Exhibit 10.39
Share Subscription Agreement
U.S. Gold Corporation, Xxxxxxx X. Xxxx and
Xxxxx X. Xxxx RMB International (Dublin)
Limited and Gold Resource Corporation
Table of contents
Clause
1 Definitions and interpretation
1.1 Definitions
1.2 Interpretation
1.3 Business Day
1.4 Inconsistency with organizational documents
2 Conditions precedent to subscription for and issue of
shares to Minority Shareholder
2.1 Conditions precedent
2.2 Reasonable endeavours
2.3 Notice
2.4 Waiver
2.5 Termination of Agreement arising from non-
satisfaction of conditions precedent
3 Subscription for and issue of Shares
3.1 Conditions Precedent
3.2 Subscription for Shares
3.3 Consideration
3.4 Company to issue and allot Shares
3.5 Company to register share issue
3.6 Share ranking
3.7 Issue of additional Shares
4 Transaction Account
4.1 Transaction Account
4.2 Application of money in Transaction Account
4.3 Project related covenants
4.4 Monthly reports
5 Additional equity raising
5.1 Additional equity
5.2 Failure to raise additional equity
5.3 Bring Along Option
5.4 Audit of additional equity spent
5.5 Minority Shareholder's costs and expenses
6 Listing of the Company
6.1 Listing of the Company
6.2 Ranking of Shares issued on Listing
6.3 Other Shares or securities not to issue
6.4 Trading following Listing
6.5 Submissions to Exchange
6.6 Restriction agreement
7 Covenants, representations and warranties regarding
Share capital structure
8 Representations and warranties regarding Company
and the Business
9 Breach or non-fulfilment of warranties and
representations
10 Management Fees
11 Dividend policy
12 Disposal of Shares
12.1 No Disposal of Shares
12.2 Notice of Sale
12.3 Exercise of Shareholder's option to purchase Sale
Shares
12.4 Allocation of Sale Shares
12.5 Sale Shares not purchased by Shareholders
12.6 Purchasing Shareholders
12.7 Disposal of Shares to Subsidiary
12.8 Encumbrance over Shares
12.9 Refusal to register
12.10 Tag Along Option
12.11 Exclusions
13 Power of attorney
13.1 Purpose of power of attorney
13.2 Power of attorney
14 Share certificates
15 Termination
15.1 Termination
15.2 Without prejudice
16 General
16.1 Notices
16.2 Governing law and jurisdiction
16.3 Prohibition and enforceability
16.4 Waivers
16.5 Variation
16.6 Cumulative rights
16.7 Assignment
16.8 Further assurances
16.9 Entire agreement
16.10 Counterparts
16.11 Stamp duty
16.12 Costs and expenses
16.13 Relationship of parties
Annexure 1 - Share Subscription Application
Annexure 2 - Unaudited consolidated financial statements
for Company
Annexure 3 - Budget and Work Plan
Annexure 4 - Register of Shares
Annexure 5 - Listing of Shares held by Majority
Shareholders
This share subscription agreement is made on
2002 between the following parties:
1. U.S. Gold Corporation
of 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx,
Xxxxxx Xxxxxx of America 80215-1545 (US Gold)
Xxxxxxx X Xxxx
of 00 Xxxxxxx Xxxxxx, #0-000, Xxxxxx, Xxxxxxxx, Xxxxxx
Xxxxxx of America 80218
Xxxxx X Xxxx
of 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, Xxxxxx Xxxxxx
of America 80212-1115
(collectively Majority Shareholders)
2. RMB International (Dublin) Limited
of West Block Building, AIB International Financial Services
Centre, Xxxxxx 0, Xxxxxxx (Minority Shareholder)
3. Gold Resource Corporation
of 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx,
Xxxxxx Xxxxxx of America 80215-1545(Company)
Recitals
A. The Majority Shareholders presently hold, in aggregate,
a controlling interest of the issued share capital of the
Company, that being 2,493,000 shares of the total currently
issued and outstanding of 3,756,000, as reflected in
Annexures 4 and 5.
B. It is intended that a placement of shares at a placement
price of US$0.37 per share be made to the Minority
Shareholder in consideration for a payment by the Minority
Shareholder to the Company.
C. The Company has agreed to issue the shares referred
to in recital B.
D. The parties now wish to record and confirm the terms
and conditions of the arrangements referred to in Recitals
A to C.
