PRIVATE AGREEMENT
ROYAL GOLD, INC.
a n d
RAKOV PTY LTD
PRIVATE AGREEMENT
THIS PRIVATE AGREEMENT (the "Agreement"), is made and
entered into in London, England this 26th day of March 1998, by
and between:
"RAKOV PTY LTD," an Australian registered company (ACN
081 713 555) incorporated under the laws of Australia, duly
represented by Mr. Ian Plimer, with its principal office in Australia,
at 55 Harrington Street, Sydney, NSW 2000, to be referred to
hereinafter as "Rakov";
and
"ROYAL GOLD, INC.," an American registered company
incorporated under the laws of the State of Delaware, with its
principal offices at Suite 1000, 1660 Wynkoop Street, Denver,
Colorado 80202-1132, USA duly represented by Mr. Peter Babin,
President of the Company, to be referred to hereinafter as "Royal."
(Rakov and Royal are collectively referred to, herein, as the
"Parties.")
A. WHEREAS 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, to
be referred to hereinafter as "S&B," and the Greek
Government have entered into a lease agreement, Nr
12.967/6.2.1992 of the Notary Public Mr Vassilios Sigalos
(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 the islands of Milos, Kimolos, Polyegos and
Antimilos (hereinafter "The Area")
B. WHEREAS S&B has established a company by the name
of MIDAS SA (hereinafter to be referred to as "MIDAS")
for the purpose of carrying out the Lease through that
company, and S&B has transferred the Lease to MIDAS.
C. WHEREAS Royal and Rakov have agreed to cooperate
with S&B and MIDAS in the exploration, development,
and mining of precious metals (gold and silver) in the Area,
under the terms and conditions of the Lease, and such
parties, together with S&B and MIDAS, have thus
adopted, on March 27th, 1998, a Private Agreement
memorializing the guidelines of this cooperation
(hereinafter, the "Midas Agreement", a copy of which is
attached to this Agreement, as Annexure A).
D. WHEREAS according to the Midas Agreement the
cooperation of the Parties will be effected within the
framework of MIDAS.
E. WHEREAS Royal and Rakov have agreed to establish a
new company (hereinafter to be referred to as "NEWCO"),
and their participation in the Midas Agreement will be
effected through NEWCO.
NOW THEREFORE, IT HAS BEEN AGREED BETWEEN
THE PARTIES AS FOLLOWS:
1 DEFINITIONS
As used hereafter in the Agreement, specific terms not defined
herein shall have the same meaning as is set forth for such terms in
the Midas Agreement.
2 THE BUSINESS
The Parties agree to form a corporation ("NEWCO"), under the
laws of Greece, for the purpose of performing the joint and several
obligations of Royal and Rakov under the Midas Agreement.
Royal is hereby authorized to prepare and file any and all such
documents and to do such necessary acts as are required to form
NEWCO. Rakov hereby irrevocably constitutes Royal its lawful
attorney for the purposes of completing such incorporation and
qualification to do business. NEWCO shall be incorporated as a
Greek Societe Anonyme, unless the Parties agree on another type
of entity. The costs of incorporation will be shared equally by the
Parties. The name of NEWCO will be "Milos Gold S.A.," if that
name is available.
The Parties will cause NEWCO to enter into the Midas
Agreement as "NEWCO," as that term is defined in the Midas
Agreement.
As soon as NEWCO is established the Parties will cause it to
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 Midas Agreement and under the Lease.
As long as NEWCO is not established, or so long as it is
established but has not yet responded to the obligation set forth in
Clause 2.3 above, any reference to NEWCO under this Agreement
and under the Midas Agreement shall be deemed to be a reference
to Royal. In such circumstances, Royal shall exercise all of
NEWCO s rights, and Royal shall be liable for all of NEWCO s
obligations.
3 INTERIM PERIOD
3.1 During the Interim Period (September 1, 1997 through the
Effective Date under the Midas Agreement), the Parties will
cooperate and use their best endeavours in order to maintain
the Lease in good standing.
3.2 All Expenses incurred by any of NEWCO, Royal or Rakov
during the Interim Period shall be deemed to be incurred by
or on behalf of NEWCO, for the benefit of MIDAS.
"Expenses" shall include all costs incurred for further
Exploration, and necessary costs for maintaining the Lease,
as well as costs and expenses incurred in connection with the
application, procedure and approval of the Extension, and the
execution of any relevant modification to the Lease.
