each
Shareholder;
(vi) the Participating Interest to be offered for sale is to be
considered neither as a controlling nor a non-
controlling interest; the concept of control is to be
disregarded, as is the concept of a minority
interest;
(vii) the valuation of the Participating Interest is to be
determined having regard to MIDAS as an
undivided whole. The value ascribed to the
relevant parcel of Participating Interest is to be the
proportion of the value of MIDAS as an undivided
whole which the number of Shares in such parcel
bears to the whole of the Participating Interest of
MIDAS;
(viii) values established in comparable transactions involving
similar assets.
(c) Act as an expert and not as an arbitrator;
(d) Establish a single value and not a range of values;
(e) Carry out such valuation with due care and professional
responsibility.
12.4 On serving a Default Notice on the Defaulting
Shareholder, the non-Defaulting Shareholder, in addition
to, and without prejudice to the non-Defaulting
Shareholder's other rights at law or in equity, shall enjoy
an option to acquire the Defaulting Shareholder's
Participating Interest using the following procedure:
(a) the Team will make, under Clause 12.3, a valuation of the
Defaulting Shareholder's Participating Interest
using the guidelines set out in Clause 12.3(b); and
(b) the Team will serve a copy of the valuation on each of the
Defaulting Shareholder and the non-Defaulting
Shareholder; the non-Defaulting Shareholder will have an option to
acquire the Defaulting Shareholder's Participating
Interest:
(i) ithin 30 days after receipt of the Team's valuation;
(ii) at a purchase price per Share equal to 90% of the Team's
valuation of the Defaulting Shareholder's
Participating Interest;
(iii) by serving written notice of exercise of the option on the
Defaulting Shareholder with a cheque for the
purchase price less the following amounts
(without duplication);
(A) any payments incurred by the non-Defaulting Shareholder
for the Defaulting Shareholder, including any
accrued and unpaid interest thereon;
(B) the costs of the expert Team making the valuations
referred to in Clause 12.4(a);
(C) all moneys due by the Defaulting Shareholder to MIDAS,
which shall be paid by the non-Defaulting
Shareholder to MIDAS.
(d) In the event the non-Defaulting Shareholder elects not to
exercise this option or in the event the thirty (30)
days' time period lapses and the option has not
been exercised, then any non-Defaulting
Shareholder may apply for the winding up of
MIDAS;
(e) if the non-Defaulting Shareholder exercises the option
under paragraph (c) , then the Defaulting
Shareholder must immediately deliver to the non-
Defaulting Shareholder the share certificates for
the Defaulting Shareholder's Shares, together with
executed Share transfers in favor of the non-
Defaulting Shareholder, together with such
documents as may be necessary to assign any
loans made by the Defaulting Shareholder to
MIDAS pursuant to Clause 7 and signed
resignations of any Directors proposed by the
Defaulting Shareholder, and all such
documents and necessary acts to be completed
upon payment to the Defaulting Shareholder.
Each Shareholder hereby irrevocably constitutes
the other its lawful attorney for the purpose of
completing any sale transaction pursuant to this
Clause and obtaining the necessary approvals by
the Minister of Development.
12.5 The provisions of this Clause 12 regarding default are
subject to the provisions of Clause 22 regarding Disputes
and Arbitration.
12.6 When an Event of Default occurs pursuant to this
Clause:
(a) the Board may apply any dividends or interest payments
which accrue or are payable to the Defaulting
Shareholder towards any moneys which the
Defaulting Shareholder is liable to pay or provide
to MIDAS, and which have not been so paid or
provided;
(b) the Board may treat any amount due and payable to
MIDAS by a Defaulting Shareholder as a debt,
and that amount shall be deemed prima facie to be
a true and lawful debt owed to MIDAS, and the
Board may charge the Defaulting Shareholder
interest on the amount of the debt, at the rate
determined by them to be the overdraft rate of
interest at the time of the Event of Default, which
would be applicable to MIDAS, plus 2% per
annum;
(c) neither the Defaulting Shareholder nor any of its
nominees holding shares in MIDAS shall be
entitled to vote in respect of its Shares at any
General Assembly of MIDAS during the period
from the date of the Event of Default to the date
that it is fully rectified, and the other Shareholder
hereto shall take all such necessary steps to ensure
that the Defaulting Shareholder and its nominees
are not entitled to vote; and
(d) neither the Defaulting Shareholder nor its nominees shall
be entitled to propose in the General Assembly of
the Shareholders any Directors during the period
between the date of any relevant Event of Default
and the date that it is fully rectified, and the other
Shareholder shall take all necessary steps to
ensure that any Director or Directors proposed by
the Defaulting Shareholder (or its nominees)
resign.