The parties agree
in consideration of, among other things, the mutual
promises contained in this Agreement:
1 Definitions and interpretation
1.1 Definitions
In this Agreement:
Balance Sheet means the unaudited consolidated balance
sheet of the Company as at March 31, 2002, which is
included in Annexure 2;
Bring Along Option means the bring along option in clause
5.3 granted by the Majority Shareholders to the Minority
Shareholder under this Agreement;
Budget and Work Plan means the budget and work plan of
the Company which is Annexure 3;
Business means the business of Exploration;
Business Day means a day on which banks are open for
business in Denver, Colorado;
Commencement Date means the date on which
commercial mining operations commence on the Project
Area and proceeds of sale of product derived from the
Project Area have first been received by the Company;
Consideration means the sum of US$200,000;
Dispose means any dealing with a Share, including but not
limited to, a sale, transfer, assignment, trust, encumbrance,
option, swap, any alienation of all or any part of the rights
attaching to a Share or interest in a Share, and includes
any attempt to so deal or the taking of any steps for the
purpose of so dealing and Disposed and Disposal have
corresponding meanings;
Encumbrance means an interest or power:
(a) reserved in or over any interest in any asset including,
but not limited to, any retention of title; or
(b) created or otherwise arising in or over any interest in
any asset under a xxxx of sale, mortgage, charge, lien,
pledge, trust or power, by way of, or having similar
commercial effect to, security for the payment of a debt,
any other monetary obligation or the performance of any
other obligation, and includes, but is not limited to, any
agreement to grant or create any of the above;
Environmental Law means any law, whether statute or
common law, concerning environmental matters, and
includes law concerning land use, development, pollution,
waste disposal, toxic and hazardous substances,
conservation of natural or cultural resources and resource
allocation including any law relating to exploration for, or
development or exploitation of, any natural resource;
Exchange means a Canadian, United States of America or
English stock exchange (other than OFEX);
Exploration means the exploration of the Project Area for
deposits of zinc, silver and lead;
Exploration and Exploitation Agreement means the
Exploration and Exploitation Agreement dated 23 August
2001 between Don Xxxxx Xxxx, S.A. de C.V. and Xxxx
Xxxxxxxx Xxxxx Xxxxxxx with respect to 2 mining
concessions, being title 168381 El Desierto and title
168382 Ampliacion del Desierto Fracc. Sur, jointly known
as El Desierto, in the Zimapan Mining District of the State
of Hidalgo, Mexico;
Government Agency means any government or any
governmental, semi-governmental, administrative, fiscal or
judicial body, department, commission, authority, tribunal,
agency or entity;
Jurisdiction means the State of Colorado, United States of
America;
Listing means the listing of Shares on any Exchange and
List and Listed have corresponding meanings;
Majority Purchaser means a person who has indicated a
willingness to purchase the Minority Shareholder's Shares
and other Shares in the Company which together equal up
to 51% of the Shares in the Company and who has
provided the Minority Shareholder with a bona fide offer to
purchase those Shares but does not include any
corporation which is a Related Corporation of the Minority
Shareholder;
Management Fees means fees payable by the Company to
US Gold in the sum of US$30,000 per month under a
Management and Administration Agreement dated
November 29, 2001 entered into between the Company
and US Gold for management and administration of the
Company by US Gold;
Material Adverse Change means an actual or likely
material deterioration in the trading results, condition,
financial position or financial prospects of the Company;
Notice of Sale means a notice of sale of Shares given
under clause 12.2;
Offeree means a Shareholder who exercises the option
granted by a Notice of Sale;
Power means any right, power, authority, discretion or
remedy conferred by this Agreement or any applicable law;
Profit and Loss Statement means the unaudited
consolidated profit and loss statement of the Company for
the 3 months ended March 31, 2002 and for the period of
inception to March 31, 2002, which is included in Annexure
2;
Project means the project known as the Zimapan project
located in the State of Hidalgo, Mexico comprising the
development and operation by the Company of mining
operations within the Project Area for the purpose of
producing zinc, silver and lead in commercial quantities;
Project Area means the area the subject of the Exploration
and Exploitation Agreement;
Related Corporation means a body corporate that is:
(a) a holding company of another body corporate; or
(b) a Subsidiary of another body corporate; or
(c)a Subsidiary of a holding company of another body
corporate;
Sale Shares means the Shares a Seller wishes to sell as
specified in a Notice of Sale;
Seller means a Shareholder who serves a Notice of Sale;
Share means an issued common equity share in the
Company;
Shareholders means each of the Majority Shareholders
and the Minority Shareholder;
Share Issue Date means the date that the Minority
Shareholder is to subscribe for shares in accordance with
clause 3.2;
Subscription Application means a subscription application
in the form set out in Annexure 1;
Subsidiary means a body corporate (in this definition called
the first body) that is a subsidiary of another body corporate
if:
(a) the other body:
(i) controls the composition of the first body's board; or
(ii) is in a position to cast, or control the casting of, more
than one-half of the maximum number of votes that might
be cast at a general meeting of the first body; or
(iii) holds more than one-half of the issued share capital of
the first body (excluding any part of that issued share
capital that carries no right to participate beyond a specified
amount in a distribution of either profits or capital); or
(b) the first body is a subsidiary of a subsidiary of the
other body;
Tag Along Notice means a notice of proposed purchase of
Shares given under clause 12.10;
Tax means:
(a) a tax, levy, charge, impost, duty, fee, deduction,
compulsory loan or withholding;
(b) income, stamp or transaction duty, tax or charge; or
(c) value added tax or goods or services tax,
which is assessed, levied, imposed or collected by, or
payable to, a Government Agency and includes, but is not
limited to, interest, fines, penalties, charges, fees or other
amounts imposed on or in respect of any of the above;
Third Party Purchaser means a person who has indicated a
willingness to purchase Shares in the Company and who
has provided a proposed Seller with a bona fide offer to
purchase Shares in the Company; and
Transaction Account means the account established and
maintained by the Company as required by clause 4.1(a).
1.2 Interpretation
In this Agreement, headings and boldings are for
convenience only and do not affect the interpretation of this
Agreement and, unless the context otherwise requires:
(a) words indicating the singular include the plural and vice
versa;
(b) words indicating a gender include any gender;
(c) where a word or phrase is defined in this Agreement,
other parts of speech and grammatical forms of that word
or phrase have a corresponding meaning;
(d) an expression indicating a natural person includes any
company, partnership, joint venture, association,
corporation or other body corporate and any Government
Agency;
(e) a reference to any thing (including, but not limited to,
any right) includes a part of that thing but nothing in this
clause 1.2(e) implies that performance of part of an
obligation constitutes performance of the obligation;
(f) a reference to a clause, party or annexure is a reference
to a clause of, and a party and annexure to, this Agreement
and a reference to this Agreement includes any annexure;
(g) a reference to a statute, regulation, proclamation,
ordinance or by-law includes all statutes, regulations,
proclamations, ordinances or by-laws amending,
consolidating or replacing it, whether passed by the same
or another Government Agency with legal power to do so,
and a reference to a statute includes all regulations,
proclamations, ordinances and by-laws issued under that
statute;
(h) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that
document;
(i) a reference to a party to a document includes that
party's successors and permitted assigns;
(j) a covenant or agreement on the part of 2 or more
persons binds them jointly and severally;
(k) a reference to an agreement includes an undertaking,
deed, agreement or legally enforceable arrangement or
understanding whether or not in writing;
(l) a reference to an asset includes all property of any
nature, including, but not limited to, a business, and all
rights, revenues and benefits;
(m) a reference to a document includes any agreement in
writing, or any certificate, notice, instrument or other
document of any kind; and
(n) a reference to a month is a reference to a calendar
month.
1.3 Business Day
Where the day on or by which any thing is to be done is not
a Business Day, that thing must be done on or by the
preceding Business Day.