3.3 If the Greek Minister of Development approves the
Extension, and the Midas Agreement then enters into force
as set forth in Clause 3.3 of such agreement (the "Effective
Date"), MIDAS will be reimbursed by NEWCO for the
Expenses incurred by MIDAS during the Interim Period, and
such reimbursement amount will be computed towards the
Sum.
3.4 If the Midas Agreement is terminated according to Clause 3.3
of the Midas Agreement, no Party shall be entitled to any
reimbursement for Expenses borne by it during the Interim
Period.
4 PARTICIPATING INTERESTS
4.1 The Parties hereby acknowledge and agree that their initial
Participating Interests in NEWCO, following the formation
of NEWCO, shall be:
a. Rakov: 400,000 Shares, which shall represent 50% of NEWCO s
issued share capital; and
b. Royal: 400,000 Shares, which shall represent 50% of NEWCO s
issued share capital.
4.2 The Participating Interests of the Parties may change from
time to time in accordance with the provisions contained
herein.
5 CONTRIBUTION OF THE SUM
5.1 From September 1, 1997 forward, the Expenses which are
required or permitted by the Midas Agreement shall be
funded exclusively by or on behalf of 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 that are to be prepared and submitted
pursuant to the procedure described in Clauses 6.3. and 6.4
of the Midas Agreement. Any Expenses incurred by or on
behalf of NEWCO during the Interim Period shall be credited
against the Sum.
5.2 After the expenditure of the Sum as aforementioned,
Expenses shall be funded by NEWCO and by S&B in the
manner provided for in Clause 7 of the Midas Agreement.
5.3 As of January 31, 1998, Royal has already expended, on
behalf of NEWCO, and as a contribution towards the Sum,
a total of [+$400,000 (US).] Rakov shall, within sixty (60)
days following execution of this Agreement, reimburse to
Royal 50% of the stated amount.
5.4 Rakov and Royal shall, upon written notice of the General
Manager of NEWCO, as described in Clause 6.7 of this
Agreement, make further advances to NEWCO to meet
Expenses until the date the aggregate of such advances
equals 1,800,000 US $. The Shareholders shall, promptly
thereafter, cause NEWCO, through its Shareholders Meeting,
to increase NEWCO's capital by the issue of 54,000 new
Shares of nominal value of 1,000 drs each and at an issue
price of 1,000 drs each. Such capital increase will be covered
exclusively by the advances of 1,800,000 US $ made to
NEWCO by Royal and Rakov.
5.5 If after the contribution of the Minimum Sum under the
Midas Agreement, NEWCO does not exercise its right to
withdraw from the Midas Agreement under Clause 27.1
thereof, the balance of the Sum required to be funded by
NEWCO shall be met by way of further advances by Rakov
and Royal to NEWCO, against further capital increases by
NEWCO. On each occasion that such advances reach
2,000,000 US $ or higher, or at least every six months, the
herein-described advances will be capitalized through a
NEWCO Shareholders Meeting decision, by the issue of such
a number of new Shares of NEWCO as will arise from the
appropriate division of the advances, at the issue price of
1,000 drs per Share. This procedure will continue until the
entire Sum required under the Midas Agreement has been
fully paid by NEWCO to MIDAS, or has otherwise been
advanced by NEWCO on behalf of MIDAS. All such capital
increases will be made through the issue of NEWCO Shares
at an issue price of 1,000 drs each.
6 FUNDING AFTER CONTRIBUTION OF THE SUM
6.1 After the funding of the Sum that NEWCO is required to
contribute to MIDAS (or that NEWCO is required to expend
for or on behalf of MIDAS), the Shareholders of NEWCO
must ensure that NEWCO has sufficient funds to carry on the
Business of MIDAS from:
(a) further subscriptions of equity capital by the Shareholders;
(b) cash generated by income earned;
(c) loans by the Shareholders to NEWCO;
(d) initial public offering or private placement of debt or equity
securities, if permitted under the Midas Agreement;
(e) floating of NEWCO in an International Stock Exchange; or
(f) external borrowings by NEWCO.