12.7 In case that in the future there will exist more than one (1)
Defaulting or non-Defaulting Shareholder, the non-
Defaulting Shareholders will have an option, within the
30 days' period provided for in Clause 12.4(c)(i), to
acquire the Defaulting Shareholder's Participating
Interest in proportion to their then-existing Participating
Interests unless a non-Defaulting Shareholder exercises
its option for a proportion less than the proportion
corresponding to its Participating Interest. On the other
hand, the non-Defaulting Shareholders exercising their
option may also indicate in their notice any additional
proportion of the Defaulting Shareholder's Participating
Interest they wish to acquire, should any non-Defaulting
Shareholder determine not to exercise (wholly or
partially) its option of acquisition.
12.8 If, after the expiry of the 30 days' period, one or
more
non-Defaulting Shareholders have not exercised
(wholly
or partially) their option, the available parcel of the
Defaulting Shareholder's Participating Interest will
be
transferred to the non-Defaulting Shareholders who
have
exercised this option with respect to their
notification for
an additional parcel of the Defaulting Shareholder's
Participating Interest.
12.9 If the options exercised by the non-Defaulting
Shareholders do not wholly cover the Participating
Interest of the Defaulting Shareholder, Clause
12.4(d)
applies.
12.10 Notwithstanding any contrary provision of this
Clause 12, in
case either ROYAL or RAKOV (but not NEWCO)
is in
default ("Defaulting Party"), it is
obliged to transfer its shares in NEWCO to ROYAL
or RAKOV
respectively at 90% of their value determined by the
Team with the same procedure provided for
hereinabove,
provided that ROYAL or RAKOV exercises its
option of acquisition of the Shares within 30 days
after
receipt of the Team's valuation. If the
non-Defaulting
Party (ROYAL or RAKOV) does not exercise its
option,
S&B may acquire the Shares of the Defaulting Party
at
the same value.
13. TRANSFER OF INTEREST
13.1 Any Shareholder may transfer, after the Earn-In
Date, all
or part of its Participating Interest (the "Parcel")
subject
to the provisions of the Agreement.
13.2 In case a Shareholder wishes to transfer a Parcel
(the
"Transferring Shareholder"), the other Shareholder
has a
preemptive right in the acquisition of this Parcel
according to the procedure provided for in the
following
Clauses.
13.3 The Transferring Shareholder shall give notice to
the
other Shareholder, including the price and terms and
conditions of the transfer ("Notice of Transfer"). If
the
Transferring Shareholder has received an offer from
a
third party, the Notice of Transfer will include the
offered
price, terms and conditions.
13.4 The non-Transferring Shareholder, so notified,
must
respond to the Transferring Shareholder within thirty
days from the Notice of Transfer whether it is
interested
in acquiring the Parcel under the same terms and
conditions included in the Notice.
13.5 In case the non-Transferring Shareholder exercises
its
option of acquisition, the transfer shall be effected
within
60 days from the Notice of Transfer, provided that
the
Transferring Shareholder has obtained the necessary
approvals form the Ministry of Development for the
transfer of the respective Shares.
13.6 In the event the non-Transferring Shareholder does
not
express within the stipulated time period its interest
to
purchase the Parcel and a third party had made an
offer,
the Transferring Shareholder shall be free to transfer
it to
the third party at the stated price and under the stated
terms and conditions within a period of ninety days
following either the rejection by the
non-Transferring
Shareholder or the expiration of the time period
determined in Clause 13.4, provided that the
Transferring
Shareholder has obtained all necessary approvals.