1.4 Inconsistency with organisational documents
If there is any inconsistency between this Agreement and
the Company's organisational documents, this Agreement
prevails.
2 Conditions precedent to subscription for and issue of
shares to Minority Shareholder
2.1 Conditions precedent
The subscription by the Minority Shareholder for the
Shares and the issue by the Company to the Minority
Shareholder of those Shares (which issue is referred to in
clause 3) is subject to, and conditional on, the following
conditions either being satisfied or being waived in
accordance with clause 2.4:
(a) all necessary Company, Majority Shareholders and
regulatory approvals, if any, from Government Agencies
being obtained; and
(b) the Minority Shareholder being satisfied that there has
not been a Material Adverse Change in the financial
position or prospects of the Company from the date of this
Agreement and that the representations and warranties in
clauses 7 and 8 are true and correct.
2.2 Reasonable endeavours
(a) The Company must use all reasonable endeavours
within its own capacity to satisfy the condition precedent
set out in clauses 2.1(a) and 2.1(b).
(b) The Minority Shareholder must use all reasonable
endeavours within its own capacity to satisfy the condition
precedent set out in clause 2.1(b).
2.3 Notice
A party must promptly notify the other party in writing if:
(a) a condition precedent has been satisfied, or
(b) a condition precedent has become incapable of being
satisfied.
2.4 Waiver
(a) The condition precedent in clause 2.1(a) may only be
waived by agreement of both parties.
(b) The condition precedent in clause 2.1(b) may only be
waived by the Minority Shareholder.
2.5 Termination of Agreement arising from non-satisfaction
of conditions precedent
If any of the conditions precedent set out in clause 2.1 are
not satisfied or waived on or before 31 May 2002 or a later
date the parties may agree in writing, either party may, by
not less than 2 Business Days' written notice to the other
party, terminate this Agreement and the parties will have no
further rights or obligations other than those rights or
obligations accrued before that date.
3 Subscription for and issue of Shares
3.1 Conditions Precedent
The Minority Shareholder agrees that on the Business Day
that all the conditions precedent in clause 2.1 are either
satisfied or waived, the Minority Shareholder will notify the
Company in writing.
3.2 Subscription for Shares
The Minority Shareholder agrees that on the Business Day
immediately following satisfaction or waiver of all the
conditions precedent in clause 2.1, the Minority
Shareholder will subscribe to the Company for 540,541
Shares by delivering a duly executed Subscription
Application to the Company.
3.3 Consideration
When subscribing for 540,541 Shares, the Minority
Shareholder will pay the Consideration to the Company by
depositing the Consideration into the Transaction Account.
3.4 Company to issue and allot Shares
On receipt of the Subscription Application from the Minority
Shareholder and on the Consideration being paid into the
Transaction Account, the Company will immediately issue
and allot to the Minority Shareholder 540,541 Shares.
3.5 Company to register share issue
Immediately after issuing and allotting the Shares to the
Minority Shareholder, the Company will enter the Minority
Shareholder's name in the register of shareholders, and will
as soon as practicable send to the Minority Shareholder a
share certificate evidencing its shareholding in the
Company.
3.6 Share ranking
On issue to the Minority Shareholder the Shares will rank
pari passu in all respects with all other then existing
Shares.
3.7 Issue of additional Shares
The Company must not issue any additional Shares in the
Company at a price which is less than the price per Share
of the Shares it issues to the Minority Shareholder without
the prior written approval of the Minority Shareholder.
4 Transaction Account
4.1 Transaction Account
The Company undertakes:
(a) to establish and maintain a United States Dollar
denominated interest bearing account in a place and with a
bank or financial institution approved by the Minority
Shareholder (Transaction Account);
(b) to maintain the Transaction Account with the bank or
financial institution and at the place at which the
Transaction Account was originally opened and not change
the Transaction Account to another bank, financial
institution or place without the prior consent of the Minority
Shareholder;
(c) to cause all interest and other earnings on the
Transaction Account to be credited to that Transaction
Account;
(d) to deal with the moneys standing to the credit of the
Transaction Account in accordance with this Agreement;
and
(e) to ensure that no monies are deposited into the
Transaction Account other than the Consideration, the sum
of US$350,000 referred to in clause 5.1 and the monies
referred to in clause 4.1(c).
4.2 Application of money in Transaction Account
(a) The Consideration standing to the credit of the
Transaction Account is only to be applied towards the
Exploration costs incurred or to be incurred by the
Company in the manner contemplated in the Budget and
Work Plan and as otherwise approved by the Minority
Shareholder.
(b) Other money deposited into the Transaction Account
under clauses 4.1(c) and 5.1 may only be applied towards:
(1) payment of the sum of US$50,000 due under the
Exploration and Exploitation Agreement on or about August
23, 2002; and
(2) Exploration costs incurred by the Company.
4.3 Project related covenants
(a) The Company must promptly use the money in the
Transaction Account which is not required for the purposes
in clause 4.2(b)(1) for the purposes of conduct of
Exploration, in a manner which is in accordance with good
industry practice.
(b) The Company must do all things (including the making
of payments) necessary to keep its rights under the
Exploration and Exploitation Agreement in good standing.
4.4 Monthly reports
As soon as reasonably practicable and no later than 15
days after the end of each month (up to the time the
Consideration and the sum of US$350,000 referred to in
clause 5.1 have been spent in accordance with the terms of
this Agreement), the Company must provide a monthly
report in a form approved by the Minority Shareholder
giving the following information:
(a) progress and current status of Exploration;
(b) details of the expenditure on items included in the
Budget and Work Plan for the relevant month, or items
which have otherwise been approved by the Minority
Shareholder under clause 4.2(a) for the relevant month,
and the total expenditure on those items to date; and
(c) details of the application of the funds in the Transaction
Account during the relevant month.