6.2 After the payment of the Sum, NEWCO's share of all funding
determined in any Annual Program and Budget that is
approved by the Board of MIDAS, shall be provided to
NEWCO, by all Shareholders of NEWCO, when and as
required, in cash, in proportion to such Shareholders' then-
existing Participating Interests in NEWCO. In the event that
a Shareholder has made an advance or a loan to NEWCO
above such Shareholder's Participating Interest's requirement,
such surplus shall be offset against any cash call.
Contributions by the Shareholders of NEWCO may be
provided as loans or by way of subscription for shares,
provided that the NEWCO Shareholders at all times provide
their respective contributions in the same way.
6.3 Loans made in accordance with Clause 6.1(c) of this
Agreement 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 of interest) 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.
6.4 Funding by an initial public offering or private placement of
debt or equity securities, as per Clause 6.1(d) of this
Agreement, will be effected on terms and conditions decided
by the Board and the Shareholders, and any resulting dilution
shall be borne by the Shareholders in proportion to their
Participating Interests at the time of the transaction.
6.5 The Shareholders may agree to float NEWCO in an
International Stock Exchange, as provided for under Clause
6.1(e) of this Agreement, for the purpose of raising enough
funds to finance NEWCO's share of Expenses for MIDAS.
6.6 The Shareholders shall ensure that NEWCO maintains a
commercially prudent debt to equity ratio.
6.7 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 any such
notice.
6.8 If any Shareholder fails for any reason to furnish its
proportionate contribution to the funding of NEWCO's share
of Expenses for MIDAS, within the time required, or within
an extension of such time as may be set by the Board, then
the other Shareholder, at its option, may either -
(a) furnish any such deficiency, and the Shareholder in default
shall be liable to pay interest to the non-Defaulting Shareholder
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, and with interest
commencing on the date that the funded deficiency was
otherwise due to be paid and with such interest accruing until
such deficiency and all interest thereon is paid in full; or
(b) elect to treat the failure of the defaulting Shareholder as an
Event of Default, in accordance with Clause 12 of this
Agreement.
7 MANAGEMENT OF NEWCO
7.1 Rakov agrees to vote its shares of NEWCO to elect or
appoint Royal's nominee to be General Manager of NEWCO
during the Earn-In Period that is provided for in the Midas
Agreement. (Such nominee shall also serve as General
Manager of MIDAS during the Earn-In Period.)
7.2 The General Manager shall be responsible for the execution
of the NEWCO Board's decisions with respect to
management and administration of NEWCO.
7.3 All operations relevant to the management and administration
of NEWCO shall be conducted by the General Manager in
accordance with the decisions and directions of the Board, as
defined in Clause 8, in a careful and workmanlike manner, in
full compliance with all laws, ordinances, rules, regulations,
orders and directives of any and all authorities having
jurisdiction over the Business.
7.4 Two signatures to be specified by the Board shall be required
on all binding documents executed in the name of NEWCO.
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.
7.5 The General Manager shall procure, at the expense of
NEWCO and for the protection of NEWCO, such minimum
amounts of insurance cover as may be required by applicable
law or such greater amounts as may be approved by the
Board.
7.6 The General Manager shall also be responsible for and do,
either himself or through personnel hired for this purpose, the
following :
7.6.1 Draw up and submit to the Board, for its consideration, a
draft of an Annual Program and Budget, such draft to be
presented at least three (3) months prior to the
commencement of the Fiscal Year to which such Annual
Program and Budget relates. (Fiscal Years shall run from
July 1 of any calendar year to June 30 of the next succeeding
calendar year.) The proposed Annual Program and Budget
shall form a part of the rolling five-year business plan
described in Clause 7.6.2 hereof.
7.6.2 Draw up and submit to the Board, for its consideration, a
draft of a proposed five-year rolling business plan, each such
plan to be submitted at the same time as the draft of the
Annual Program and Budget that is provided for in Clause
7.6.1.
7.6.3 Secure and submit to the Board, for its approval, the relevant
MIDAS feasibility study and Mine Development Plan, when
appropriate.
7.6.4 Provide to the Shareholders monthly reports on the status of
the Business.
7.6.5 Permit and facilitate the inspection by any Shareholder,
through its authorised representatives or recognised 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. The General Manager
shall be obligated to maintain all documents and written
material for a period of seven (7) years, or longer if the
relevant laws so require.