13.7 The transfer of the Parcel to such third party will
only be
effective if and when the transferee enters into a
deed
with the non-Transferring Shareholder agreeing to
be
bound by the terms and conditions of the Agreement
(and
agreeing to assume with respect to the Parcel
purchased,
the obligations pertinent under the Agreement and
the
Articles).
13.8 For the purpose of making certain that any third
party to
whom a Parcel is transferred hereunder is financially
capable of assuming the financial burden
accompanying
such Parcel, no transfer may be made by either
Shareholder without first obtaining the consent of
the
Board with respect thereto, which consent shall not
be
unreasonably withheld.
13.9 The restrictions (right of first refusal) stipulated in
this
Clause or anywhere else in the Agreement with
regards to
the transfer of the Parcel shall not apply in the event
such
transfer is to an Affiliate of the Transferring
Shareholder.
13.10 In case that in the future there will exist more
than two
Shareholders, the non-Transferring Shareholders
will
have an option to acquire the Parcel in proportion to
their
then existing Participating Interests, and the
provisions of
Clauses 12.7 and 12.8 shall apply mutatis mutandis.
13.11 If the options exercised by the
non-Transferring
Shareholders do not wholly cover the Parcel, Clause
13.6
applies.
14. CONFIDENTIALITY
14.1 The Parties shall agree upon appropriate
procedures for
the protection of technical and other information that
is
designated as "proprietary" or "confidential."
14.2 No Shareholder or Party, without the prior written
consent of the other Parties, shall disclose to any
unrelated third person, unless required by law or
regulation including, but not limited to stock
exchange
regulations in Greece, Europe, Australia, USA or
elsewhere, any Confidential Information.
14.3 Where information is required to be released in
respect to
stock exchange requirements or securities laws or
regulations, the Parties shall be required to approve
the
draft of any planned release prior to such release,
prepared by any Party, such approval not to be
unreasonably or unduly withheld, and each Party
shall act
promptly in approving such release. In the event
that the
addressee with respect to the proposed release
receives no
comment within five business days from receipt of
notice,
the release shall be deemed approved by the Party
not
making comments.
14.4 No Party shall make advertisements, release
publicity
material, publications, news statements or similar
written
matters which relate to the Operations until the same
shall
be submitted to and approved by the other Party or
Parties, such approval not to be unreasonably
withheld.
14.5 The Parties agree that Confidential Information
shall be
kept confidential throughout the duration of the
Agreement and that further additional documents
necessary to implement that intention will be
executed by
the Parties, including a confidentiality agreement
with
similar content with third parties, including but not
limited to prospective purchasers and consultants.
However, such confidentiality agreement will not
release
the Party from any liability in case of disclosure of
such
confidential information by the third party infringing
such
confidentiality agreement.
15. DEADLOCK
15.1 If, at a meeting of the Board, a deadlock situation
(an
equality of votes or lack of majority required for a
decision on an issue of major importance) has come
to
exist which, despite any amicable efforts of the
Shareholders, remains unsolved during a period of
one
(1) month as from the date of the relevant meeting,
either
Shareholder may give notice in writing to the other
Shareholder requesting the appointment of experts
for the
purpose of this Clause.
15.2 The Shareholders will appoint one expert each,
within ten
(10) days following the notice for the appointment of
experts of the preceding Clause. No later than ten
(10)
days from the date of the appointment of the last
expert,
both experts will meet to identify the issues and
appoint a
third expert who shall preside over the panel of
experts
(the "Panel"). Such appointment must have been
concluded no later than 15 days following the initial
meeting of the two experts.
15.3 The Shareholders will prepare and submit to the
Panel all
necessary documents providing the information and
the
arguments/positions of the Shareholders in order for
the
Panel to reach a decision. The Panel will also
examine
the witnesses of the Shareholders. Each Shareholder
is
entitled to propose two (2) witnesses to be examined
by
the Panel.
