Exhibit 4.18
JOINT VENTURE AGREEMENT
between:
AFRICAN RAINBOW MINERALS GOLD LIMITED
(Registration Number: 1997/015869/06)
and
HARMONY GOLD MINING COMPANY LIMITED
(Registration Number: 1950/038232/06)
and
CLIDET NO 383 (PROPRIETARY) LIMITED
(Registration Number: 2001/029602/07)
2
CONTENTS
1. DEFINITIONS AND INTERPRETATION................................... 4
2. SUSPENSIVE CONDITION............................................. 13
3. THE INTERIM MANAGEMENT OF FREEGOLD............................... 13
4. SHAREHOLDINGS IN FREEGOLD........................................ 15
5. FURTHER FINANCING................................................ 21
6. FREEGOLD'S BUSINESS.............................................. 24
7. THE BOARD........................................................ 24
8. CHAIRMAN AND DEPUTY CHAIRMAN OF THE BOARD........................ 31
9. PROFITS AND DIVIDEND POLICY...................................... 32
10. GENERAL MEETINGS OF THE COMPANY AND MATTERS REQUIRING BOTH
SHAREHOLDERS' APPROVAL......................................... 33
11. TRANSFERS OF SHAREHOLDER'S INTEREST.............................. 34
12. RECIPROCAL RIGHTS OF PRE-EMPTION BETWEEN THE SHAREHOLDERS........ 36
13. COME ALONG....................................................... 40
14. TAG ALONG........................................................ 42
15. HARMONY CALL OPTIONS............................................. 42
16. MATERIAL BREACH.................................................. 44
17. ARM AND HARMONY'S RECIPROCAL CALL OPTIONS........................ 46
18. MARKET VALUE OF THE SHAREHOLDER'S INTEREST....................... 47
19. LENDERS' CTA..................................................... 49
20. WINDING-UP....................................................... 50
21. SHAREHOLDERS CONSENT............................................. 51
22. PARTIES BOUND.................................................... 51
23. ENFORCEMENT OF THE COMPANY'S RIGHTS.............................. 51
24. SHAREHOLDERS' RIGHTS TO INFORMATION.............................. 52
25. CONFIDENTIALITY.................................................. 52
26. EXPANSION OF THE MINING AND RELATED ACTIVITIES OF FREEGOLD....... 54
27. ARBITRATION AND DISPUTE RESOLUTION............................... 55
28. MINE HEALTH AND SAFETY ACT APPOINTMENTS.......................... 57
29. GENERAL.......................................................... 57
30. ADDRESSES FOR LEGAL PROCESSES AND NOTICES........................ 61
31. STATUS OF THIS AGREEMENT......................................... 63
3
PREAMBLE
The definitions of terms contained in clause 1 apply to this preamble.
A. ARM and Harmony are engaged in the gold mining industry. On 13 October 2001
they concluded a Co-operation Agreement ("the Co-operation Agreement") to
provide for the expansion and development of their future gold mining
operations in the Republic in conjunction with each other for the period
and on the terms and conditions set out in the Co-operation Agreement.
B. In terms of the Co-operation Agreement, each of ARM and Harmony ("the
introducing party") will, with effect from the signature date of that
agreement, refer to the other ("the accepting party"), in writing, all gold
mining opportunities in the Republic that it becomes aware of and wishes to
pursue, with a view to pursuing such gold mining opportunities jointly. The
introducing party shall be obliged to simultaneously provide the accepting
party with all information which it has relating to such gold mining
opportunities.
C. ARM, Harmony, AngloGold and Freegold concluded the Sale of Business
Agreement on 24 December 2001 in terms of which inter alia:
(i) Freegold will manage the Businesses of Freegold for the period from 1
January 2002 to the implementation date of the Sale of Business
Agreement in the event that the agreement becomes unconditional or, in
the event that the Sale of Business Agreement does not become
unconditional, Freegold will cease to manage the Businesses of
Freegold on the date on which the Sale of Business Agreement lapses
due to the non-fulfilment of the conditions precedent or for any other
reason;
(ii) Freegold will, in the event of the Sale of Business Agreement
becoming unconditional, acquire from AngloGold with effect form 1
January 2002 the Businesses of Freegold on the implementation date of
the Sale of Business Agreement; and
4
(iii) ARM and Harmony are obliged to enter into an agreement in order
to regulate their relationship as shareholders of Freegold on or
before 21 January 2002.
D. The purchase price for the Businesses of Freegold will be paid in three
instalments, an initial payment of R1800000000 (one thousand eight hundred
million Rand) plus the interest calculated in terms of the Sale of Business
Agreement on the implementation date of the Sale of Business Agreement
("the initial payment"), a second payment of R400000000 (four hundred
million Rand) on 1 January 2005 ("the second payment") and a third payment
in respect of any recoupment tax, capital gains tax and any other income
taxes payable by AngloGold in respect of the disposal of the Businesses of
Freegold so as to ensure that AngloGold receives an aggregate consideration
of R2200000000 (two thousand two hundred million Rand) after the taxes
payable in respect of the disposal ("the tax payment") which payment will
most probably be made before the second payment.
E. On 21 January 2002 ARM and Harmony concluded a joint venture agreement
("the first joint venture agreement") as contemplated in (C)(iii) above to
record and agree the terms and conditions of their relationship during the
management period referred to in (C)(i), to regulate the relationship
between them as shareholders of Freegold and to bind Freegold to comply
with those terms and conditions insofar as they relate to Freegold.
F. The Parties wish to conclude this Agreement to regulate the relationship
between them as set out in E and to supersede the joint venture agreement.
NOW THEREFORE THE PARTIES AGREE THAT:
1. DEFINITIONS AND INTERPRETATION
For the purposes of this Agreement unless the context requires otherwise,
the following terms shall have the meaning ascribed to them below:
1.1 "this Agreement" means this Joint Venture Agreement;
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1.2 "AngloGold" means AngloGold Limited (Registration Number:
1944/017354/06);
1.3 "ARM" means African Rainbow Minerals Gold Limited
(Registration Number: 1997/015869/06);
1.4 "the ARM Unsecured Loan" means the loan of R400 000 000 (four hundred
million Rand) made by ARM to Freegold on loan
account;
1.5 "the ARM Term Loan" means the loan of R500 000 000 (five hundred
million Rand) made by ARM to Freegold on loan
account and funded by the BoE Term Loan;
1.6 "ARM Unsecured Claims on means all of ARM's Claims on Loan Account
Loan Account" excluding the ARM Term Loan;
1.7 "the Articles" means the articles of association of Freegold in
force from time to time;
1.8 "the ARM Directors" means the directors nominated by ARM and holding
office from time to time in terms of the
Articles;
1.9 "ARM's Interest" in relation to any particular time, means all of
ARM's Shares and its Claims on Loan Account (if
any) at the time in question;
1.10 "the Auditors" means the auditors of Freegold for the time
being;
1.11 "Board" means the board of directors of Freegold as
constituted from time to time;
6
1.12 "BoE" means BoE Merchant Bank, a division of
BoE Bank Limited (Registration Number:
1951/000847/06);
1.13 "BoE Cession and Pledge in Security" means the written cession and pledge
in security by ARM in favour of BoE as
security for all of ARM's obligations
under, inter alia, the Maandagshoek
Guarantee;
1.14 "the BoE Term Loan" means the term loan of R500 000 000
(five hundred million Rand) made by
the Lenders (but initially only BoE)
to ARM and guaranteed by Freegold
pursuant to the Freegold Guarantee;
1.15 "Business Day" means any day other than a Saturday,
Sunday or statutory public holiday in
the Republic;
1.16 "Businesses of Freegold" means the gold mining businesses
known as the Bambanani, Joel,
Matjhabeng and Tshepong mines and
the Ernes Oppenheimer Hospital
business, together with all their
associated assets and infrastructure,
as carried on by AngloGold and its
associated companies as at 21
November 2001 and as more fully
described in the Sale of Business
Agreement;
1.17 "Claims on Loan Account" in relation to either of the
Shareholders, means its claims in
respect of loans made to Freegold by
such Shareholder, where such loans
are made with the consent of or by
arrangement with the other
Shareholder or in terms of this
Agreement as well as its claims
against Freegold
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which have arisen from any other
cause.
1.18 "the Companies Act" means the Companies Act 1973, as
amended from time to time;
1.19 "Conditional Subscription Agreement" means the written agreement entitled
"Conditional Subscription Agreement"
between BoE and ARM pursuant to which
BoE may acquire Shares in Freegold;
1.20 "Debt Guarantor" means Micawber 243 (Proprietary)
Limited (Registration Number
2001/021483/07) which will inter alia
guarantee to the Lenders the
obligations of ARM under the BoE Term
Loan and the obligations of Freegold
under the Freegold Guarantee;
1.21 "the Directors" means the ARM Directors and the
Harmony Directors;
1.22 "Financier" means a bank, financial institution
or other entity which is regularly
engaged in or established for the
purpose of making, purchasing or
holding interests in loans,
securities or other financial assets;
1.23 "Freegold" means Clidet No 383 (Proprietary)
Limited (Registration Number
2001/029602/07), a private company
incorporated in the Republic in which
both ARM and Harmony hold 50% (fifty
percent) of the issued share capital,
the name of which will as soon as
possible after the implementation
date of the Sale of Business
Agreement be changed to Freegold
(Proprietary) Limited or such other
name as may be acceptable to the
Shareholders and the
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Registrar of Companies;
1.24 "Freegold Counter means the written agreement
Indemnity" entitled "Freegold Counter
Indemnity" between Freegold
and the Debt Guarantor pursuant
to which Freegold indemnifies the
Debt Guarantor against certain
costs, losses, liabilities or
expenses it may incur under the
written agreements entitled
"Lenders' Debt Guarantee" and
"Harmony Debt Guarantee";
1.25 "Freegold Debt Guarantee" the written guarantee entitled
"Freegold Debt Guarantee"
pursuant to which Freegold
guarantees the obligations of
ARM under the BoE Term Loan;
1.26 "Harmony" means Harmony Gold Mining
Company Limited (Registration
Number 1950/038232/06);
1.27 "the Harmony Directors" means the directors nominated
by Harmony and holding office
from time to time in terms of
the Articles;
1.28 "the Harmony Term Loan" means the loan of R500 000 000
(five hundred million Rand) made
by Harmony to Freegold on loan
account;
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1.29 "the Harmony Unsecured Loan" means the loan of R400 000 000 (four hundred
million Rand) made by Harmony to Freegold on
loan account;
1.30 "Harmony Unsecured Claims means all of Harmony's Claims Loan Account
on Loan Account" excluding the Harmony Term Loan;
1.31 "Harmony's Interest" in relation to any particular time, means all
of Harmony's Shares and its Claims on Loan
Account (if any) at the time in question;
1.32 "Lenders' CTA" means the written agreement entitled
"Lenders' Common Terms Agreement" between BoE
(as Lender and Facility Agent), ARM, Freegold
and the Debt Guarantor, the terms and
conditions of which apply, inter alia, to the
BoE Term Loan;
1.33 "Lenders" means BoE and any Financiers that have at any
time advanced funds to ARM under the BoE Term
Loan;
1.34 "Maandagshoek Guarantee" means the written agreement entitled
"Guarantee" issued by ARM and African Rainbow
Minerals and Exploration Investments
(Proprietary) Limited (Registration No.