5 Additional equity raising
5.1 Additional equity
In addition to the Consideration paid under this Agreement,
the Company must within 12 months of the date the
Minority Shareholder pays the Consideration to the
Company:
(a) raise a further amount of US$350,000 in equity;
(b) deposit that amount into the Transaction Account;
(c) commence expenditure of that amount on Exploration;
and
(d) demonstrate that all withdrawals from the Transaction
Account of the amount deposited to the Transaction
Account under clause 5.1(b) which are made within that
period of 12 months have been applied to Exploration as
required under clause 4.2(b).
5.2 Failure to raise additional equity
Without limiting any Power of the Minority Shareholder
under this Agreement, the Minority Shareholder will be able
to exercise the Bring Along Option in accordance with
clause 5.3 if, and only if, on the date 12 months after the
Minority Shareholder pays the Consideration to the
Company, the Company has not complied with clause 5.1.
5.3 Bring Along Option
(a) The Minority Shareholder may give a Bring Along
Notice to each Majority Shareholder and the Company that
the Minority Shareholder intends to sell all of its Shares and
requires the Majority Shareholders to transfer as many of
their Shares to a Majority Purchaser as are necessary for
the Majority Purchaser to purchase up to 51% of the
Shares on the same terms and at a price equal to the price
at which the Minority Shareholder proposes to sell its
Shares to the Majority Purchaser.
(b) A Bring Along Notice given under clause 5.3(a) must
specify:
(1) the number of Shares the Minority Shareholder intends
to sell, which must constitute all of the Shares held by the
Minority Shareholder at the time the Bring Along Notice is
given, and the sale price per Share;
(2) the number of Shares the Majority Shareholders are
required to sell;
(3) the name of the Majority Purchaser; and
(4) any other terms of the proposed sale, including the
proposed date of sale and transfer of the Shares.
(c) If the Minority Shareholder gives a Bring Along Notice
under clause 5.3(a) the Majority Shareholders must,
subject to clause 5.3(e), on payment of the sale price, sell
and transfer as many of their Shares to the Majority
Purchaser that are necessary for the Majority Purchaser to
purchase up to 51% of the Shares in the Company at the
same time as the Minority Shareholder transfers its Shares
to the Majority Purchaser.
(d) Each Majority Shareholder agrees with each other
Majority Shareholder that, in complying with clause 5.3(c),
each Majority Shareholder will sell and transfer to the
Minority Shareholder the proportion of the total number of
Shares to be sold by that Majority Shareholder which the
number of Shares it holds at the time the Bring Along
Notice is given bears to the total number of Shares held by
all the Majority Shareholders at the time the Bring Along
Notice is given. Nothing in this clause 5.3(d) affects the
rights of the Minority Shareholder under clause 5.3(c).
(e) Clause 5.3(c) does not apply if a Bring Along Notice is
given and, before the date on which the Minority
Shareholder is due to transfer its Shares to the Majority
Purchaser (which must not be less than 15 days from the
date of the Bring Along Notice), the Majority Shareholders
make an irrevocable offer to the Minority Shareholder to
purchase all of its Shares at a price which is equal to or
greater than the price offered by the Majority Purchaser for
completion on the date applicable to the sale to the Majority
Purchaser and otherwise on terms no less favourable than
those applicable to the proposed sale by the Minority
Shareholder to the Majority Purchaser. In these
circumstances, the Minority Shareholder must transfer its
Shares to the Majority Shareholder on the terms offered to
it by the Majority Shareholder. The Majority Shareholders
agree to notify the Minority Shareholder of the proportions
of Shares that the Minority Shareholder is to transfer to
each of them.
(f) If the Majority Shareholders make an offer to the
Minority Shareholder under clause 5.3(e) but fail to pay on
or before the date on which the Minority Shareholder would
have been due to sell and transfer its Shares to the
Majority Purchaser had the Majority Shareholder not made
an offer under clause 5.3(e), then the entitlement of the
Majority Shareholders to make an offer under that clause
terminates. If this happens, then the Minority Shareholder
may proceed to sell and transfer the Shares to the Majority
Purchaser on the terms notified under clause 5.3(b), and
clauses 5.3(c) and 5.3(d) (but not clause 5.3(e)) will apply
to that sale.
5.4 Audit of additional equity spent
(a) The Minority Shareholder may conduct an audit to
establish that the Consideration and the sum of
US$350,000 referred to in clause 5.1 have been applied for
the purposes permitted under clause 4.2 and in accordance
with clauses 4.2 and 5.1.
(b) The Company must provide to the Minority Shareholder,
within a reasonable period of being requested to do so, any
information in its possession, access to books and records
and all other assistance relevant to the audit the Minority
Shareholder carries out under clause 5.4(a) which the
Minority Shareholder may require.
5.5 Minority Shareholder's costs and expenses
The Company must apply any amount of equity it raises
above the US$350,000 referred to in clause 5.1 towards
reimbursement of the Minority Shareholder in relation to the
costs and expenses the Minority Shareholder incurred for
its due diligence and for the negotiation, preparation,
execution, delivery and registration of this Agreement,
including any amount payable by the Minority Shareholder
under clauses 16.11 and 16.12.
6 Listing of the Company
6.1 Listing of the Company
The Company must, subject to prevailing market
conditions, use reasonable endeavours to list the Company
on an Exchange.
6.2 Ranking of Shares issued on Listing
The Shares issued on Listing will on issue rank pari passu
in all respects with the other then existing issued Shares.
6.3 Other Shares or securities not to issue
(a) Without the prior written consent of the Minority
Shareholder the Company will not after the Share Issue
Date issue Shares, warrants, options or other forms of
securities to:
(1) any director or officer of the Company or of US Gold or
any relative of any of those directors or officers other than
through the exercise of stock options under the stock
option agreements outstanding as at the date of this
Agreement referred to in clause 7(a)(4);
(2) US Gold, any Subsidiary of US Gold or shareholder of
US Gold except as may be required as a result of or related
to the merger of US Gold into a third party company, and to
any related disposition of Shares held by US Gold,
including those Shares being distributed to officers or
directors of US Gold as part of any agreement between US
Gold and the third party company;
(3) Xxxxxxx X Xxxx or Xxxxx X Xxxx or any relative of
Xxxxxxx X Xxxx or Xxxxx X Xxxx, except as provided in
clause 6.3(a)(2) above,
otherwise than at an arms length market price and in
compliance with clause 3.7.