15.4 The documents will be submitted in their original
language and translation will be required, if such
original
language is other than English. The language of the
procedure will be English and the place will be
Athens,
Greece.
15.5 The Panel must reach a recommendation within
three (3)
months following the appointment of the third expert
as
to how the deadlock ought to be resolved. The
recommendation will be taken by majority. The
Panel
will determine by majority vote all necessary details
pertaining to the procedure established by this
Clause.
However, any extension of the deadlines established
hereby will be effected only by unanimous decision
of the
Panel.
15.6 Each Shareholder will bear its expenses, whereas
the
expenses of the third expert and of the procedure
will be
split equally (50-50) between the Shareholders.
15.7 The decision of the Panel is not binding on the
Shareholders. In the event the Shareholders have
not
reached an agreement to comply with the decision of
the
Panel or have not reached a settlement within fifteen
days
following such decision, the following shall occur:
Each Shareholder must offer to the other
Shareholder a
certain price per Share in a meeting of all
Shareholders, to take place sixty (60) to ninety
(90) days following expiration of the preceding
fifteen (15) days' time period.
The Shareholder to which the offer of the higher
price is
made may, within fifteen (15) days of service of
such offer either accept that offer or serve a
notice
on the other Shareholder (the "First Bidder"),
unconditionally offering to purchase all of the
Participating Interest held by the First Bidder.
The price per Share offered to be paid by the
other
Shareholder must be at least 5% higher than the
offer price per Share specified in the First
Bidder's offer.
Further counteroffers are made by either Shareholder
subject to the same fifteen (15) days' time limits
and with each new offer price per Share
exceeding
the previous offer price per Share by at least 5%.
If a new offer price per Share in a counteroffer
does not exceed the previous offer price per Share
by at least 5%, that counteroffer is deemed not to
have been made for the purposes of this Clause.
When fifteen (15) days has elapsed without the then-
current bid being accepted or countered by a
further bid, there will, subject to any Government
or other consents and approvals which are
required to be obtained at that time, be a binding
contract between the then current highest bidder
("Buyer") and the other Shareholder ("Seller"),
and the Seller is deemed to have accepted the
offer to purchase its Participating Interest made
by
the Buyer.
The completion of the transfer of the Seller's
Participating Interest to the Buyer will take place
on or before the fifteen (15) days after the Seller
has accepted or is deemed to have accepted the
offer made by the Buyer and provided that all
necessary consents and approvals have been
obtained. At the time of completion of the
transfer, the Seller will hand to the Buyer the
certificates for the Seller's Shares along with an
assignment of the Shareholder's loans included in
its Participating Interest, and the Buyer will
simultaneously hand to the Seller a bank cheque
for the total purchase price.
In the event a Shareholder has failed to present an
offer at
the specified time and place, the bid process will
start on the price offered by the Shareholder that
has presented an offer.
16. FORCE MAJEURE
16.1 For the purpose of the Agreement, "force majeure"
means
act of God, strike, lockout or other industrial
disturbance,
unavoidable accident, act of the public enemy, war,
blockade, public riot, earthquake, lightning, fire,
storm,
flood, explosion, governmental restraint, acts of
governmental agencies, definite inability to obtain or
comply with necessary permits and Greek State
consents
including transfer of Shares from RGC to S&B, or
from
S&B to NEWCO or vice versa, or the acquisition of
new
Shares by S&B or NEWCO, any other cause
whatsoever,
whether of a kind specifically enumerated above or
otherwise, which is beyond the reasonable control of
the
Shareholders, and renders the performance of the
Agreement impossible even through any alternative
legal
means that the Shareholders will have to seek in
good
faith, provided that lack of funds for any reason shall
not
be construed as a cause beyond the reasonable
control of
the Shareholder affected, unless the lack of funds is
a
direct result of any restriction, control, penalty or
other
measure imposed by any Government or agency
thereof.