7.6.6 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 this Agreement, all
property, real and personal belonging to, and of all
transactions entered into by or on behalf of NEWCO, the
costs and expenses relating to the Operations, and such other
matters as may be required from time to time by the Board.
7.6.7 Ensure that NEWCO adheres to and implements each
approved Annual Program and Budget.
7.6.8 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.
7.6.9 Ensure that NEWCO 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 NEWCO or MIDAS; to inspect
and take copies of the documents relating to the Business,
and relating to NEWCO's and MIDAS' affairs, including all
books of account; and to discuss the affairs, finances and
accounts of NEWCO and MIDAS with the officers,
employees and Auditors of NEWCO and MIDAS, at all
reasonable times.
7.6.10 Keep NEWCO's assets in good condition.
7.6.11 Ensure that NEWCO complies with all requirements of
government authorities relating to the Business.
7.6.12 Perform all duties specifically delegated to him/her.
7.6.13 Until the Earn-In under the Midas Agreement is complete,
the General Manager is to be appointed by the Board upon
Royal's proposal. The General Manager may be dismissed by
the Board, but only with the concurrence of Royal.
Following the payment of the Sum under the Midas
Agreement, the Board, on an annual basis, will appoint the
General Manager of NEWCO, and the General Manager will
then serve at the pleasure of the Board.
8 BOARD
8.1 The Board will be responsible for the management and
administration of NEWCO. The Board will, indicatively and
not by way of limitation, decide upon the following matters:
8.2 NEWCO's position with respect to any vote within MIDAS
on
8.2.1 the voluntary relinquishment of all or any part of the Lease
according to the terms and conditions of the Lease;
8.2.2 undertakings vis-a-vis the Greek State which materially
increase the obligations of NEWCO or MIDAS with respect
to the Business;
8.2.3 approval, revision and amendments of the Annual Programs
and Budgets and the relevant Mine Development Plan;
8.2.4 terms and conditions of any external borrowings, and terms
and conditions of any Shareholder loans;
8.2.5 the hiring of the General Manager, subject to Clauses 7.1.
and 7.6.13., as well as the delegating of material powers and
responsibilities to the General Manager;
8.2.6 mortgages and other encumbrances on real property or
mining rights of NEWCO;
8.2.7 guarantees of NEWCO on behalf of third parties;
8.2.8 release of any debt owing to NEWCO, or compromise of any
claim vested in NEWCO;
8.3 The Board of NEWCO shall consist of 4 Directors, 2
Directors proposed by Rakov and 2 proposed by Royal. The
first Directors shall be the ones identified in Annexure B. 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 or expended on behalf of MIDAS
under the Midas Agreement, the Chairman of the Board shall
be selected from among the Directors proposed by Royal; the
Vice-Chairman of the Board shall be selected from among the
Directors proposed by Rakov.
8.4 All costs associated with any technical or other advisors
brought to such meetings of the Board 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.
8.5 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 any individual Director shall be borne by the
Shareholder that nominated such Director.
8.6 Except as otherwise specifically provided in the Agreement,
each meeting of the Board shall be convened and held in
accordance with the Articles of NEWCO 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 Shareholders may decide
from time to time.
8.7 Under Greek law as it currently stands, it is not possible for
the Board to adopt enforceable decisions through circulating
resolutions. If in the future such possibility is available,
decisions will be taken by circulating resolutions. The
Shareholders will make every effort to facilitate the
deliberation and decision making process through written and
oral communications prior to the holding of the Board's
meetings.
8.8 All the decisions of the Board other than those provided for
herein shall be made by simple majority of the Directors
present or lawfully represented at the meeting.
9 SHAREHOLDERS' GENERAL ASSEMBLY
9.1 The Shareholders' General Assembly shall convene at least
once a year and as often as is required, if decisions are
required to be made that can only be made by the
Shareholders. Such meetings shall be called by the Chairman
of the Board, or by any Shareholder as provided in the
Articles and applicable law. Written notice to that effect must
be given to the Shareholders at least twenty (20) days prior
to the date of the meeting.
9.2 Rakov agrees to vote for Royal's nominee for Chairman
throughout the Earn-In Period called for in the Midas
Agreement.
9.3 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.
9.4 After the Earn-In Date, decisions of the General Assembly
that are required by law to be taken by an increased majority
shall be taken by the increased majority determined under the
Articles of NEWCO and applicable law.