1997/020158/07) in favour of BoE pursuant to
which ARM as primary obligor guarantees the
obligations of ARM Mining Consortium Limited
to BoE under a subordinated loan agreement in
an amount of R102 500 000 (one hundred and
two million five hundred thousand Rand)
excluding capitalised interest;
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1.35 "Management Period" means the period from 1 January 2002 until
the implementation date of the Sale of
Business Agreement or the date on which that
agreement lapses, as the case may be, during
which period Freegold will manage the
Businesses of Freegold in terms of the Sale
of Business Agreement;
1.36 "Market Value" means the combined value of the Shareholder's
Interest of all Shareholders determined in
accordance with clause 18;
1.37 "Member of the Same in relation to a Shareholder which is a
Group" company, means another company which is for
the time being a holding company of the
Shareholder in question or a subsidiary of
that shareholder or another subsidiary of any
such holding company of that shareholder and
where applicable, includes any individual who
owns or otherwise controls, directly or
indirectly, more than 50% (fifty percent) of
the total votes in respect of all the issued
ordinary share capital of the Shareholder in
question, or nay company controlled by that
individual or a member of his immediate
family and any trust of which that individual
or his immediate family is a beneficiary;
1.38 "Merchant Bank" means a merchant bank or investment bank
which is a subsidiary or a part or a division
of a registered bank whether such bank is
registered in the Republic or elsewhere:
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1.39 "Nominee" means a Shareholder who holds a Share as a
nominee for a Shareholder as permitted in
terms of this Agreement and the Articles;
1.40 "the Parties" means ARM, Harmony and Freegold and their
successors in title and "Party" means any of
them;
1.41 "Prime Rate" means the rate (percent per annum) from time
to time charged by ABSA Bank Limited for
similar amounts on unsecured overdraft to its
prime customers in good standing in the
private sector, as certified by the manager
of that bank, whose appointment it will not
be necessary to prove, calculated on a daily
basis and compounded monthly in arrear;
1.42 "the Republic" means the Republic of South Africa;
1.43 "the Sale of Business means the sale of business agreement
Agreement" concluded between ARM, Harmony, Anglogold and
Freegold on 24 December 2001;
1.44 "Shares" means the ordinary par value shares of R1
(one rand) each in the issued share capital
of Freegold from time to time;
1.45 "Shareholders" means ARM and Harmony and where the context
so requires, includes their successors in
title to any Shares, and "Shareholder" means
any one of them as the context may require;
1.46 "Shareholder's Interest" in relation to a Shareholder at any
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particular time, means all that Shareholder's
Shares and its Claims on Loan Account (if any);
1.47 "Signature Date" means the date on which this Agreement is signed
by the last Shareholder signing it;
1.48 "Stock Exchange" means the JSE Securities Exchange South Africa and
any stock exchange on which shares of a company
may be listed;
1.49 "Unsecured Claims on means collectively, the ARM Unsecured Claims on
Loan Account" Loan Account and the Harmony Unsecured Claims on
Loan Account;
1.50 words and expressions defined in the Companies Act which are not defined in
this Agreement shall have the same meaning in this Agreement as those
ascribed to them in the Companies Act;
1.51 if any provision in a definition or the preamble contains a substantive
provision conferring rights or imposing obligations on any Party, then
notwithstanding that it is in the definitions clause or preamble, effect
shall be given to it as if it were a substantive provision of this
Agreement;
1.52 Unless inconsistent with the context, an expression which denotes:
1.52.1 any gender includes the other genders;
1.52.2 a natural person includes an artificial person and vice versa;
1.52.3 the singular includes the plural and vice versa;
1.53 All the headings and sub-headings in this Agreement are for convenience
only and are not to be taken into account for the purposes of interpreting
it.
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2. SUSPENSIVE CONDITION
This Agreement, save for clauses 1, 2, 3, 16, 25, 27, 29 and 30, is subject
to the suspensive condition that the Sale of Business Agreement becomes
unconditional on or before 30 April 2002 or such later date as may be
agreed in writing between the Shareholders, and is implemented, failing
which this Agreement shall be of no force or effect.
3. THE INTERIM MANAGEMENT OF FREEGOLD
3.1 Freegold is obliged to manage the Businesses of Freegold in terms of the
Sale of Business Agreement during the Management Period, or should the Sale
of Business Agreement not become unconditional, from 1 January 2002 to the
date on which that agreement lapses.
3.2 The Shareholders shall provide human and other resources required for such
management by Freegold free of charge. Should it be necessary to obtain
human or other resources from third parties, the Shareholders shall bear
the costs thereof equally, provided that the necessary approvals in terms
of clause 3.12 have been obtained.
3.3 Freegold has commenced management of the Businesses of Freegold and an
Interim Executive Committee ("Interim Exco") has been established which is
vested with the management of Freegold in the same manner, mutatis
mutandis, as if the Interim Exco were the Board.
3.4 The Interim Exco consists of 12 (twelve) representatives.
3.5 Each Shareholder is entitled, by written notice to the other Shareholder,
to appoint 6 (six) representatives to the Interim Exco and similarly by
written notice to remove any such representative or to replace any such
representative who is so removed or who ceases for any other reason to be a
member of the Interim Exco.
3.6 The quorum for meetings of the Interim Exco is 4 (four) representatives
present at the commencement of and throughout the meeting of whom 2
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(two) shall be representatives appointed by ARM and 2 (two) shall be
representatives appointed by Harmony.
3.7 The 6 (six) representatives on the Interim Exco of each of ARM and
Harmony have 1 (one) block vote, which vote is cast by 1 (one) of their
respective representatives.
3.8 The Interim Exco has established an interim steering committee which
shall report directly to the Interim Exco. The interim steering committee
is responsible for the day to day running of the Businesses of Freegold
within the powers delegated to it by the Interim Exco. In particular,
the interim steering committee operates within the constraints of any
approved budget and schedule of authority.
3.9 The interim steering committee consists of that number of persons deemed
necessary by the Interim Exco for the running of the Businesses of
Freegold.
3.10 The interim steering committee ensures that the Businesses of Freegold
are run and managed according to the highest international standards and
operating procedures relating to health, safety and environment.
3.11 The interim steering committee is empowered to establish such sub-
committees as may be necessary for the running of the Businesses of
Freegold.
3.12 All expenditure by either of the Shareholders in the course of the
management of the Businesses of Freegold during the Management
Period in excess of R100 000 (one hundred thousand Rand) may only be
incurred with the prior written approval of the Interim Exco. All
expenditure less than R100 000 (one hundred thousand Rand) by either
of the Shareholders must be approved by the financial directors of
each of the Shareholders.
3.13 Should the Businesses of Freegold not generate sufficient working
capital at any time during the Management Period, the Shareholders
shall provide bridging finance equally to Freegold which bridging
finance shall be repaid when sufficient capital is available to make
such repayments and after
15
having provided for working capital requirements. Should the Sale of
Business Agreement lapse for any reason and should one of the
Shareholders have contributed less than 50% (fifty percent) of such
bridging finance that Shareholder shall compensate the other
Shareholder by making a payment to the extent and with the effect
that such bridging finance shall have been contributed equally
within 3 (three) days of receipt of a written demand to make such
payment.
3.14 All expenses approved in terms of clause 3.12 shall be borne
equally by the Shareholders unless borne by Freegold. Should the
aggregate of payments in respect of such expenses be
disproportionate to the Shareholder's Interest that they will hold
after the implementation date of the Sale of Business Agreement and
dilution in terms of clause 4 (if any), then the Shareholder whose
payments are less than its proportionate share shall compensate the
other Shareholder by making a payment to the extent and with the
effect that such expenses are borne by the Shareholders in
proportion to their shareholding within 3 (three) days of receipt of
a written demand to make such payment.
3.15 The income of the Businesses of Freegold during the Management
Period shall be applied in the payment of the costs incurred during
the Management Period and the profits of the costs incurred during
the Management Period and the profits of the Businesses of Freegold
shall be retained and shall, after the implementation date of the
Sale of Business Agreement, be dealt with in terms of clause 9.
Should the Sale of Business Agreement lapse the profits and losses
of Freegold shall be for the account of AngloGold.
4. SHAREHOLDINGS IN FREEGOLD
4.1 It is recorded that the authorised share capital of Freegold is
100000 (one hundred thousand) ordinary shares of R1 (one Rand) each
and that the issued share capital of Freegold, which is held by ARM
and Harmony in equal proportions, is 2 (two) ordinary shares of R1
(one Rand) each.
4.2 Freegold shall, provided that neither Shareholder defaults in
making its contribution in respect of the initial payment in terms
of clause 4.3, allot and issue 9 999 (nine thousand nine hundred and
ninety nine) Shares to
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each of the Shareholders at par and for cash as soon as possible after the
Signature Date.
4.3 It is recorded that Freegold is obliged to pay the initial payment to
AngloGold on the implementation date of the Sale of Business Agreement, on
which date each Shareholder shall contribute to Freegold, on loan account,
an amount equal to 50% (fifty percent) of the initial payment ("the initial
contribution") in the following manner:
4.3.1 ARM shall advance the ARM Unsecured Loan to Freegold and Harmony shall
advance the Harmony Unsecured Loan to Freegold; and
4.3.2 ARM shall advance the ARM Term Loan to Freegold and Harmony shall advance
the Harmony Term Loan to Freegold.
4.4 Subject to clause 4.6, in the event that for any reason whatsoever either
of the Shareholders ("the defaulting shareholder") fails to contribute the
full amount of its initial contribution, any such shortfall shall be
contributed to Freegold by the other Shareholder ("the complying
shareholder") within 10 (ten) Business Days of the date of receipt of the
written notice in terms of clause 21 of the Sale of Business Agreement,
and, unless the complying shareholder elects otherwise in writing, Freegold
shall allot and issue to the complying shareholder the number of shares
necessary so that each Shareholder holds the percentage of the total number
of Shares which is in proportion to the contribution made by each of them
respectively ("the adjusted Shareholder's shareholding percentage").