16.2 If a Shareholder is rendered unable wholly or in
part by
force majeure, as defined in Clause 16.1, to carry out
its
obligations under the Agreement, other than in
respect to
the payment of called sums or other moneys payable
by
that Shareholder under the Agreement, that
Shareholder
shall give to the other Shareholder or Shareholders,
and to
the General Manager, prompt written notice of the
force
majeure occurrence, with reasonably full particulars
concerning it, and the Shareholder giving the notice
shall
be excused from performing its obligations during,
but
not longer than, the continuance of the force
majeure, and
that Shareholder shall not, for reason of that inability
or
delay, be or be deemed to be a Defaulting
Shareholder.
16.3 The Shareholder giving notice of force majeure
shall use
its reasonable endeavors and all reasonable diligence
to
remove the cause of the force majeure and shall
begin or
resume performance of its suspended obligations as
soon
as possible after that cause has been removed. To
that
end, the other Shareholder or Shareholders shall
offer to
the Shareholder giving notice of force majeure all
reasonable assistance.
17. APPROVALS NOT OBTAINED
17.1 If the Minister of Development refuses to grant
consent to
the application of S&B for the acquisition by
NEWCO of
the new Shares issued after the capitalization of the
Sum
funded by NEWCO, the Parties will negotiate in
good
faith to determine a manner in which NEWCO can
participate in the Exploration, Development and
Mining
Operations of the Product with rights which are as
near as
possible and equivalent to the rights provided for in
the
Agreement.
18. GUARANTEE
18.1 ROYAL and RAKOV irrevocably and
unconditionally
guarantee to S&B or its successors or permitted
assigns,
as prime obligors, jointly and severally with
NEWCO,
the good performance of all the obligations of
NEWCO
under the Agreement, in each case waiving their
rights of
exception and division (the "Guarantee").
18.2 Within the frame of Guarantee, the above Parties
agree to
indemnify S&B against all losses or damages that
the
latter may suffer as a result of either a breach by or
failure
of performance by NEWCO of any of the aforesaid
obligations under the Agreement.
18.3 The Guarantee remains in full force and effect
until such
time as NEWCO is fully discharged of all its
obligations
under the Agreement.
19. TRANSFER OF SHARES IN NEWCO
19.1 If ROYAL or RAKOV wish to transfer their
shares in
NEWCO, S&B has a preemptive right to acquire the
number of shares either of ROYAL or RAKOV is
willing
to transfer, and Clause 13 applies mutatis mutandis.
19.2 The preemptive right does not apply for the
transfer of
shares of NEWCO by either of ROYAL or RAKOV
to an
Affiliate, or from ROYAL to RAKOV, or vice
versa.
19.3 Neither ROYAL nor RAKOV shall have the right
to float
their shares in NEWCO in an International Stock
Exchange without the prior written consent of S&B.
Such written consent shall not be necessary in case
S&B
has first noticed that it has determined not to take
MIDAS
public. In any case, during the Exploration and
Development, ROYAL and/or RAKOV may float
such
shares of NEWCO so that they don't lose capital and
management control of NEWCO.
20. ESTABLISHMENT OF NEWCO
20.1 Until establishment of NEWCO by ROYAL and
RAKOV, all rights of NEWCO under the Agreement
will
be exercised by ROYAL and all liabilities affecting
NEWCO will be fully undertaken by ROYAL. In
such
case, every reference in the Agreement to NEWCO
is
deemed to be a reference to ROYAL.
21. NOTICES
21.1 Any notice or other communications pursuant to
the
Agreement shall be in writing, delivered in person or
sent
by registered mail, return receipt requested,
addressed as
follows:
If to S&B:
To the Chairman, Vice-Chairman, Managing
Director and Executive Director
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇ ▇▇▇▇▇▇
Tel.: ▇▇▇▇-▇-▇▇▇▇-▇▇▇
Fax: ▇▇▇▇-▇-▇▇▇▇-▇▇▇
If to NEWCO:
If to ROYAL:
To the Chairman, Royal Gold, Inc.
Suite 1000, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to RAKOV:
The effective date of such notices shall be the date of
receipt by the addressee as evidenced by the post
office or
the courier service.
21.2 Any Party may change its address for the purposes
of the
Agreement by giving at least fourteen (14) days'
notice in
writing to the other Parties hereto.