(b) A reference to relative in clause 6.3(a) means:
(1) the spouse, de facto spouse, parent or remoter lineal
ancestor, son, daughter or remoter issue, or brother or
sister of that person; or
(2) any trust or settlement of which a director, officer or
person described in clause 6.3(b)(1) is a beneficiary.
6.4 Trading following Listing
The Company must take all necessary steps to ensure that
all Shares held by the Minority Shareholder at the time
Listing occurs, and all Shares issued to the Minority
Shareholder on Listing (if any), are listed or registered so
that, subject to clause 6.5, the Shares can be traded on the
Exchange immediately after Listing.
6.5 Submissions to Exchange
If the Exchange on which the Company is Listed restricts
trading in the Shares held by the Minority Shareholder in
the Company after Listing the Company undertakes to
make submissions to the Exchange on behalf of the
Minority Shareholder as the Minority Shareholder may
reasonably request to minimise the number of Shares
which are subject to trading restrictions, but the Minority
Shareholder acknowledges that ensuring the Company is
Listed on the Exchange is paramount and agrees that
Listing will not be delayed for any reason relating to any
dispute with the Exchange on trading restrictions.
6.6 Restriction agreement
If the Company uses its reasonable endeavours to
minimise the number of Shares held by the Minority
Shareholder in the Company which are subject to trading
restrictions by the Exchange, the Minority Shareholder
agrees to execute any restriction agreement restricting its
ability to trade the Shares held by the Minority Shareholder
in the Company which the Exchange may request the
Minority Shareholder execute as a condition of the
Company Listing on the Exchange.
7 Covenants, representations and warranties regarding
Share capital structure
(a) The Company represents and warrants to the Minority
Shareholder that, as at the date of this Agreement and as
at the date the representations and warranties are repeated
under clause 7(b):
(1) the Majority Shareholders are the registered holder of
2,493,000 fully paid Shares;
(2) the Shares held by the Majority Shareholders as well as
all other shareholders, as listed in Annexure 4, have been
validly issued by the Company and are all the issued
Shares in the Company;
(3) the Company has not issued shares of any other class
of its equity to any person or entity;
(4) the Company has not issued options to subscribe for
unissued shares in the capital of the Company (except
under the stock option agreement issued in favor of Xxxxxxx
X. Pass dated July 27, 2000 for 200,000 shares of common
stock with an exercise price of US$0.50 per share and
expiring July 27, 2010), nor convertible notes; and
(5) the Majority Shareholders have not given any
Encumbrance over their Shares in the Company.
(b) The Company repeats the representations and
warranties in clause 7(a) as at the date the Consideration is
paid under this Agreement.
(c) From the date of this Agreement and before the issue
and allotment of the 540,541 Shares to the Minority
Shareholder in accordance with clause 3, the Company will
not issue any shares or options to subscribe for unissued
shares in the capital of the Company or convertible notes to
any person, including the Majority Shareholders.
(d) Without the prior consent of the Minority Shareholder
the Company must not issue any preferred Shares before
Listing or at the time of Listing.
8 Representations and warranties regarding Company and
the Business
(a) The Company represents and warrants to the Minority
Shareholder, as at the date of this Agreement and as at the
date the representations and warranties are repeated
under clause 8(b):
(1) the unaudited Balance Sheet is true and correct and is
a true and correct reflection of the assets and liabilities as
at the date of the Balance Sheet, and has been prepared in
accordance with generally accepted accounting principles
in the Jurisdiction;
(2) the Company is the legal and beneficial owner of all of
the assets shown in the unaudited Balance Sheet, and
there are no material present liabilities or contingent
liabilities (including under a guarantee or an indemnity)
other than shown in the Balance Sheet;
(3) since the date of the unaudited Balance Sheet, there
has been no Material Adverse Change in the Company's
financial position from that shown in the Balance Sheet;
(4) the unaudited Profit and Loss Statement is true and
correct and is a true and correct reflection of the financial
performance of the Company for the period shown in the
Profit and Loss Statement, and has been prepared in
accordance with generally accepted accounting principles
in the Jurisdiction;
(5) since the date of the unaudited Profit and Loss
Statement, there has been no Material Adverse Change in
the Company's financial performance from that shown in
the Profit and Loss Statement;
(6) the statement of unaudited cash flows provided to the
Minority Shareholder before the date of this Agreement is
true and correct and is a true and correct reflection of the
cash flows of the Company for the period shown in the
statement, and has been prepared in accordance with
generally accepted accounting principles in the Jurisdiction;
(7) the execution, delivery and performance by the
Company of this Agreement and the issuance of the
Shares to the Minority Shareholder do not and will not
violate any term of the Company's organisational
documents, any law, regulation, authorisation, ruling,
consent, judgment, order or decree of a Government
Agency or a document or an Encumbrance which is binding
on it or on its assets;
(8) the Company is solvent and is able to pay its debts as
and when they become due, but the Minority Shareholder
acknowledges that the matters disclosed in clause 8(c) do
not constitute a breach of this representation and warranty;
(9) except as provided in this Agreement no person will
have any right of first refusal or any pre-emptive rights in
connection with the issuance of the Shares or any future
issuance of shares by the Company;
(10) the Company has not granted any Encumbrances of
any kind to any entity, or agreed to grant an Encumbrance;
(11) other than those matters disclosed by the Company to
the Minority Shareholder, the Company has not been
involved in any litigation or prosecutions, and no third party
has threatened to commence litigation or prosecutions
against the Company, including claims by any Government
Agency;
(12) no claims have been made or are expected to be
made on the Company, and the Company is not in default
under the terms of any of its contracts or agreements, but
the Minority Shareholder acknowledges that the matters
disclosed in clause 8(c) do not constitute a breach of this
representation and warranty;
(13) the Company has not entered into any material
contracts or agreements which are significant or important
to the Business which have not been disclosed by the
Company to the Minority Shareholder;
(14) the Company has all necessary licences, approvals,
permits and permissions required in law to carry on the
Business, all conditions have been complied with, and the
Company is not aware of any circumstances which might in
any way prejudice their continuance or renewal;
(15) all information given by the Company to the Minority
Shareholder in respect of the transaction, and the assets,
the Business and the affairs of the Company, is true and
correct as at the time it was given in all material respects
and is not, whether by omission of information or otherwise,
misleading in a material respect;
(16) the Company has not withheld from the Minority
Shareholder any document, information or other fact which
might reasonably be expected to materially and adversely
affect the Company, or the financial position, the Business,
the assets, the liabilities, or the profitability of the Company;
(17) the Company has filed all corporate notices and
effected all registrations with the relevant Government
Agencies as required by all applicable laws and all those
filings and registrations are current, complete and accurate
in every material respect;
(18) the Company has complied in all material respects
with all statutes and regulations which are applicable to the
Company and the Business carried on by it;
(19) the Company has complied with all Tax laws in all
applicable jurisdictions and the Company has paid all
Taxes due and payable by it, and that all documents to
which the Company is a party and which attract stamp duty
have been duly and properly stamped;
(20) the Company is not a trustee of a trust or settlement;
and
(21) other than as disclosed to the Minority Shareholder in
writing before the date of this Agreement the Company has
not engaged in any activities, or done any act, which may
give rise to a claim against the Company under any
Environmental Law.