4.5 The adjusted Shareholder's shareholding percentage shall be determined in
accordance with the following formula:
A 100
Y = ------------------ X ---
B 1
in which formula:-
(i) "Y" is the adjusted Shareholder's shareholding percentage;
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(ii) "A" is that portion of the initial payment (less the interest thereon)
contributed by the relevant Shareholder;
(iii) "B" is R1 800 000 000 (one thousand eight hundred million Rand).
EXAMPLE 1: FOR THE DETERMINATION OF THE ADJUSTED SHAREHOLDER'S SHAREHOLDING
PERCENTAGE OF A SHAREHOLDER WHO CONTRIBUTES R720 000 000 (SEVEN HUNDRED AND
TWENTY MILLION RAND) OF THE INITIAL CONTRIBUTION AND ASSUMING THAT THE INITIAL
PAYMENT IS R1 800 000 000 (ONE THOUSAND EIGHT HUNDRED MILLION RAND).
720 000 000 100
----------- ---
Y = 1 800 000 000 X 1
Y = 40%
EXAMPLE 2: FOR THE DETERMINATION OF THE ADJUSTED SHAREHOLDER'S SHAREHOLDING
PERCENTAGE OF A SHAREHOLDER WHO PAYS R1 080 000 000 (ONE THOUSAND AND EIGHTY
MILLION RAND) OF THE INITIAL CONTRIBUTION AND ASSUMING THAT THE INITIAL PAYMENT
IS R1 800 000 000 (ONE THOUSAND EIGHT HUNDRED MILLION RAND).
1 080 000 000 100
------------- ---
Y = 1 800 000 000 X 1
Y = 60%
4.6 In the event that for any reason whatsoever either of the Shareholders
("the defaulting shareholder") fails to contribute any amount at all of
its initial contribution, its initial contribution shall be contributed
to Freegold by the other Shareholder ("the complying shareholder")
within 10 (ten) Business Days of the date of receipt of the written
notice in terms of clause 21 of the Sale of Business Agreement and the
defaulting shareholder shall be obliged to transfer its 1 (one) Share
("the transfer share") to the complying shareholder, for a purchase
consideration equal to the transfer share's par value of R1 (one Rand),
by delivering to the complying shareholder against payment of the
purchase consideration its share
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certificate for the transfer share, together with such duly executed
transfer form as may be required by law for the transfer of the
transfer share to the complying shareholder or any Nominee for the
complying shareholder, and the provisions of clause 12.3.10 shall apply
mutatis mutandis.
4.7 On 1 January 2005, to the extent that Freegold is unable to fund the
second payment from internal cash resources (the amount which Freegold
is unable to fund is hereafter referred to as "the second payment
shortfall amount"), each Shareholder shall contribute on loan account
to Freegold an amount equal to that percentage of the second payment
shortfall amount which is equivalent to their then respective
percentage shareholdings ("the second payment contribution"), which
contributions will form part of the Unsecured Claims on Loan Account.
4.8 Should a Shareholder ("the defaulting shareholder") not contribute the
full amount due by it in terms of clause 4.7, the other Shareholder
("the complying shareholder") shall within 10 (ten) Business Days of
the date of receipt by Freegold of the written notice in terms of
clause 21 of the Sale of Business Agreement remedy the default of the
defaulting shareholder by contributing as an unsecured loan to Freegold
the amount ("the new unsecured claim on loan account") which the
defaulting shareholder has failed to contribute in terms of clause 4.7.
Thereafter the defaulting shareholder's shareholding in Freegold shall
be diluted in accordance with the dilution procedure ("the dilution
procedure") set out in clauses 4.9 to 4.12 (both inclusive).
4.9 The Market Value of the Shareholder's interest after the second payment
contribution shall be determined in terms of clause 18. The market
value of the Shares shall be determined by subtracting the Claims on
Loan Account from the Market Value of the Shareholder's interest and
dividing the result by the number of Shares.
4.10 Once the market value per Share has been determined, the Auditors shall
determine in terms of this clause 4.10 the percentage of the Shares
which the defaulting shareholder should hold after dilution ("the
second adjusted Shareholder's shareholding percentage"). The second
adjusted Shareholder's shareholding percentage shall be determined in
the following manner:
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B - (A x C) 100
Y = [ A + ( ------------ )] x ---
Market Value 1
in which formula:
(i) "Y" is the second adjusted Shareholder's shareholding percentage;
(ii) "A" is the defaulting shareholder's attributable share capital
(being the par value of the defaulting shareholder's Shares plus a
proportionate share of any share premium or the stated capital, as
the case may be) plus the face value of its Claims on Loan Account,
divided by the total share capital of Freegold and the total Claims
on Loan Account;
(iii) "B" is that portion of the second payment contribution made by
defaulting shareholder;
(iv) "C" is the amount of the second payment shortfall amount;
(v) "Market Value" is the Market Value determined in terms of clause 18.
EXAMPLE: FOR THE DETERMINATION OF THE SECOND ADJUSTED SHAREHOLDER'S
SHAREHOLDING PERCENTAGE OF A SHAREHOLDER WHOSE EXISTING SHAREHOLDER'S INTEREST
IS 50% (FIFTY PERCENT) AND WHO CONTRIBUTES R150 000 000 (ONE HUNDRED AND FIFTY
MILLION RAND) OF THE SECOND PAYMENT CONTRIBUTION ASSUMING THAT THE MARKET VALUE
IS R3 BILLION (THREE THOUSAND MILLION RAND).
150 million - (0.5 x 400 million) 100
Y = [ 0.5 + ( --------------------------------- )] x ---
3 billion 1
Y = 48,3%
4.11 The Auditors shall determine the number of Shares ("the remedy shares")
to be allotted and issued to the complying shareholder so that the
defaulting shareholder holds the second adjusted shareholder's
percentage. The complying shareholder shall subscribe for and Freegold
shall allot and issue to the complying shareholder the remedy shares at
the
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market value per Share determined in terms of clause 4.9 ("the
subscription price").
4.12 The amount of the subscription price shall be set off against the
amount of the new unsecured claim on loan account in partial repayment
by Freegold to the complying shareholder of the new unsecured claim on
loan account (the remaining balance of the new unsecured claim on loan
account is hereafter referred to as "the new claim balance").
4.13 The defaulting shareholder shall for a period of 60 (sixty) days after
the remedy of the default of the defaulting shareholder by the
complying shareholder, have a call option ("the clawback option") to
require the complying shareholder to sell to the defaulting shareholder
that number of the remedy shares ("the clawback remedy shares") and
that portion of the new claim balance that will put the defaulting
shareholder back in the position it would have been in had it not
defaulted in respect of the second payment contribution ("the clawback
new claim balance"). The purchase price for:
4.13.1 the clawback remedy shares shall be calculated by multiplying the
number of clawback remedy shares by the market value per Share
which was determined in terms of clause 4.9 and which was used for
the calculation of the number of remedy shares allotted and issued
in terms of clause 4.11;
4.13.2 the clawback new claim balance shall be the face value thereof.
The aggregate of the purchase prices for the clawback remedy shares and
the clawback new claim balance is hereafter referred to as "the
clawback price".
4.14 The clawback option may be exercised by the defaulting shareholder by
way of written notice to the complying shareholder on or before the
last day of the 60 (sixty) day period. Upon the exercise of the
clawback option, the defaulting shareholder shall pay the clawback
price (together with interest thereon at the Prime Rate from the date
of remedy of the default in terms of clause 4.8 to the date of payment
of the clawback price) to the complying shareholder within 10 (ten)
Business Days of the date of
21
exercise of the clawback option against delivery by the
complying shareholder to the defaulting shareholder of the
share certificates and a share transfer form in respect of the
clawback remedy shares signed by the complying shareholder and
blank as to transferee and a written cession of the clawback
new claim balance in favour of the defaulting shareholder.
4.15 The defaulting shareholder shall indemnify the complying
shareholder against any tax incurred by the complying
shareholder in respect of the transfer of the clawback remedy
shares contemplated in clause 4.14.
4.16 When Freegold is required to pay the tax payment in terms of
the Sale of Business Agreement and to the extent that Freegold
is unable to fund the tax payment from internal cash resources
(the amount which Freegold is unable to fund is hereafter
referred to as "the tax payment shortfall amount") each
Shareholder shall contribute on loan account to Freegold an
amount equal to that percentage of the tax payment shortfall
amount which is equivalent to their then respective percentage
shareholdings ("the tax payment contribution"), which
contributions will form part of the Unsecured Claims on Loan
Account.
4.17 Should a Shareholder not contribute the full amount due by it
in terms of clause 4.16, the dilution procedure and the
provisions of clauses 4.8 to 4.15 (both inclusive) shall apply
mutatis mutandis except that references to the second payment
contribution shall be construed as references to the tax
payment contribution.
5. FURTHER FINANCING
5.1 Unless otherwise agreed between the Shareholders in writing,
neither Shareholder shall be obliged to give any guarantees or
provide any security in respect of the funding obligations of
Freegold.
5.2 Freegold's future capital requirements shall be provided in
the following manner:
5.2.1 out of Freegold's own resources; or if this is not possible
22
5.2.2 by means of loans from financial institutions and other appropriate
third parties secured by the assets of Freegold without security
being provided by the Shareholders; or if this is not possible;
5.2.3 by means of loans by the Shareholders or, if so agreed between the
Shareholders, by means of share capital, which shall be contributed
("the capital call contribution") by the Shareholders pro rata to
their shareholdings at that time; and
5.2.4 combinations of the above.
5.3 Where the Shareholders provide any capital by way of loans,
including without limitation, the loans in respect of the Unsecured
Claims on Loan Account, such loans (other than the ARM Term Loan and the
Harmony Term Loan, the terms and conditions of which are contained in
written agreements concluded between ARM and Freegold and Harmony and
Freegold respectively) shall, unless otherwise agreed in writing between
the Shareholders, be on the following terms and conditions:
5.3.1 such loans shall be interest bearing at the rate agreed between the
Shareholders and Freegold from time to time and failing such
agreement at the Prime Rate;
5.3.2 subject to the provisions of clause 9.1, such loans shall be
repayable to the Shareholders pro rata to their then shareholding as
and when the funds are available;
5.3.3 such loans shall in all other respects be on the terms and conditions
applicable to the existing Unsecured Claims on Loan Account (if any)
at the time in question.