22. DISPUTES ARBITRATION
22.1 Any dispute, controversy, claim arising out of or
relating
to the Agreement or the subject matter of the
Agreement,
or the execution, validity, interpretation,
implementation,
breach or termination hereof, or the rights and
liabilities
of the Parties hereunder shall be settled by
arbitration in
accordance with the Rules of Conciliation and
Arbitration
of the International Chamber of Commerce. The
Arbitration court shall comprise 3 arbitrators, each
Party
appointing one arbitrator, and the third arbitrator,
being
the Chairman, shall be appointed by the Court of
Arbitration in accordance with the said Rules. The
arbitrators shall apply the substantive laws of the
Greek
State. The award of the arbitration shall be in the
English
language and shall be final, irrevocable and binding
on all
the Parties which were invited to participate in the
arbitration proceedings, without recourse to any
regular
or extraordinary means of appeal and shall be
enforceable
in any court of law having jurisdiction over the
Parties.
The cost of such arbitration shall be assessed to such
Party or Parties as may be determined by the
arbitrators.
23. GOVERNING LAW
23.1 The Agreement shall be governed by and
construed in
accordance with the laws of the Greek State.
24. MISCELLANEOUS
24.1 The Agreement sets forth the full and complete
understanding of the Parties with respect to the
subject
matter hereof as of the date first above stated, and it
supersedes all previous agreements, representations,
minutes and memoranda made or dated prior hereto
and
relating to the subject matter hereof.
24.2 Any modification or amendment of the Agreement
or any
agreement of the Parties required by the Agreement
shall
not be of any force or effect unless it is in writing
and
signed by each of the Parties.
24.3 Any invalidity of a term, section, Clause or
provision of
the Agreement judged to be invalid for any reason
whatsoever by the arbitrator or a court of competent
jurisdiction, shall not affect the validity or operation
of
any other term, section, Clause or provision of the
Agreement.
24.4 The Agreement shall be binding upon and inure
for the
benefit of the Parties hereto and their respective
permitted
assigns and successors in title, but all in accordance
with
the provisions hereof.
24.5 Each party will bear its own legal expenses, other
than
the payment of stamp duty, incurred in the
preparation
and settling of the Agreement. Any stamp duty
payable
on the Agreement shall be a MIDAS expense
payable by
the Parties in proportion to their respective
Participating
Interests.
24.6 Each Party will do, execute, acknowledge and
deliver all
and every such further acts, deeds, agreements,
assignments and assurances as shall be reasonably
necessary and required for the purposes of giving
full
effect to the Agreement.
24.7 Headings and paragraph titles are for the sole
purpose to
facilitate the review of the text and have no further
legal
significance.
24.8 If there is any conflict between the provisions of
the
Agreement and the Articles, the provisions of the
Agreement shall prevail and on written request by
either
Shareholder to the Chairman of the Board, the
Articles
shall be amended, to the extent possible, to remove
any
such conflict.
24.9 Unless another provision of the Agreement
specifies to
the contrary, a Party must not unreasonably withhold
or
delay any approval or consent that may be required
from
that Party under the Agreement.
24.10 No Shareholder shall be entitled to mortgage,
pledge,
charge, encumber or create or suffer to exist, a lien,
charge, or encumbrance over in respect of all or part
of its
Participating Interest without the prior written
consent of
the other Shareholder, which consent may not be
unreasonably withheld, in order to facilitate project
finance.
24.11 All contracts for goods or services with respect
to the
Business shall be negotiated on an arm's length and
competitive basis, even if the services or goods
required
can be provided by one of the Shareholders or their
respective Affiliates. In the event of equal terms, the
Affiliates will be chosen.
25. PRODUCTS OTHER THAN PRODUCTS
25.1 If, in the conduct of Business, MIDAS produces
silver in
connection with the gold production, this product
will be
included in the meaning of Product. In such case,
MIDAS will undertake any and all relevant
obligations of
S&B vis a vis the Greek State.