(b) The Company repeats the representations and
warranties in this clause 8 as at the date the Consideration
is paid under this Agreement.
(c) The Minority Shareholder acknowledges that as at the
date of this Agreement the Company is accruing but not
paying to US Gold the Management Fees.
9 Breach or non-fulfilment of warranties and
representations
The Company acknowledges that the Minority Shareholder
may bring a claim for damages as a result of the
inaccuracy, breach or non-fulfilment of any of the
representations and warranties made by the Company in
clauses 7 and 8.
10 Management Fees
(a) All Management Fees incurred by the Company up to
the Commencement Date must not be paid from revenue
or other amounts derived by the Company from the Project
or the Project assets.
(b) For the avoidance of doubt, in determining the amount
of distributable cash flow for the purposes of clause 11, no
amount is to be deducted from the Project revenue for the
purposes of payment of or otherwise with respect to the
Management Fees which are unpaid as at the
Commencement Date.
(c) Without limiting clauses 10(a) and (b), US Gold
covenants and agrees not to make any claim for payment
of Management Fees which are incurred (either before or
after the Commencement Date) but unpaid, until the
Company has sufficient funds available to it (after payment
of the amounts referred to in clause 11(a)) to pay those
Management Fees.
(d) For the avoidance of doubt nothing in this clause 10
limits the right of US Gold to be paid:
(1) the Management Fees which are unpaid as at the
Commencement Date from money available to the
Company which has not been derived from revenue or
other amounts derived from the Project or the Project
assets; or
(2) for Management Fees incurred with respect to the
period after the Commencement Date from the revenue or
other amounts derived from the Project or the Project
assets, but only from amounts available after payment of
the amounts referred to in clause 11(a).
11 Dividend policy
The Company must distribute its distributable cash flow to
the Shareholders, to the fullest extent possible, but only if:
(a) a sufficient amount has been set aside for reasonable
working capital, other reasonable requirements relating to
Exploration and development and operation of the Project,
and reasonable costs and expenses relating to Listing of
the Company; and
(b) any distribution does not exceed the amount legally
available for distribution.
12 Disposal of Shares
12.1 No Disposal of Shares
Other than an as provided for in clauses 5 and 12.10, the
parties to this Agreement may not Dispose of any Share,
except after complying with clauses 12.2, 12.3, 12.5, 12.6,
12.7 and 12.9.
12.2 Notice of Sale
A Majority Shareholder or Minority Shareholder who wants
to Dispose of any Shares must serve a Notice of Sale on
each other party to this Agreement specifying:
(a) the number of Sale Shares and the sale price per share;
(b) the name of the proposed buyer of the Sale Shares,
(being the Third Party Purchaser);
(c) any other terms of the proposed Disposal;
(d) in the case of a sale by the Minority Shareholder, a
statement to the effect that each Majority Shareholder has
an option to purchase the Sale Shares on the terms set out
in the Notice of Sale if the Majority Shareholder complies
with clause 12.3; and
(e) in the case of a sale by a Majority Shareholder, a
statement to the effect that the Minority Shareholder has an
option to purchase the Sale Shares on the terms set out in
the Notice of Sale if the Minority Shareholder complies with
clause 12.3.
12.3 Exercise of Shareholder's option to purchase Sale
Shares
(a) Each Shareholder may exercise its option to purchase
the Sale Shares by giving notice to the Company and the
Seller of the number of Sale Shares it wishes to buy within
7 Business Days after the date of service of the Notice of
Sale.
(b) If a Shareholder exercises its option to purchase Sale
Shares then the Seller must sell to that Shareholder the
number of Sale Shares allocated to that Shareholder under
clause 12.4 and the Shareholder must purchase them on
the terms set out in the Notice of Sale.
12.4 Allocation of Sale Shares
(a) If the Seller receives offers for equal to or less than the
number of Sale Shares the Seller must sell to that Offeree
the number of Sale Shares that Offeree has offered to buy.
(b) If the Seller receives offers to acquire more Shares than
the number of Sale Shares, then subject to clause 12.4(d)
the number of Sale Shares that Offeree is entitled to
acquire is:
Where:
ONS means the number of Shares held by the Offeree
immediately before the service of the Notice of Sale.
TNS means the number of Shares held by all Offerees
immediately before the service of the Notice of Sale.
SS means the number of Sale Shares.
N means the number of Shares that each Offeree is
entitled to acquire.
(c) Any remaining Sale Shares that have not been
allocated after the application of clause 12.4(a) are
allocated subject to clause 12.4(d) as follows:
Where:
ONS means the number of Shares held by the Offeree
immediately before the service of the Notice of Sale.
TNS means the number of Shares held immediately before
the service of the Notice of Sale by all Offerees who have
been allocated less than the number of Sale Shares
indicated in the Offeree's notice.
RSS means the remaining number of Sale Shares which
have not been already allocated to Offerees after the
application of the formula set out in clause 12.4(a).