10 DILUTION
10.1 Following (but only following) the Earn-In Date under the
Midas Agreement, the provisions of Clause 11 of the Midas
Agreement shall apply to the Shareholders of NEWCO,
mutatis mutandis.
11 DEFAULT
11.1 The following events are Events of Default under this
Agreement:
(a) Failure by Royal or Rakov to make timely delivery of funds
called for by the General Manager during the Earn-In
Period;
(b) the Transfer or encumbrance (or attempted Transfer or
encumbrance) of all or any Shares or Participating
Interest by a Shareholder, except in accordance with
the provisions of this Agreement;
(c) a breach of a material provision of the this Agreement
(d) a petition in bankruptcy or a winding-up petition (except for
the purposes of reconstruction) in respect of a
Shareholder, filed by or against it and such petition is
not withdrawn or dismissed within thirty (30) days
after its filing; or
(e) the making of an assignment for the benefit of creditors of a
Shareholder; or
(f) A receiver or compulsory administrator is appointed for a
Shareholder or its assets and such appointment is not
discharged within thirty (30) days; or
(g) a Shareholder ceases to carry on its business.
11.2 If a Shareholder is responsible for an Event of Default, as
such are listed above, during the Earn-In Period, 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 such default is not cured within thirty (30) days following
receipt of such Default Notice, the non-Defaulting
Shareholder shall be entitled to delivery of all of the
Defaulting Shareholder's Shares of NEWCO,
together with appropriate transfer instruments, duly
endorsed, and together with such other documents as
may be necessary to assign any loans made by the
Defaulting Shareholder to NEWCO pursuant to
Clause 6.1(c) of this Agreement. The Defaulting
Shareholder shall also deliver executed resignations
of any Directors that had been nominated by the
Defaulting Shareholder. Each Shareholder hereby
irrevocably constitutes the other its lawful attorney
for the purpose of completing any transaction
pursuant to this Clause, and obtaining the necessary
approvals from the Minister of Development.
11.3 If a Shareholder is responsible for an Event of Default after
the Earn-In Period, then the provisions of Clause 12 of the
Midas Agreement shall apply, mutatis mutandis.
11.4 The provisions of this Clause 11 regarding default are subject
to the provisions of Clause 22 of this Agreement regarding
Disputes and Arbitration.
11.5 Wherever an Event of Default occurs pursuant to this Clause:
(a) the Board may apply any dividends or interest
payments which have accrued or are payable to the
Defaulting Shareholder towards any moneys which
the Defaulting Shareholder is liable to pay or provide
to NEWCO, and which have not been so paid or
provided;
(b) the Board may treat any amount due and payable to
NEWCO by a Defaulting Shareholder as a debt, and
that amount shall be deemed prima facie to be a true
and lawful debt owed to NEWCO, and the Board
may charge the Defaulting Shareholder interest on the
amount of the debt at the rate determined to be the
overdraft rate of interest, as under Clause 7.9 of the
Midas Agreement at the time of the Event of Default;
(c) neither the Defaulting Shareholder nor any of its nominees
holding shares in NEWCO shall be entitled to vote in
respect of its Shares at any General Assembly of
NEWCO during the period from the date of the
Event of Default to the date that such Event of
Default 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 such Event of Default is fully rectified,
and the Defaulting Shareholder shall take all
necessary steps to ensure that any Director or
Directors proposed by the Defaulting Shareholder (or
its nominees) resign promptly following any Event of
Default.
12 TRANSFER OF INTEREST
12.1 Any Shareholder may transfer all or part of its Participating
Interest ("the Parcel") subject to the provisions of this
Agreement.
12.2 In case a Shareholder wishes to transfer a Parcel (the
"Transferring Shareholder"), the other Shareholder has a pre-
emptive right in the acquisition of this Parcel according to the
procedure provided for in the following Clauses.
12.3 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.
12.4 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.
12.5 In case the non-Transferring Shareholder exercises its option
of acquisition, the transfer shall be effected within sixty (60)
days after the Notice of Transfer, provided that the
Transferring Shareholder has obtained the necessary
approvals from the Ministry of Development for the transfer
of the respective Shares.
12.6 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 the Parcel
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 12.3,
provided that the Transferring Shareholder has obtained all
necessary approvals.