5.4 Should a Shareholder ("the defaulting shareholder") fair to fulfil
any of its obligations in terms of and in accordance with clause 5.2.3,
and should the defaulting shareholder remain in breach of those
obligations for a period of 14 (fourteen) days after receipt of a
written notice by the other Shareholder ("the complying shareholder")
calling upon the defaulting shareholder to remedy such breach, the
complying shareholder may, after it has remedied the default, in its
sole discretion, elect to invoke the dilution procedure, in
23
which event the provisions of clauses 4.8 to 4.15 (both inclusive)
shall apply mutatis mutandis except that:
5.4.1 references to the second payment contribution shall be construed
as references to the capital call contribution; and
5.4.2 the clawback option may be exercised in accordance with clause
4.13 within a period of 180 (one hundred and eighty) days.
5.5 Should the complying shareholder elect not to remedy the default of
the defaulting shareholder and invoke the dilution procedure in
accordance with clause 5.4, it may, in its sole discretion, elect to
claim immediate repayment of the loan advanced by it to Freegold in
terms of clause 5.2.3.
5.6 Should AngloGold claim any amount from Freegold in terms of the Sale
of Business Agreement and should Freegold be unable to pay the amount
out of its own resources then the Shareholders shall provide further
capital by way of loans pro rata to their shareholdings at that time
to Freegold in order to enable it to pay such amount to AngloGold.
Unless otherwise agreed in writing between the Shareholders, the
indebtedness of Freegold incurred in respect of such loans shall be on
terms and conditions agreed between the Shareholders and the Board
and, failing such agreement shall be on the terms and conditions
applicable to the existing Unsecured Claims on Loan Account (if any)
at the time in question. Should a Shareholder fail to fulfil any of
its obligations in terms of this clause 5.6 the provisions of clause
5.4 shall apply mutatis mutandis.
5.7 The Shareholders agree that to the extent that any of them suffers any
loss in relation to suretyships and indemnities given on behalf of
Freegold, or loans made or credit given to Freegold pursuant to this
Agreement, they shall compensate each other within 3 (three) days of a
written demand to the extent and with the effect that such losses are
borne in proportion to their then shareholdings in Freegold.
24
6. FREEGOLD'S BUSINESS
6.1 Each of the Shareholders shall use all reasonable and proper means in
its power to maintain, improve and extend the business of Freegold and
to further the reputation and interests of Freegold and any
subsidiaries it may have from time to time, subject to the terms and
conditions of the Co-operation Agreement.
6.2 The business of Freegold shall be that of gold mining, the acquisition
and exploitation of mineral rights and all related operations
including, but not limited to, smelting, refining, beneficiation and
marketing of gold and its associated minerals and by-products, and any
other types of business which the Shareholders may agree upon from
time to time subject to the terms and conditions of the Co-operation
Agreement.
6.3 Except as the Shareholders may otherwise agree in writing or save as
otherwise provided for or contemplated in this Agreement, they shall
exercise their powers in relation to Freegold so as to ensure that
Freegold carries on and conducts its business and affairs in a proper
and efficient manner and for its own benefit.
6.4 The expression "Freegold" where used in this clause 6 shall include
any subsidiaries it may have from time to time to the extent and with
the effect that the provisions of this clause 6 shall apply in
relation to each such subsidiary as they apply in relation to
Freegold.
6.5 The Shareholders record that Freegold shall be a profit orientated
enterprise.
7. THE BOARD
7.1 Notwithstanding the provisions of the Articles, The Board shall
consist of 12 (twelve) directors.
7.2 For as long as ARM and Harmony each hold 50% (fifty percent) of the
Shares, or for so long as ARM and BoE collectively hold (pursuant to
an
25
acquisition of Shares by BoE in terms of the Conditional
Subscription Agreement) 50% (fifty percent) of the Shares and
Harmony holds the other 50% (fifty percent) of the Shares:
7.2.1 ARM may nominate 6 (six) persons for appointment as directors;
and
7.2.2 Harmony may nominate 6 (six) persons for appointment as
directors;
which persons shall be appointed as directors in terms of the
Articles.
7.3 If, and for so long as a Shareholder holds more than 50% (fifty
percent) of the Shares, such Shareholder shall be entitled to
nominate 7 (seven) persons for appointment as directors and the
other Shareholder shall be entitled to nominate 6 (six) persons for
appointment as directors, which persons shall be appointed as
directors in terms of the Articles provided that if and for so long
as a Shareholder holds 75% (seventy five percent) of more of the
Shares, the Shareholders shall nominate directors in proportion to
their then shareholdings. Should the application of the
proportionate nomination principle result in a fraction, then that
number shall be rounded off to the nearest whole number.
7.4 Subject to the provisions of the Companies Act, the Shareholder
nominating a director shall be entitled to remove and replace such
director by written notice to Freegold, and in the same manner
replace a director who ceases to be a director for any other reason.
7.5 The Shareholders shall be entitled to nominate alternate directors
for the directors nominated in terms of this clause 7, who shall be
appointed in terms of the Articles. Such alternates need not be
directors.
7.6 Subject to the provisions of clause 7.3, the quorum for meetings of
the Board shall be 4 (four) directors present at the commencement of
and throughout the meeting of whom 2 (two) shall be ARM Directors
and 2 (two) shall be Harmony Directors.
26
7.7 If within 30 (thirty) minutes after the time appointed for the commencement
of any meeting of the Board a quorum is not present, the meeting shall be
adjourned to a day 7 (seven) days after the date of the adjourned meeting
at the same place and time. Should that day not be a Business Day the
meeting shall be adjourned to the next Business Day after the expiry of the
7 (seven) day period.
7.8 Should a quorum not be present at such adjourned meeting within 30 (thirty)
minutes after the time appointed for the meeting, the directors present in
person at that adjourned meeting shall constitute a quorum.
7.9 Unless otherwise determined by the Board a director shall receive at least
7 (seven) days notice of directors' meetings and shall receive at least 48
(forty eight) hours notice of adjourned meetings.
7.10 All nominations of directors and alternate directors in terms of this
clause 7 shall be made by written notice given to Freegold by the relevant
Shareholder.
7.11 Each Shareholder shall exercise its votes in respect of any resolution for
the appointment or removal of a director in the same manner as the
Shareholder who nominated such director.
7.12 Where no chairman or deputy chairman of the Board is present at the
commencement of and throughout the meeting the directors nominated by the
Shareholder who appointed the chairman in terms of clause 8 shall elect
from amongst their number a chairman of the meeting.
7.13 So as to effect meaningful black empowerment, transfer of skills and
capacity building, each Shareholder shall be entitled to identify 2 (two)
invitees whose identity shall be provided to Freegold in writing and who
shall be approved by the Board in writing and once so approved shall, in
addition to the directors, except where the Shareholders agree otherwise,
be entitled to attend and speak at meetings of the Board but shall not be
entitled to vote at such meetings.
7.14 The ARM Directors shall collectively have 1 (one) block vote which will be
cast by 1 (one) of the ARM Directors present at the meeting of the Board
27
and the Harmony Directors shall collectively have 1 (one) block
vote which will be cast by 1 (one) of the Harmony Directors
present at the meeting of the Board.
7.15 If, and for so long as a Shareholder holds more than 50% (fifty
percent) of the Shares, the directors nominated by such
Shareholder shall have 2 (two) block votes and the other
Shareholder shall have 1 (one) block vote which will be cast by 1
(one) of their respective directors present at the meeting of the
Board.
7.16 No resolution of the Board shall be regarded as having been
passed in respect of any of the following matters unless it has
been passed unanimously:
7.16.1 save as otherwise provided for in this Agreement, the
allotment or issue of any further shares in Freegold which
have been placed under the control of the directors by
Freegold in general meeting and in respect of which a
general authority has been given.
7.16.2 save as otherwise provided for in this Agreement, the
consent to the registration of transfer of Shares otherwise
than in terms of this Agreement, the Articles or any
agreement between all the Shareholders;
7.16.3 the creation or issue of any debentures by Freegold;
7.16.4 the declaration of dividends in excess of that provided for
in clause 9 of this Agreement;
7.16.5 the purchase by Freegold of any asset other than in the
ordinary, normal and regular course of business or the
entering into of any lease in terms of which an item will be
leased otherwise than in the ordinary, normal and regular
course of business;
7.16.6 the sale or disposal of any fixed assets of Freegold for a
total selling price per transaction of more than
R 50 000 000 (fifty million Rand);
28
7.16.7 the conclusion, extension, renewal or modification of any long term
(exceeding 6 (six) months) contract, other than in the normal,
ordinary and regular course of business and any unusual or onerous
contract;
7.16.8 the conclusion of any contract with a Shareholder of Member of the
Same Group as the Shareholder outside the normal, ordinary and regular
course of business;
7.16.9 the conclusion of any other transaction or contract outside the
normal, ordinary and regular course of business;
7.16.10 subject to the provisions of clause 26, the establishment of any new
business including the sinking of any new shafts or the material
expansion of the operations of Freegold other than in accordance with
the budget or business plan;
7.16.11 the suspension or cessation or abandonment of any business or part
thereof carried on by Freegold;
7.16.12 the changing of the main business of Freegold;
7.16.13 save as otherwise provided for in this Agreement or in terms of the
Freegold Debt Guarantee, the mortgage, pledge or hypothecation in any
other manner of any assets or property of Freegold outside the normal
and regular course of business;
7.16.14 save as otherwise provided for in this Agreement or in terms of the
Freegold Debt Guarantee, the giving of any suretyship or guarantee for
the obligations of any person or entity other than a wholly owned
subsidiary;
7.16.15 save as otherwise provided for in this Agreement or in terms of the
Freegold Counter Indemnity, the issuing or any indemnities by Freegold
or the undertaking of any other similar obligations outside the normal
and regular course of business;
29
7.16.16 the provision of any finance to any other person or entity whether in
the form of loans or in any other manner of amounts (whether or not
reflected on Freegold's balance sheet) outside the normal and regular
course business;
7.16.17 subject to the provisions of clause 26, the authorisation or incurring
of any capital expenditure outside the normal, ordinary and regular
course of business and which is not provided for in the short or long
term budget or business plan;
7.16.18 the change of the basis of accounting used by Freegold for its
previous accounting period unless required by any law. Generally
Accepted Accounting Practice or convention;
7.16.19 the employment or dismissal of all employees who report directly to
the steering committee established in terms of clause 7.19
7.16.20 the adoption or material variation, of any bonus or profit-sharing
scheme or any share option or share incentive scheme or employee share
trust or share ownership plan;
7.16.21 the variation of any benefits under the pension fund in respect of
Freegold, other than variations of benefits required to be effected by
the pension fund;
7.16.22 the acquisition of any business, whether directly by acquiring the
business itself, or indirectly by acquiring the share capital of any
company owning the business;
7.16.23 the subscription for or the purchase of shares of or stock in or
debentures issued by any company outside the normal and regular course
of business;
7.16.24 the entering into of any partnership or joint venture with any third
party outside the normal and regular course of business;
7.16.25 the disposition or dilution Freegold's interests, directly or
indirectly, in any subsidiaries it may have from time to time;
30
7.16.26 the merging of Freegold with any other company or corporate body or
the merger of Freegold's business with that of any other person;
7.16.27 the approval of annual and long term budgets of Freegold from time to
time and deviations therefrom, which vote in favour of such resolution
shall not be unreasonably withheld taking cognisance of generally
accepted mining industry practice, sound economic principles and the
best interests of the Businesses of Freegold specifically and Freegold
generally;
7.16.28 the determination of Freegold's annual and long term business plan and
investment and financial policies and plans, which vote in favour of
such resolution shall not be unreasonably withheld taking cognisance
of generally accepted mining industry practice, sound economic
principles and the best interests of the Businesses of Freegold
specifically and Freegold generally;
7.16.29 the determination of Freegold's hedging and associated foreign
exchange policies;
7.16.30 the conclusion of any contract between Freegold and any director or
employee of Freegold or any person who is a relative or member of
Freegold as defined in the Estate Duty Act. 1955 (as amended), or any
corporation or company controlled by any Shareholder, director, Member
of the Same Group or relative, directly or indirectly outside the
normal, ordinary and regular course of business;
7.16.31 the variation of, addition to or cancellation of any terms or
conditions of or the cancellation of any appointment, transaction or
agreement dealt within this clause 7.16 or to which it applies.