N means the number of Shares that each Offeree is
entitled to acquire.
(d) If the number of Sale Shares to be acquired by an
Offeree calculated by applying the formula is more than the
number of Sale Shares that Offeree has offered to buy then
that Offeree will acquire only the number of Sale Shares
that it has offered to buy.
(e) The Company must apply the formulae in clauses
12.4(a) and 12.4(c) to determine the entitlement of each
Offeree.
(f) The Company must repeat the application of the formula
in clause 12.4(c) until all Sale Shares are allocated.
(g) If a fraction results from the application of the formula in
clause 12.4(a) or clause 12.4(c) the fraction will be rounded
up or down as determined by the Company.
(h) The Company must notify in writing the Seller and each
Offeree of the number of Sale Shares to which each
Offeree is entitled.
12.5 Sale Shares not purchased by Shareholders
(a) The Seller may sell any Sale Shares not purchased by
another Shareholder in accordance with clause 12.3 to the
buyer named in the Notice of Sale within 60 days after the
date of service of the Notice of Sale.
(b) The Seller must not sell the Sale Shares:
(1) for a purchase price less than the price specified in the
Notice of Sale; or
(2) on terms more beneficial to the buyer than those set out
in the Notice of Sale.
(c) The Seller must give a copy of any agreement with the
buyer named in the Notice of Sale relating to the Sale
Shares to each other Shareholder within 3 days after
execution of the agreement.
(d) If the Seller does not sell the Sale Shares to the buyer
named in the Notice of Sale within the time set out in
clause 12.5(a) it may not sell those Sale Shares without
complying again with this clause 12.
12.6 Purchasing Shareholders
A Shareholder who Disposes of Shares to anyone other
than another Shareholder (including a Disposal under
clauses 6.3(a)(2) and 12.7) must ensure that the
transferee, before registration of the transfer of the Shares,
enters into an agreement with the other parties agreeing to
be bound by this Agreement as if named as a party and as
a Shareholder, amended as reasonably required by the
other Shareholders.
12.7 Disposal of Shares to Subsidiary
A Shareholder may Dispose of Shares without complying
with this clause 12 (other than clause 12.6) if:
(a) the transferee is a wholly-owned Subsidiary of the
Shareholder; or
(b) all other Shareholders give prior written approval.
12.8 Encumbrance over Shares
No Shareholder may create an Encumbrance over a Share
unless the person to whom the Encumbrance is granted
enters into an agreement with all Shareholders not to
Dispose of the Shares unless that person complies with
this clause 12.
12.9 Refusal to register
The Company may refuse to issue, or register the transfer
of, any Shares if this clause 12 has not been complied with.
12.10 Tag Along Option
(a) Each Shareholder may, within 15 Business Days of
receiving a Notice of Sale under clause 12.2, give a Tag
Along Notice to the Seller and the Company that it requires
the Third Party Purchaser to purchase some or all of its
Shares on the same terms and at a price equal to the price
at which the Seller proposes to sell the Sale Shares to the
Third Party Purchaser.
(b) If a Shareholder gives a Tag Along Notice under clause
12.10(a), the Seller must not transfer the Sale Shares to
the Third Party Purchaser and the Company must not
register any such transfer, unless the Seller procures that
the Third Party Purchaser purchase the Shares the subject
of the Tag Along Notice at the same time as the purchase
of the Sale Shares.
(c) A Tag Along Notice, once given, is irrevocable but both
the Tag Along Notice and all obligations under the Tag
Along Notice will lapse if for any reason the Sale Shares
are not transferred to the Third Party Purchaser.
(d) On the issue of a Tag Along Notice the Seller must take
all reasonable steps to cause the Shares to be purchased
by the Third Party Purchaser on the terms and at the price
specified in the Tag Along Notice, and otherwise in
accordance with this clause 12.10.
(e) If the Seller is unable to cause the Third Party
Purchaser to buy all of the Shares at the price specified in
the Tag Along Notice (or a greater price) and otherwise in
accordance with this clause 12.10 and to complete that
purchase then the Seller must not sell or otherwise transfer
any of the Sale Shares to the Third Party Purchaser.
12.11 Exclusions
This entire clause 12 (other than clause 12.6) does not
apply to a Disposal by US Gold of its Shares in the
Company where US Gold enters into and completes a
merger of US Gold into a third party company, and in
connection with that merger US Gold or the merged entity
agrees to the distribution of Shares in the Company held by
US Gold to certain officers or directors of US Gold.
13 Power of attorney
13.1 Purpose of power of attorney
The appointments of attorneys in clause 13.2 are for the
purposes only of any of the transactions contemplated by
clauses 5.3 and 12.
13.2 Power of attorney
In consideration of, among other things, the mutual
promises contained in this Agreement:
(a) each Shareholder irrevocably appoints the other
Shareholders severally as its attorney to complete and
execute (under hand or under seal) such instruments for
and on its behalf as the attorney thinks necessary or
desirable to give effect to any of the transactions
contemplated by clauses 5.3 and 12;
(b) each appointor agrees to ratify and confirm whatever
the attorney lawfully does, or causes to be done, under the
appointment;
(c) each appointor agrees to indemnify the attorney against
all claims, demands, costs, charges, expenses, outgoings,
losses and liabilities arising in any way in connection with
the lawful exercise of all or any of the attorney's powers
and authorities under that appointment; and
(d) each appointor agrees to deliver to the Company on
demand any power of attorney, instrument of transfer or
other instruments as the Company may require for the
purposes of any of the transactions contemplated by
clauses 5.3 and 12.
14 Share certificates
Every share certificate issued by the Company to a
Shareholder must be endorsed by the Company with a
statement that the Shares are subject to the terms of this
Agreement.
15 Termination
15.1 Termination
This Agreement will terminate:
(a) by mutual agreement of all parties;
(b) in respect of a Shareholder when it does not hold any
Shares;
(c) if the Company is wound up by resolution of
Shareholders or an order of a court of a competent
jurisdiction; or
(d) on Listing, but this clause does not limit or affect
clause 7(d).