25.2 If, in the conduct of Business, MIDAS produces
industrial minerals and baryte, S&B has the right to
obtain such products from MIDAS and MIDAS is
obliged to deliver them to S&B, as only S&B is
entitled
to those products.
25.3 S&B shall pay to MIDAS the proportional share of
the
Expenses incurred, which the market value of the
products, described in Clause 25.2, bears to the total
market value of the Product.
25.4 The prospective precious metals exploration
projects
throughout the world held by or known to RAKOV
are
not within the scope of the Agreement, but the
Parties
will use their best endeavors to conclude separate
agreements in relation thereto.
26. TERM OF AGREEMENT
26.1 The Agreement shall come into effect on the
Effective
Date except for Clauses 2, 3, 4, 14, 18, 19, 20, 21, 22
and
23, which produce effect from the date of execution
of the
Agreement, and shall remain in full force and effect
until:
terminated by written agreement between all
Shareholders; or
any Shareholder holds all of the Participating
Interests; or
MIDAS is liquidated or wound up.
26.2 Termination of the Agreement does not extinguish
or
otherwise affect any rights of any Shareholder
against the
other which:
accrued before the time at which termination or
release
occurred; or
by necessary implication shall survive the
termination of
the Agreement.
26.3 Clauses which are expressed to survive
termination will
do so.
27. WITHDRAWAL
27.1 NEWCO may not withdraw from the Agreement
unless it
has paid in to MIDAS, or has paid or advanced on
behalf
of MIDAS, the Minimum Sum (or unless NEWCO
is
acting under Clause 3.3).
27.2 In case NEWCO withdraws from the Agreement
before
the Earn-In Date, it shall do all things necessary to
fully
and effectively transfer the Shares issued at its name
to
S&B for a purchase price of 1,000 Drs for all of
them.
NEWCO hereby irrevocably constitutes S&B its
lawful
attorney for the purpose of completing any
transaction
pursuant to this clause and obtaining the necessary
approvals by the Minister of Development.
Notwithstanding the above right of S&B, NEWCO
shall
not be released from any of its obligations under the
Agreement until it has completed all things
necessary for
the transfer of its Shares. NEWCO shall not be
reimbursed for Expenses incurred before the Earn-In
Date.
27.3 After the Earn-In Date, either Shareholder may
withdraw
from the Agreement at any time provided that this
Shareholder gives Notice of Transfer of its
Participating
Interest and the other Shareholder exercises its
preemptive right as per Clause 13.
28. ROYALTY INTEREST OF S&B
28.1 Upon completion and approval of a positive Mine
Development Plan for a commercial gold project on
Milos, S&B will have the option either to participate
in
such Development in accordance with its then
existing
Participating Interest or to transfer such Participating
Interest.
28.2 The transfer of S&B's Participating Interest will be
effected either in accordance with Clause 13 or in
exchange for reservation of a royalty interest paid by
MIDAS. In case S&B elects the royalty interest, its
Participating Interest will be transferred to NEWCO.
28.3 The royalty interest will amount, at S&B's option,
either
to 5% of the net smelter returns or to 20% of
MIDAS' net
profits, provided, however, that this royalty will be
paid
to S&B after all Shareholders shall have recovered
their
respective capital investment in MIDAS out of
cumulative distributions of operating cash flow from
MIDAS actually received by them. Until the
recovery of
the Shareholders' capital investment, the royalty
interest
paid to S&B will amount either to 1% of the net
smelter
returns or to 4% of MIDAS' net profits.
28.4 If S&B elects the royalty interest, and if it should
thereafter determine to transfer all or any portion of
such
royalty interest, then the provisions of Clause 13 will
apply, mutatis mutandis.
IN WITNESS WHEREOF the Parties hereto have
executed these
presents in five (5) original copies, the day and year
first
hereinabove written. Each party has taken one copy,
whereas the
fifth one will be deposited with the pertinent Tax
Office, as
provided by law.
ROYAL GOLD, INC.
By: ________________________________
RAKOV PTY LTD
By: ________________________________
SILVER & BARYTE ORES MINING CO. S.A.
By: ________________________________
MIDAS S.A.
By: ________________________________