7.17 Should a Shareholder hold 75% (seventy five percent) or more of the Shares
the provisions of clause 7.16 shall not apply and Board resolutions and
resolutions put to the vote of the Board shall be decided by way of a
majority vote.
31
7.18 Save as otherwise provided in this Agreement, all resolutions of the Board
shall be decided by way of a majority vote.
7.19 The Board shall establish a steering committee which shall report directly
to the Board. The steering committee shall be responsible for the day to
day running of the Businesses of Freegold within the powers delegated to it
by the Board. In particular, the steering committee shall operate within
the constraints of any approved budget and schedule of authority.
7.20 The steering committee shall ensure that the Businesses of Freegold are run
and managed according to the highest international standards and operating
procedures relating to health, safety and environment.
7.21 The steering committee may establish sub-committees such as financial
committees, empowerment committees, technical committees and human
resources committees.
8. CHAIRMAN AND DEPUTY CHAIRMAN OF THE BOARD
8.1 In line with the Shareholders' intention to promote the empowerment image
and profile of Freegold and in order to grow and develop its business, the
chairman of the Board shall, for the first 24 (twenty four) months after
the implementation date of the Sale of Business, be a person nominated by
ARM and appointed in terms of the Articles and the deputy chairman for that
period shall be a person nominated by Harmony. Thereafter, notwithstanding
that Harmony should be entitled to nominate the chairman, it is the
intention of the Shareholders that, for the above reasons, Freegold should
have joint-chairmen, one of whom shall be a person nominated by ARM and the
other shall be a person nominated by Harmony. There shall accordingly be no
deputy chairman.
8.2 The chairman and the deputy chairman shall always be nominated from amongst
the directors of Freegold.
8.3 The chairman and deputy chairman shall not have a casting vote at meetings
of the Board.
32
8.4 A chairman, joint-chairman or deputy chairman nominated by a
Shareholder may be removed and may be replaced pursuant to a written
request given to Freegold to that effect by that Shareholder. A
chairman and deputy chairman shall be appointed, removed and replaced
by Freegold in terms of the Articles at a general meeting.
8.5 Each Shareholder shall exercise its votes in respect of any resolution
for the appointment or removal of a chairman, joint-chairman or deputy
chairman in the same manner as the Shareholder nominating such
chairman or deputy chairman or requesting his removal, as the case may
be.
9. PROFITS AND DIVIDEND POLICY
9.1 The surplus cash after payment of operating costs and current taxes of
Freegold shall be applied in the following manner:
9.1.1 firstly, to fund working capital, capital expenditure and to
provide for taxes;
9.1.2 secondly, to the provision for pro rata repayment and to pro-rata
repayment of, the capital and interest on the ARM Term Loan and
the Harmony Term Loan;
9.1.3 thirdly, to the provision for payment and to payment of the
second payment and the tax payment;
9.1.4 fourthly, to the pro rata repayment of the capital and interest
on the ARM Unsecured Loan and the Harmony Unsecured Loan and any
further Unsecured Claims on Loan Account;
9.1.5 fifthly, to the payment of dividends.
9.2 Subject to clause 9.1 and unless otherwise agreed in writing by the
Shareholders, they shall procure that all of Freegold's profits for
each financial year, which are available for distribution, will,
unless otherwise
33
agreed, be distributed by the payment of cash dividends at least
twice during each financial year and within 30 (thirty) days of
the end of each period of 6 (six) months during the financial
year in question.
10. GENERAL MEETINGS OF THE COMPANY AND MATTERS REQUIRING BOTH
SHAREHOLDERS' APPROVAL
10.1 The quorum for general meetings of Freegold shall always include
both Shareholders who shall be present at the commencement of and
throughout the general meeting. The voting and the conduct at
proceedings of general meetings shall in all other respects be
governed by the Articles and the Companies Act.
10.2 Resolutions in respect of the following matters may only be passed
with the approval in writing of a Shareholder or Shareholders, as
the case may be, holding 75% (seventy five percent) or more of
the Shares:
10.2.1 the change of the Auditors;
10.2.2 the passing of a resolution as contemplated in Section 228
of the Companies Act to authorise the sale or disposition
of the whole or a major part of the business or the assets
of Freegold;
10.2.3 subject to the provisions of this Agreement and save in
respect of Shares which BoE may become entitled to acquire
in terms of the Conditional Subscription Agreement, the
creation, allotment or issue of any shares in the capital of
Freegold or any other security or granting of any option or
rights to subscribe in respect thereof or the conversion of
any instrument into such shares;
10.2.4 the declaration of a dividend otherwise than in accordance
with clause 9;
10.2.5 the bringing of any application for the winding-up of
Freegold; or
10.2.6 the obtaining of a listing for the Shares on any Stock
Exchange.
34
10.3 The expression "Freegold" where used in clause 10.2 shall include any
subsidiaries Freegold may have from time to time to the extent and with the
effect that the provisions of clause 10.2 shall apply in relation to each
such subsidiary as they apply in relation to Freegold.
10.4 Should there be an equality of votes in respect of a resolution proposed at
a general meeting the chairman of the general meeting shall not have a
casting vote.
10.5 Save as otherwise provided for in this Agreement, the Articles or the Act,
all resolutions put to the vote of the general meeting shall be decided by
way of a majority vote.
11. TRANSFERS OF SHAREHOLDER'S INTEREST
11.1 Neither Shareholder shall, except in accordance with the provisions of this
Agreement or in accordance with the provisions of the Conditional
Subscription Agreement or with the prior written consent of the other
Shareholder:
11.1.1 pledge, mortgage or otherwise hypothecate or encumber its
Shareholder's Interest or any of the rights attached to its
Shareholder's Interest; or
11.1.2 sell, transfer or otherwise dispose of its Shareholder's Interest or
any of the rights attached to its Shareholder's Interest; or
11.1.3 enter into any agreement in respect of the votes attached to its
Shareholder's Interest or any of the other rights attached to its
Shareholder's Interest.
11.2 Any Shareholder shall be entitled to encumber its Shareholder's Interest in
favour of the Debt Guarantor and/or any Financier that provides funding to
such Shareholder to enable such Shareholder to make contributions
35
(whether in the form of loans or share capital) to Freegold; provided that
in granting such security the relevant Shareholder shall ensure that:
11.2.1 the Debt Guarantor and/or any Financier, as the case may be, agrees to
comply with the provisions of clauses 12.1 to 12.6 (both inclusive) in
favour of the other Shareholder when realising the relevant
Shareholder's Interest; and
11.2.2 the Debt Guarantor and/or any Financier, as the case may be, agrees to
ensure that any person who agrees to acquire the relevant
Shareholder's Interest shall enter into and sign a deed of adherence
to observe, perform and be bound by all the terms of this Agreement
which are capable of applying to such person.
11.3 The Harmony Term Loan shall be secured in the same manner and to the same
extent mutatis mutandis as the security provided to the Lenders and/or the
Debt Guarantor in respect of the assets of Freegold.
11.4 The Parties shall procure that before any person (other than a person who
is already a Shareholder) is registered as a holder of any Share, such
person shall enter into and sign a deed of adherence to observe, perform
and be bound by all the terms of this Agreement which are capable of
applying to such person. The Parties shall further co-operate in good faith
so as to amend this Agreement to provide for the additional Shareholder or
Shareholders. Freegold shall not register any such person as the holder of
any Share until such a deed has been executed. Upon being so registered
that person shall be deemed to be a Party to this Agreement.
11.5 Freegold shall not register any transfer of Shares made in breach of this
Agreement and the Shares so transferred shall carry no rights whatsoever
unless and until the breach is rectified.
11.6 No Shareholder shall transfer any Shares unless a proportionate amount of
that Shareholder's Claims on Loan Account, if any, are transferred together
with such Shares.
36
12. RECIPROCAL RIGHTS OF PRE-EMPTION BETWEEN THE SHAREHOLDERS
12.1 Save as otherwise provided in this Agreement, each Shareholder ("the
offeror") undertakes not to sell or otherwise dispose of or transfer any
Shareholder's Interest owned by it to anyone ("a third party offer")
other than the other Shareholder ("the offeree"), without first offering
such Shareholder's Interest ("the offer Shareholder's Interest") to the
offeree at the same price and on the same terms and conditions as those
on which the offeror is prepared to sell the offer Shareholder's
Interest under a bona fide transaction to such other person.
12.2 Any offer ("the offer") in terms of clause 12.1 shall;
12.2.1 be made in writing to the offeree and be delivered to the offeree at
its address set out in clause 30;
12.2.2 specify the name of the third party who is the prospective
transferee, the purchase price expressed as an amount in South
African Rands and the terms and conditions of the third party offer;
12.2.3 be irrevocable for a period of 30 (thirty) days from its receipt by
the offeree;
12.2.4 not be capable of partial acceptance unless otherwise agreed by the
prospective transferee;
12.2.5 be accepted by the offeree giving written notice to the offeror's
address specified in clause 30 within the 30 (thirty) days referred
to in clause 12.2.3.