15.2 Without prejudice
Termination of this Agreement under clause 15.1 will be
without prejudice to any accrued rights of the parties.
16 General
16.1 Notices
(a) Any notice or other communication including, but not
limited to, any request, demand, consent or approval, to or
by a party to this Agreement:
(1) must be in legible writing and in English addressed as
shown below:
(A) if to Majority Shareholders:
Address: 0000 Xxxxxxx Xx., Xxxxx 000, Xxxxxxxx,
Xxxxxxxx, Xxxxxx Xxxxxx of America
80215-1545
Attention: Xxxxxxx X Xxxx
Facsimile: 000-000-0000;
(B) if to Minority Shareholder:
Address: West Block Building, AIB International Xxxxxxxxx
Xxxxxxxx Xxxxxx, Xxxxxx 0, Xxxxxxx
Attention: RMB International (Dublin) Limited
Facsimile: int+353 1 6702 439; and
(C) if to the Company:
Address: 0000 Xxxxxxx Xx., Xxxxx 000, Xxxxxxxx,
Xxxxxxxx, Xxxxxx Xxxxxx of America
80215-1545
Attention: Xxxxxxx X Xxxx
Facsimile: 000-000-0000,
or as specified to the sender by any party by notice;
(2) where the sender is a company, must be signed by an
officer or under the common seal of the sender;
(3) is regarded as being given by the sender and received
by the addressee:
(A) if by delivery in person, when delivered to the
addressee;
(B) if by post, 3 Business Days from and including the date
of postage; or
(C) if by facsimile transmission, whether or not legibly
received, when transmitted to the addressee,
but if the delivery or receipt is on a day which is not a
Business Day or is after 4.00 pm (addressee's time) it is
regarded as received at 9.00 am on the following Business
Day; and
(4) can be relied on by the addressee and the addressee is
not liable to any other person for any consequences of that
reliance if the addressee believes it to be genuine, correct
and authorised by the sender.
(b) A facsimile transmission is regarded as legible unless
the addressee telephones the sender within 2 hours after
transmission is received or regarded as received under
clause 16.1(a)(3) and informs the sender that it is not
legible.
(c) In this clause 16.1, a reference to an addressee
includes a reference to an addressee's officers, agents or
employees.
16.2 Governing law and jurisdiction
(a) This Agreement is governed by the laws of the
Jurisdiction.
(b) Each of the parties irrevocably submits to the exclusive
jurisdiction of the courts of the Jurisdiction.
16.3 Prohibition and enforceability
(a) Any provision of, or the application of any provision of,
this Agreement or any Power which is prohibited in any
jurisdiction is, in that jurisdiction, ineffective only to the
extent of that prohibition.
(b) Any provision of, or the application of any provision of,
this Agreement which is void, illegal or unenforceable in
any jurisdiction does not affect the validity, legality or
enforceability of that provision in any other jurisdiction or of
the remaining provisions in that or any other jurisdiction.
16.4 Waivers
(a) Waiver of any right arising from a breach of this
Agreement or of any Power arising on default under this
Agreement must be in writing and signed by the party
granting the waiver.
(b) A failure or delay in exercise, or partial exercise, of:
(1) a right arising from a breach of this Agreement; or
(2) a Power created or arising on default under this
Agreement,
does not result in a waiver of that right or Power.
(c) A party is not entitled to rely on a delay in the exercise
or non-exercise of a right or Power arising from a breach of
this Agreement or on a default under this Agreement as
constituting a waiver of that right or Power.
(d) A party may not rely on any conduct of another party as
a defence to exercise of a right or Power by that other
party.
(e) This clause may not itself be waived except by writing.
16.5 Variation
A variation of any term of this Agreement must be in writing
and signed by the parties.
16.6 Cumulative rights
The Powers are cumulative and do not exclude any other
right, power, authority, discretion or remedy of the parties.
16.7 Assignment
Rights arising out of or under this Agreement are not
assignable by one party without the prior written consent of
every other party.
16.8 Further assurances
Each party must do all things and execute all further
documents necessary to give full effect to this Agreement.
16.9 Entire agreement
This Agreement supersedes all previous agreements in
respect of its subject matter and embodies the entire
agreement between the parties.
16.10 Counterparts
(a) This Agreement may be executed in any number of
counterparts.
(b) All counterparts, taken together, constitute one
instrument.
(c) A party may execute this Agreement by signing any
counterpart.
16.11 Stamp duty
The Minority Shareholder is responsible for any stamp
duty (including any fine or penalty) in respect of this
Agreement.
16.12 Costs and expenses
Subject to clauses 5.5 and 16.11, each party must pay its
own costs and expenses in respect of:
(a) the negotiation, preparation, execution, delivery and
registration of this Agreement; and
(b) the enforcement or protection or attempted enforcement
or protection of any rights under this Agreement,
including, but not limited to, any legal costs and expenses
and any professional consultant's fees.
16.13 Relationship of parties
Neither party is the partner, agent, employee or
representative of any other party and neither party has the
power to incur any obligations on behalf of, or pledge the
credit of, any other party.
Executed as an agreement:
Signed for
US Gold Corporation
/s/ Xxxxxxx X. Xxxx
by Xxxxxxx X Xxxx, President, in
the presence of:
Witness /s/ Xxxxxxx X. Pass
Name (please print) Xxxxxxx X. Pass
Signed by
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X Xxxx
in the presence of:
Witness /s/ Xxxxxxx X. Pass
Name (please print) Xxxxxxx X. Pass
Signed by
/s/ Xxxxx X. Xxxx
Xxxxx X Xxxx
in the presence of:
Witness /s/ Xxxxxxx X. Pass
Name (please print) Xxxxxxx X. Pass
Signed by
RMB International (Dublin) Limited
/s/ Xxxxx Xxxx
by: Xxxxx Xxxx
/s/ X. Xxxx Ree
by: X. Xxxx Ree
Signed for
Gold Resource Corporation
by Xxxxxxx X Xxxx, President, in
the presence of:
Witness /s/ Xxxxxxx X. Pass
Name (please print) Xxxxxxx X. Pass