12.7 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 this Agreement (and agreeing to
assume with respect to the Parcel purchased, the obligations
pertinent under this Agreement and the Articles), and also
agreeing to be bound by the terms and conditions of the
Midas Agreement.
12.8 For the purpose of making certain that any third party to
whom a Parcel is transferred hereunder is 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.
12.9 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 that the
proposed transfer is to an Affiliate of the Transferring
Shareholder, provided that such Affiliate adheres to Clause
12.7 hereof.
12.10 In the event that, in the future, there exists more than two
Shareholders, the non-Transferring Shareholders will have an
option to acquire the Parcel in proportion to their then-
existing Participating Interests.
12.11 If the options exercised by the non-Transferring Shareholders
do not wholly cover the Parcel, Clause 12.6 of this
Agreement shall apply.
13 CONFIDENTIALITY
13.1 The Parties shall agree upon appropriate procedures for the
protection of technical and other information that is
designated as "proprietary" or "confidential".
13.2 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.
13.3 Where information is required to be released in respect of
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.
13.4 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.
13.5 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 either Party, when and as
requested by the other Party. Confidential Information may
be shared by either Party with any third party, subject to prior
execution of an appropriate confidentiality agreement, and
provided that any such confidentiality agreement will not
release the Party from liability in case of disclosure of
Confidential Information by the third party that breaches such
confidentiality agreement.
14. [This section has been omitted.]
15. DEADLOCK
15.1 If at a meeting of the Board a deadlock situation (an equality of
votes, or a lack of majority required for a decision on an issue
of major importance) has come to exist, and despite any
amicable efforts of the Shareholders, such situation remains
unresolved 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. For
the purposes of this Clause, neither Party is permitted to
cause a deadlock by adopting a position that would cause
NEWCO to be in default under the Midas Agreement.
15.2 In the event of deadlock, the Shareholders will appoint one expert
each within ten (10) days following the notice for the
appointment of experts under 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 shall be concluded
no later than fifteen (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, and the recommendation of
the Panel will also be taken by majority vote. 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 own expense and the expenses of its
expert in resolving any deadlock, but 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 shall not be binding on the Shareholders.
In the event the Shareholders have not reached an agreement
to comply with the decision of the Panel, or have otherwise
not reached a settlement within fifteen (15) days following
the decision of the Panel, the following shall occur :
(a) 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.
(b) The Shareholder to which the offer of the higher price is made
may, within fifteen (15) days after 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 to the First Bidder
by the other Shareholder must be at least 5% higher
than the offer price per Share specified in the First
Bidder's offer.
(c) Further counter-offers may be 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 counter-offer does not
exceed the previous offer price per Share by at least
5%, that counter-offer shall be deemed not to have
been made for the purposes of this Clause.
(d) 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 shall be deemed
to have accepted the offer to purchase its
Participating Interest made by the Buyer.
(e) The completion of the transfer of the Seller's Shares or
Participating Interest to the Buyer will take place on
or before fifteen (15) days after the Seller has
accepted or is deemed to have accepted the offer
made by the Buyer, 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 any Shareholders' loans
included in its Participating Interest and the Buyer
will simultaneously hand to the Seller a bank cheque
for the total purchase price.
(f) In the event a Shareholder has failed to present an offer at the
specified time and place, the bid process will start at
the price offered by the Shareholder which 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 MIDAS
Shares from RGC to S&B, or from S&B to NEWCO or vice
versa, or the acquisition of new MIDAS 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 may 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 of the payment of
called sums or other moneys payable by that Shareholder
under the Agreement, that Shareholder shall give to the other
Shareholder 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 such 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 endeavours 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
If the Greek Minister of Development refuses to grant consent to
the application of S&B for the acquisition by NEWCO of the new
Shares of MIDAS that are to be issued after the capitalization of the
Sum that is to be funded by NEWCO, the Parties will negotiate in
good faith with S&B to determine a manner in which NEWCO can
participate in the Exploration, Development and Mining Operations
of the Product within the Area, with rights that are, as near as
possible, equivalent to the rights provided for in the Midas
Agreement.
18 GUARANTEE
18.1 Royal and Rakov have irrevocably and unconditionally guaranteed to
S&B and to its successors or permitted assigns, as prime
obligors, jointly and severally, with NEWCO, the good
performance of all the obligations of NEWCO under the
Midas Agreement, in each case waiving their rights of
exception and division ("The Guarantee").