12.3 If the offer is duly accepted by the offeree;
12.3.1 then the sale and purchase of the offer Shareholder's Interest which
results shall be on the terms and conditions of the third party
offer provided that payment shall be made within 60 (sixty) days
after the acceptance referred to in clause 12.2.5. Should payment
for the offer Shareholder's Interest occur after the payment date
specified in the third party offer, the offeree shall pay interest
on the
37
purchase price at the Prime Rate from the payment date specified in the
third party offer until the date of payment;
12.3.2 the offeror shall deliver the relevant share certificate(s) to the
offeree or any Nominee(s) for the offeree, together with such duly
executed transfer forms as may be required by law for the transfer of
the Shares forming part of the offer Shareholder's Interest to the
offeree or any Nominee(s) for the offeree, and a power of attorney in
such form and in favour of such person as the offeree may nominate so as
to enable the offeree to exercise all rights of ownership in respect of
the Shares forming part of the offer Shareholder's Interest, including,
without limitation, the voting rights thereto;
12.3.3 the offeror shall deliver the relevant cessions to the offeree in
writing in respect of a proportionate amount of its rights in respect of
its Claims on Loan Account;
12.3.4 the offeror and the offeree shall procure (insofar as they are able)
that such transfer or transfers are duly registered;
12.3.5 the offeror shall do all such other things and execute all such other
documents as the offeree may require to give effect to the sale and
purchase of the offer Shareholder's Interest;
12.3.6 each of the Shareholders shall use its reasonable endeavours to obtain
any regulatory or other consents that are needed to enable the sale and
purchase of the offer Shareholder's Interest to be completed. If such
consents are refused the purchase and sale shall become void and the
offeror and the offeree shall be released from their obligations under
this clause 12.3, but they shall negotiate with each other in good faith
with a view to achieving an alternative solution.
12.3.7 the offeree shall within the 60 (sixty) day period referred to in clause
12.3.1 provide the offeror with a written statement by the offeree's
Financiers to the effect that they are prepared to lend the
38
necessary funds to the offeree to enable it to purchase the offer
Shareholder's Interest at the end of the 60 (sixty) day period;
12.3.8 should the funds referred to in clause 12.3.7 not be available at the
end of the 60 (sixty) day period referred to in clause 12.3.1 then,
provided that the offeree provides proof, to the reasonable
satisfaction of the offeror, before the end of the 60 (sixty) day
period, that payment of the purchase price will be made within a
further 30 (thirty) days from the end of such 60 (sixty) day period,
the offeree shall have an additional 30 (thirty) day period from the
end of such 60 (sixty) day period to pay the purchase price;
12.3.9 should the offeree fail to make payment at the end of the 60 (sixty) day
or the additional 30 (thirty) day period, at the case may be, the
offeror shall without prejudice to its other rights in law be entitled
to cancel the agreement of sale and purchase in terms of clause 12.3 and
the offeree shall forfeit all its pre-emptive rights in respect of any
proposed future transfers by the offeror of its Shareholder's Interest
or a portion of its Shareholder's Interest;
12.3.10 if the offeror fails or refuses to transfer any offer Shareholder's
Interest in accordance with its obligations hereunder, the offeree
shall execute and deliver on behalf of the offeror the necessary
transfer form(s) and other documents required for the transfer of the
offer Shareholder's Interest. The offeree shall receive the purchase
money in trust for the offeror and in the case of any Shares forming
part of the offer Shareholder's Interest cause the offeree to be
registered as the holder thereof, whereupon it shall pay the purchase
money so received by it to the offeror and after the offeree has been
registered in exercise of the aforesaid powers the validity of the
proceedings shall not be questioned by any person.
12.4 Should the offer not be accepted by the offeree within the period
applicable under clause 12.2.6, then the offeror shall be entitled to
sell or otherwise dispose of and transfer the offer Shareholder's
Interest to the third party specified as the prospective transferee in
the offer, provided that:
39
12.4.1 the sale is entered into within 30 (thirty) days from the date on
which the offeror receives written notification from the offeree of
its rejection of the offer or the offer expires, whichever is the
earlier;
12.4.2 the sale is not effected at a price and on terms and conditions which
are more favourable to the prospective transferee than those first
offered to the offeree in terms of the offer;
12.4.3 no transfer may be effected in terms of this clause 12.4 unless and
until the prospective transferee will have first agreed in writing to
become a party to and be bound as a Shareholder by all the terms and
conditions of this Agreement in accordance with the requirements of
clause 11.4 and the sale or other disposal to the prospective
transferee in question shall not take effect unless and until the
requirements of this clause 12.4.3 have been completed to the
reasonable satisfaction of the offeree:
12.4.4 without detracting from the generality of this clause 12.4, no
transfer may be effected in terms of this clause 12.4 to a prospective
transferee who at the time of the proposed transfer is or would be in
breach of any of the obligations to be assumed by such transferee in
terms of the requirements of clause 12.4.3; and
12.4.5 should the sale or other disposal to the prospective transferee named
in the offer not be entered into within the 30 (thirty) days referred
to in clause 12.4.1, all the provisions of this clause 12 shall
continue to remain in force.
12.5 Notwithstanding anything else in this clause 12 it shall not apply to and
therefore not preclude:
12.5.1 any transfer of any Shares by a Shareholder to a bona fide Nominee of
that Shareholder or from any such bona fide Nominee back to that
Shareholder or from any one such bona fide Nominee to any other such
bona fide Nominee, where there is no change of beneficial ownership of
the Shares in question, provided that no such transfer may be effected
unless and until such Nominee will have first agreed in writing to
become a party to and be bound as a
40
Shareholder by all terms and conditions of this Agreement in
accordance with the requirements of clause 11.4;
12.5.2 any transfer of any Shareholder's Interest by a Shareholder to any
other company which is wholly owned subsidiary of that Shareholder,
provided that:
12.5.2.1 the transferee continues to be a wholly owned subsidiary of such
Shareholder for as long as it holds any Shares;
12.5.2.2 no transfer may be effected in terms of this clause 12.5.2 unless and
until the prospective transferee will have first agreed in writing to
become a party to and be bound as a Shareholder by all the terms and
conditions of this Agreement in accordance with the requirements of
clause 11.4;
12.5.2.3 the Shareholder shall continue to be bound by this Agreement and
undertakes that is the transferee, after having taken transfer of the
Shares in question, ceases to be a wholly owned subsidiary of the
Shareholder, it will prior to so ceasing transfer all Shares it may
then be holding back to that Shareholder in accordance with the
requirements of clause 12.5.2.1.
12.6 Any third party who takes transfer of a Shareholder's Interest in terms of
clause 12 shall comply with the provisions of clause 11.4.
12.7 The provisions of clauses 12.1 to 12.6 (both inclusive) other than clause
12.5.1, shall not apply to any transfer of the whole or any part of ARM's
Shareholder's Interest in accordance with the provisions of the Conditional
Subscription Agreement.
13. COME ALONG
13.1 Should a shareholder ("the disposing shareholder") at any time hold 70%
(seventy percent) or more of the Shareholder's Interest and should an offer
41
to acquire its entire Shareholder's Interest be received from a third
party ("the third party offer") the disposing shareholder shall, in
the event that it wishes to accept the third party offer in respect of
its Shareholder's Interest, indicate in writing to the other
Shareholder ("the remaining shareholder") its intention to accept the
third party offer insofar as it relates to its Shareholder's Interest.
13.2 The notice in terms of clause 13.1 shall constitute an offer by the
disposing shareholder to sell its Shareholder's Interest to the
remaining shareholder on the terms of the third party offer.
13.3 Such offer to the remaining shareholder shall be irrevocable and
capable of acceptance for a period of 30 (thirty) days after the
receipt of such notice.
13.4 Should the offer referred to in clause 13.2 be refused by the
remaining shareholder or expire unaccepted, then the other provisions
of this Agreement or the Articles conferring pre-emptive rights on the
Shareholders shall not apply and the disposing shareholder shall have
the right to immediately require the remaining shareholder to join
with the disposing shareholder in accepting the third party offer and
giving effect to any sale resulting therefrom.
13.5 If the remaining shareholder fails or refuses to cede and transfer any
of its Shareholder's Interest in accordance with its obligations
hereunder, the disposing shareholder shall execute and deliver on
behalf of the remaining shareholder the necessary transfer form(s) and
other documents required for the transfer of the remaining
Shareholder's Interest. The disposing shareholder shall receive the
purchase money in trust for the remaining Shareholder's Interest and
cause the third party to be registered as the holder thereof,
whereupon it shall pay the purchase money so received by it to the
remaining shareholder and in the case of such registration in exercise
of the aforesaid powers, the validity of any such actions shall not be
questioned by any person.
42
14. TAG ALONG
Subject to the provisions of clause 12, should either Shareholder hold
70% (seventy percent) or more of the Shares, such Shareholder shall not
enter into any transaction for the sale or disposal of more than 49%
(forty nine percent) of the entire Shareholder's Interest unless at the
same time it procures for the other Shareholder an offer by the same
time it procures for the other Shareholder an offer by the same
purchaser for the purchase of the Shareholder's Interest of the other
Shareholder at the same price and upon the same terms and conditions.
15. HARMONY CALL OPTIONS
15.1 Should the Lenders call up the BoE Term Loan or any part thereof (by
the exercise of any of their rights under clause 12 of the Lenders'
CTA pursuant to ARM failing to remedy an event of default under that
agreement in the time period allowed therefor), ARM shall forthwith
inform Harmony in writing thereof and such notice shall constitute
an offer by ARM to Harmony to sell that percentage of its
Shareholder's Interest ("the Sold Interest"), calculated at Market
Value, which is equal in value to the outstanding amount of the BoE
Term Loan in respect of which BoE has called for payment. The
purchase price for the Sold Interest shall be:
15.1.1 in respect of ARM's Shares ("the Sold Shares") comprised in
the Sold Interest, the market value thereof (being the Market
Value of the Sold Interest less the face value of ARM's
Claims on Loan Account comprised in the Sold Interest); and
15.1.2 in respect of ARM's Claims on Loan Account comprised in the
Sold Interest ("the Sold Claims"), the face value thereof.
15.2 Such offer to Harmony shall be irrevocable and capable of acceptance
by Harmony for a period of 30 (thirty) days after the date of
receipt of such offer by Harmony pursuant to the provisions of
clause 15.1 or the date of receipt by Harmony of a written notice
from BoE informing Harmony that the Lenders have called up the BoE
Term Loan or a part thereof, whichever date is the earlier. Within
30 (thirty) days of the date of
43
acceptance of the aforesaid offer or, in the event that the
Market Value has not been determined prior to that date, within
2 (two) Business Days of the date on which the Market Value is
determined, Harmony shall pay the purchase price for the Sold
Interest to BoE on behalf of ARM against delivery by ARM (or its
nominee) to Harmony of the share certificates and a share
transfer form in respect of the Sold Shares and a written cession
of the Sold Claims in favour of Harmony.
15.3 Should BoE be entitled to exercise its rights, under clause 9 of
the BoE Cession and Pledge in Security pursuant to a breach by
ARM of the Maandagshoek Guarantee and notify ARM in writing that
it is so entitled and is going to exercise such rights, ARM shall
forthwith inform Harmony in writing thereof and such notice shall
constitute an offer by ARM to Harmony to sell that percentage of
its Shareholder's Interest ("the Sold Interest"), calculated at
Market Value, which is equal in value to the amount outstanding
by ARM under the Maandagshoek Guarantee. The purchase price for
the Sold Interest shall be:
15.3.1 in respect of ARM's Shares ("the Sold Shares") comprised in
the Sold Interest, the market value thereof (being the
Market Value of the Sold Interest less the face value of
ARM's Claims on Loan Account comprised in the Sold
Interest); and
15.3.2 in respect of ARM's Claims on Loan Account comprised in the
Sold Interest ("the Sold Claims"), the face value thereof.
15.4 Such offer to Harmony shall be irrevocable and capable of
acceptance by Harmony for a period of 30 (thirty) days after the
date of receipt of such offer by Harmony pursuant to the
provisions of clause 15.3 or the date of receipt by Harmony of a
written notice from BoE informing Harmony that it is entitled to
exercise its rights, under clause 9 of the BoE Cession and Pledge
in Security pursuant to a breach by ARM of the Maandagshoek
Guarantee, whichever date is the earlier. Within 30 (thirty) days
of the date of acceptance of the aforesaid offer or, in the event
that the Market Value has not been determined prior to that date,
within 2 (two) Business Days of the date on which the Market
Value is determined, Harmony shall pay the purchase price for the
Sold Interest to BoE on behalf of ARM against delivery by ARM (or
its nominee) to Harmony of the share
44
certificates and a share transfer form in respect of the Sold Shares
and a written cession of the Sold Claims in favour of Harmony.
15.5 If ARM fails or refuses to cede and transfer any of its Shareholder's
Interest in accordance with its obligations under clause 15.2 or
clause 15.4, as the case may be, Harmony shall execute and deliver on
behalf of ARM the necessary transfer form(s) and other documents
required for the transfer of ARMs's Shareholder's Interest.
15.6 The provisions of clauses 15.3 and 15.4 shall be subject to BoE,
having consented in writing to ARM being entitled to offer the Sold
Interest to Harmony under clause 15.3 and to the sale of the Sold
Interest to Harmony pursuant to its acceptance of any such offer.
16. MATERIAL BREACH
16.1 For the purposes of this clause 16, the expression "material breach"
means a breach of any of the terms of this Agreement which is material
having regard to all relevant circumstances including, without being
limited to, the nature of the relationship between the Shareholders
and the need for each Shareholder to maintain the confidence of the
other, the nature of the breach (and in particular whether it is
intentional, negligent or neither) and the consequences of the breach.
16.2 If either Shareholder ("the defaulting shareholder") commits a
material breach which is not capable of being remedied, the following
provisions shall apply:
16.2.1 the other Shareholder ("the aggrieved shareholder") shall,
without prejudice to its other rights in law, have the right
either to require Freegold to be wound up in accordance with
clause 20 or to require the defaulting shareholder to sell its
Shareholder's Interest to it, as the aggrieved shareholder may
elect;
16.2.2 the aggrieved shareholder's right in terms of clause 16.2.1 must
be exercised by written notice ("the election notice") given
within 30
45
(thirty) days from the date on which the aggrieved shareholder
becomes aware of the breach or within a period of 10 (ten) days
after the determination of the Market Value, whichever is the
later, and such notice shall identify the breach, refer to clause
16.2.1 and specify which of the alternative rights referred to in
clause 16.2 is being elected;
16.2.3 if the aggrieved shareholder exercises the right to require
Freegold to be wound up, then the Shareholders shall be bound to
take all such steps as may be necessary to wind up Freegold
forthwith by way of a members voluntary winding up;
16.2.4 if the aggrieved shareholder exercises the right to require the
defaulting shareholder to sell its Shareholder's Interest to it,
then the sale shall be subject to the following terms and
conditions:
16.2.4.1 the effective date of the sale shall be the date on which the
defaulting shareholder receives the election notice;
16.2.4.2 the purchase price payable for the defaulting shareholder's
Shareholder's Interest shall be the Market Value of such
Shareholder's Interest;
16.2.4.3 completion of the sale shall be effected within 90 (ninety) days
of the expiry of the period specified in clause 16.2.2
16.3 If any Shareholder commits a material breach which is capable of
being remedied then, without prejudice to any other rights that the
aggrieved shareholder may have in law, the following provisions shall
apply:
16.3.1 the aggrieved shareholder may give written notice ("the warning
notice") to the defaulting shareholder identifying the material
breach and referring to this sub-clause, provided that such
notice must be given within 30 (thirty) days from the date on
which it becomes aware of the material breach;
16.3.2. if the warning notice is given in terms of clause 16.3.1 and if
the material breach identified in that notice is not remedied by
the
46
defaulting shareholder within a period of 15 (fifteen) days from
the date it receives the warning notice, or such longer period as
may be reasonable in the circumstances provided that the
defaulting shareholder commences the remedial action within the
15 (fifteen) day period and proceeds with such action
expeditiously and in good faith, then the aggrieved shareholder
shall have the same rights as those set out in clause 16.2, the
provisions of which shall apply mutatis mutandis provided that
the aggrieved shareholder shall have a further 30 (thirty) days
within which to give the election notice.
16.4 Notwithstanding anything to the contrary contained in this
Agreement, no Party shall be entitled to cancel this Agreement.
16.5 Subject to clause 27 and notwithstanding anything to the contrary
in this clause 16, the aggrieved shareholder shall be entitled to
exercise its common law rights in respect of a breach of the terms
and conditions of this Agreement, irrespective of whether such
breach is a material breach capable of remedy or not or whether it
is a non-material breach.
17. ARM AND HARMONY'S RECIPROCAL CALL OPTIONS
17.1 If either Shareholder ("the affected Shareholder") is placed under
any provisional or final order of winding-up or judicial management
or enters into any voluntary winding-up other than a voluntary
winding-up for the purposes of a bona fide scheme of arrangement or
reconstruction ("an option event"), then the other Shareholder ("the
other Shareholder") shall have the option to require the affected
Shareholder to sell the affected Shareholder's Interest to it.
17.2 The other Shareholder's right to exercise the right referred to in
clause 17.1 will lapse if it is not exercised by written notice
("the election notice") given within 60 (sixty) days from the date
on which the other Shareholder becomes aware of the happening of the
option event, or within 10 (ten) days of the date of the
determination of the Market Value, whichever is the later, and such
notice shall identify that option event and refer to this clause 17.
47
17.3 If the other Shareholder exercises the right referred to in clause
17.1 then the sale shall be on the same terms and conditions mutatis
mutandis as those set out in clause 12.3, except that:
17.3.1 the effective date of the sale, shall be the date on which the
affected Shareholder receives the election notice;
17.3.2 the purchase price payable for the affected Shareholder's
Interest shall be the Market Value thereof;
17.3.3 completion of the sale shall be effected subject to clause 12.3
within 90 (ninety) days of the expiry of the period of
14 (fourteen) days after the determination date referred to in
clause 17.2.
18. MARKET VALUE OF THE SHAREHOLDER'S INTEREST
18.1 Whenever the Market Value is required to be determined for the
purposes of any provision of this Agreement, then failing agreement
between the Shareholders as to the Market Value within 10 (ten)
Business Days, the Market Value shall be determined, at the request of
either Shareholder, in accordance with the following provisions unless
otherwise agreed in writing by the Shareholders:
18.1.1 the Shareholders shall each appoint 1 (one) Merchant Bank to
value the entire Shareholder's Interest;
18.1.2 for the avoidance of any doubt, each Shareholder shall expressly
instruct the Merchant Bank appointed by it that, in valuing the
entire Shareholder's Interest, the value of the Claims on Loan
Account shall not be deducted;
18.1.3 the Market Value will be the average of the 2 (two) valuations;
18.1.4 should the valuations of the 2 (two) Merchant Banks differ by
more than 20% (twenty percent) then the Shareholders will appoint
by
48
agreement between them a third Merchant Bank to carry out a valuation
of the entire Shareholder's Interest without reference to the 2 (two)
valuations of the Merchant Banks appointed in terms of clause 18.1.1;
18.1.5 failing agreement between the Shareholders as provided for in clause
18.1.4, on the application of either Shareholder, the third Merchant
Bank will be appointed by the senior partner of the Auditors;
18.1.6 the average of those 2 (two) of the 3 (three) valuations which are
closest to each other will be the Market Value;
18.1.7 the Merchant Banks appointed in terms of clause 18.1.1 shall act as
experts and not as arbitrators and will determine and certify the
Market Value as at the effective date of the purchase on the
following assumptions and bases:
18.1.7.1 valuing the entire Shareholder's Interest as on an arms-length
sale between a willing seller and a willing purchaser;
18.1.7.2 if Freegold is then carrying on business as a going concern on a
sustainable basis, on the assumption that it will continue to do
so;
18.1.8 if any difficulty arises in applying any of these assumptions or
bases then the difficulty shall be resolved by the Merchant Banks
taking all relevant facts, circumstances and information into account;
18.1.9 the Merchant Banks may call upon any professional advisors of
Freegold, including the Auditors or any of their predecessors, for
such documents and information as the Merchant Banks may reasonably
require for the purposes of this determination and the Parties shall
give or, so far as they are able, procure that appropriate authority
is given to those advisers to make the disclosures required of them
and that they as far as they are able,
49
give the Merchant Banks all such facilities and information as
they may reasonably require for the purposes of their
determination;
18.1.10 for the purposes of their determination the Merchant Banks shall
be entitled to consult any other valuers and take account of any
valuations obtained from any other valuer, but not necessarily be
bound by them;
18.1.11 the Merchant Banks shall afford the Shareholders the opportunity
to make such written and, at their discretion, oral
representations as they or any of them wish, subject to such
reasonable time and other limits as they may prescribe, and they
shall have regard to any such representations but not be bound by
them;
18.1.12 all the Parties will use their best endeavours to procure that
the Merchant Banks will determine the Market Value within 30
(thirty) days of being requested to do so.