18.2 Within the framework of the Guarantee, the Parties have agreed
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 Midas
Agreement.
18.3 The Guarantee shall remain in full force and effect, jointly and
severally, until such time as NEWCO is fully discharged of all its
obligations under the Midas Agreement.
19 S&B'S PRE-EMPTIVE RIGHTS UPON TRANSFER OF SHARES IN NEWCO
19.1 If Royal or Rakov wish to transfer their shares in NEWCO, S&B has
a pre-emptive right (subordinate to the respective pre-
emptive rights of Rakov or Royal) to acquire the number of
shares that the disposing party is willing to transfer, and
Clause 12 of this Agreement applies mutatis mutandis.
19.2 The pre-emptive right of S&B does not apply to any proposed
transfer of NEWCO shares to an Affiliate of Royal or Rakov, or from
Royal to Rakov, or vice versa.
19.3 Neither Royal nor Rakov shall have the right to float their shares
in NEWCO of an International Stock Exchange without the prior
written consent of S&B, unless S&B has first noticed that it has
determined not to take MIDAS public.
20 NOTICES
20.1 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:
(a) If to Royal:
To the Chairman, Royal Gold, Inc.
Suite 1000, 1660 Wynkoop Street
Denver, Colorado 80202-1132
Tel.: (303) 573-1660
Fax: (303) 595-9385
(b) If to Rakov:
[To be furnished.]
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, or fax confirmation.
20.2 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.
21. [This section has been omitted.]
22 DISPUTES - ARBITRATION
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 two arbitrators. The
arbitration proceedings shall take place in Athens, in the English
language, before one arbitrator who 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
This 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 NEWCO 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 of
facilitating 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.
24.11 All contracts for goods or services respecting 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, a Shareholder or its Affiliate will be
preferred over any third party.
25 [This section has been omitted.]
26 TERM OF AGREEMENT
26.1 The Agreement shall come into effect on the date
of execution, with retroactive application as set forth herein
regarding Expenses incurred since September 1, 1997, and the
Agreement shall remain in full force and effect until:
(a) terminated by written agreement between all
Shareholders; or
(b) any Shareholder holds all of the Participating
Interests, or
(c) NEWCO 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:
(a) accrued before the time at which termination or release
occurred; or
(b) by necessary implication shall survive the termination of the
Agreement.
26.3 Clauses that are expressed to survive termination
will do so.
27 WITHDRAWAL FROM MIDAS AGREEMENT
27.1 Subject to Clause 27.2, NEWCO may not withdraw from the
Midas Agreement until it has paid in to MIDAS, or until it
has expended on behalf of MIDAS, the Minimum Sum, as
described in the Midas Agreement (1,700,000 US $).
27.2 Depending upon the Minister's approval for the Extension of
the Lease as described in Clause 3.3 of the Midas Agreement,
NEWCO may withdraw from the Midas Agreement within fifteen
(15) days following the above ministerial decision, if the conditions
of the approval for the Extension may be considered, in good faith,
to be overly burdensome.
27.3 In case NEWCO withdraws from the Midas Agreement before
the Earn-In Date, it shall do all things necessary to fully and
effectively transfer the MIDAS Shares issued in its name to S&B,
for a purchase price of 1,000 Drs for all such Shares. 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 Greek Minister of
Development. Notwithstanding the above right of S&B, NEWCO
shall not be released from any of its obligations under the Midas
Agreement until it has completed all such acts necessary for the
transfer to S&B of any of its Shares in MIDAS.
27.4 After the Earn-In Date, under the Midas Agreement, any
Shareholder of MIDAS may withdraw from the Midas Agreement
at any time, provided that such Shareholder gives Notice of
Transfer of its Participating Interest, and provided that the other
Shareholders of MIDAS have an opportunity to exercise their pre-
emptive rights as per Clause 13 of the Midas Agreement.
IN WITNESS WHEREOF the Parties hereto have executed these
presents in three (3) original copies, the day and year first
hereinabove written. Each Party has taken one fully-executed
copy, whereas the third copy will be deposited with the pertinent
Tax Office, as provided by law.
ROYAL GOLD, INC.
By: /s/
Peter B. Babin
President
RAKOV PTY LTD
By: /s/
Ian Plimer
Managing Director