18.2 If the determination of the Market Value is referred to the Merchant
Banks in terms of clause 18.1 the date of determination of the Market
Value ("the determination date") shall be the date on which both
Shareholders receive the final and binding Merchant Banks'
determination of the Market Value in writing. If the Market Value is
determined by written agreement between the Shareholders, the
determination date shall be the date on which the agreement is reached.
18.3 The sum of all the costs and expenses of the Merchant Banks appointed
in terms of this clause 18 shall be borne equally by both Shareholders.
19. LENDERS' CTA
Each Shareholder undertakes to the other that it shall exercise all the
voting rights attached to its Shares, and all powers, discretions and
authorities exercisable directly and indirectly by it in relation to
Freegold, so as to procure that Freegold complies with its obligations and
undertakings under the Lenders' CTA.
50
20. WINDING-UP
20.1 In the event of Freegold being wound up by way of a members' voluntary
winding-up, the Shareholders will procure that the liquidator is a member
of The South African Institute of Chartered Accountants acceptable to
both Shareholders, or in default of agreement, nominated at the request
of either Shareholder by the President for the time being of such
Institute.
20.2 The Shareholders shall prove in the winding-up of Freegold to the maximum
extent permitted by law all sums due or to fall due to them respectively
from Freegold and shall exercise all rights of set-off and generally do
all such other acts and things as may be available to them in order to
obtain the maximum receipts and recoveries.
20.3 To the extent that either or both of the Shareholders do not receive
satisfaction in full in the winding-up of Freegold of all sums due or to
fall due to them, then the aggregate shortfall between all sums due or to
fall due to the Shareholders and all amounts actually recovered by the
Shareholders from Freegold or its liquidator (whether by direct payment
or the exercise of any right of set-off or otherwise) shall be
calculated and apportioned between the Shareholders in proportion to
their then holdings of Shares, and the Shareholders shall make
contributions within 3 (three) days of receipt of a written demand to
make such payment one to the other to the extent and with the effect that
each Shareholder bears its respective share of the aggregate amount of
such shortfall.
20.4 If Freegold enters into a members voluntary winding-up each Shareholder
shall, unless otherwise agreed to in writing, be obliged to continue to
perform and discharge its obligations under any executory contract
between it and Freegold to the full extent required by Freegold to enable
it or any of its assignees to meet all Freegold's obligations and
commitments to its customers and other third parties (including any
obligations and commitments for ongoing maintenance).
51
21. SHAREHOLDERS CONSENT
Where this Agreement provides that any particular transaction or matter
requires the consent, approval or agreement of any Shareholder, such
consent, approval or agreement may be given subject to such reasonable
terms and conditions as that Shareholder may impose and any breach of such
terms and conditions by any person subject to them shall be deemed to be a
breach of the terms of this Agreement.
22. PARTIES BOUND
22.1 Freegold undertakes with each of the Shareholders to be bound by and
comply with the terms and conditions of this Agreement insofar as the
same relate to it and to act in all respects as contemplated by this
Agreement.
22.2 The Shareholders undertake with each other to exercise their powers in
relation to Freegold so as to ensure that Freegold fully and promptly
observes, performs and complies with its obligations under this
Agreement.
22.3 Each Shareholder undertakes with each of the other Parties that whilst it
remains a Party to this Agreement it will not (except as expressly
provided for in this Agreement) agree to cast any of the voting rights
exercisable in respect of any of the Shares held by it in accordance with
the directions, or subject to the consent of, any other person.
23. ENFORCEMENT OF THE COMPANY'S RIGHTS
23.1 If it appears that either Shareholder ("the defaulting Shareholder") is
in breach of any obligation which it owes to Freegold (whether under this
Agreement or the Articles or under any other agreement, including any
employment agreement, or otherwise) or has misapplied or retained or
become liable or accountable for any money or property of Freegold, or
has been guilty of any misfeasance or breach of any fiduciary or other
duty in relation to Freegold or is under any obligation to indemnify
Freegold
52
against any liability, then it is agreed that the enforcement and
prosecution of any right of action of Freegold in respect thereof
shall be passed to the directors nominated by the other Shareholder
alone who shall have full power and authority on behalf of Freegold to
enforce, negotiate, litigate and settle any claim arising out of any
such right of action and the defaulting Shareholder shall take all
steps within its power to give effect to the provisions of this clause
23.1.
23.2 Freegold agrees with each of the Shareholders that any moneys or
property which it may recover or receive as a result of the operation
of the provisions of this clause 23 shall be applied by it in a
proper and efficient manner for its own benefit.
24. SHAREHOLDER'S RIGHTS TO INFORMATION
24.1 The ARM Directors shall be entitled to disclose to ARM all information
which they are entitled to receive as directors of Freegold and to
furnish to ARM copies of all documents containing any such
information.
24.2 The Harmony Directors shall be entitled to disclose to Harmony all
information which they are entitled to receive as directors of
Freegold and to furnish to Harmony copies of all documents containing
any such information.
25. CONFIDENTIALITY
25.1 All communications between ARM Harmony Freegold and/or any of them
and all information and other materials supplied to or received by any
of them from the others which by its nature is intended to be for the
knowledge of the recipient alone, and all information concerning the
business transactions and the financial arrangements of ARM. Harmony
or Freegold with any person with whom any of them is in a confidential
relationship with regard to the matter in question coming to the
knowledge of the recipient, shall be kept confidential by the
recipient unless or until the recipient can reasonable demonstrate
that any such communication,
53
information and material is, or part of it is, in the public domain
through no fault of its own. To the extent that it is in the public
domain or is required to be disclosed by law or in accordance with
generally accepted accounting practice or in compliance with the rules
of any Stock Exchange or in pursuance of employment duties, this
obligation shall then cease.
25.2 The Shareholders shall use all reasonable endeavours to procure the
observance of such restrictions by Freegold, and shall take all
reasonable steps to minimise the risk of disclosure of confidential
information, by ensuring that only they and such of their employees
and directors whose duties will require them to possess any of such
information have access thereto and instructing such employees and
directors to treat such information as confidential.
25.3 The obligation contained in this clause 25 shall endure, even after
the termination of the Agreement, without limit in point of time
except and until such confidential information enters the public
domain as set out in clause 25.1.
25.4 Notwithstanding clauses 25.1 to 25.3 each Shareholder may at any time
disclose any such information and communications to a Member of the
Same Group as it, to its own professional advisers (including any
Merchant Bank appointed in terms of clause 18) or those of any Member
of the same Group as it; and, if required to do so by law or any
applicable regulatory requirements or requested to do so by any
regulatory body to whose jurisdiction that Shareholder is subject or
with whose instructions it is customary to comply, to the person(s) to
whom the disclosure is required or requested provided that such
Shareholder obtains an undertaking from such persons to maintain the
confidentiality of the information on the same terms and conditions as
apply to the Parties in terms of this clause 25.
25.5 Nothing in clauses 25.1 to 25.3 shall preclude either Shareholder at
any time from disclosing to any person any information about the
financial results or the operations of Freegold which is reasonably
required to assess the financial conditions and prospects of that
Shareholder and its subsidiaries provided that such Shareholder
obtains a written undertaking from such persons to maintain the
confidentiality of the information on the
54
same terms and conditions as apply to the Parties in terms of this
clause 25.
26. EXPANSION OF THE MINING AND RELATED ACTIVITIES OF FREEGOLD
26.1 Should either Shareholder ("the proposing shareholder") propose that
Freegold embark on any new mining operation or an expansion or
reopening of any existing mining operation ("the expansion") which
will require additional funding which has not been provided for in the
budget and should the other Shareholder not be in favour of the
expansion, Freegold and the proposing shareholder shall apply their
best endeavours to reach agreement on a structure such as a
partnership or joint venture by way of which the proposing shareholder
can embark on the expansion and in terms of which Freegold will
contribute ore reserves and the use of its facilities and personnel on
commercial terms.
26.2 Should Freegold and the proposing shareholder be unable to reach
agreement on a structure as contemplated in clause 26.1, the proposing
shareholder may proceed with the expansion for its own profit and loss
and shall pay to Freegold an amount to be agreed between the proposing
shareholder and Freegold as compensation for the exploitation of the
ore reserves and the use of Freegold's facilities and personnel.
26.3 Should Freegold and the proposing shareholder be unable to reach
agreement on the amount of such compensation in terms of clause 26.2
the matter shall be referred to arbitration in terms of clause 27 and
the arbitrator shall be instructed that the intention of the
Shareholders is that Freegold receives a market related compensation
for the use of its facilities and personnel and that Freegold be
compensated for the exploitation of its ore reserves at a fair and
reasonable market related price.
26.4 The provisions of this clause 26 shall not come into effect until 1
January 2005.
55
27. ARBITRATION AND DISPUTE RESOLUTION
27.1 Any dispute between the Parties in regard to any matter arising out of
or in terms of or pursuant to this Agreement shall be resolved in the
following manner:
27.1.1 matters which cannot be resolved by the general meeting of the
Board, as the case may be, shall be referred for resolution to a
senior executive nominated by each of ARM and Harmony
respectively;
27.1.2 if the matter referred to the senior executives of ARM and
Harmony respectively in terms of clause 27.1.1 is not resolved
between them within 14 (fourteen) days after the date on which it
is referred to them, the matter shall be referred for resolution
to the most senior executive at the time of ARM and Harmony
respectively;
27.1.3 any dispute to which the provisions of this clause 27 apply which
is not resolved in terms of clauses 27.1.1 and 27.1.2 shall be
referred to arbitration in accordance with clauses 27.2 to 27.8
27.2 Should any dispute arise between the Parties in regard to:
27.2.1 the interpretation of; or
27.2.2 the carrying into effect of; or
27.2.3 any of the Parties' rights and obligations arising from; or
27.2.4 the rectification of; or
27.2.5 any matter arising out of or in connection with or pursuant to;
this Agreement, then that dispute shall be submitted to and decided by
arbitration, subject to the procedure in 27.1 being exhausted.
27.3 That arbitration shall be held:
27.3.1 with only the Parties and their legal representatives or advisors
present thereat;
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27.3.2 unless otherwise agreed in writing in Johannesburg.
it being the intention that the arbitration shall, where possible, be
held and concluded within 21 (twenty one) Business Days after it has
been demanded
27.4 The arbitrator shall be agree between the Parties and failing
agreement within 7 (seven) days after the arbitration has been
demanded, then the arbitrator shall:
27.4.1 if the matter is primarily of an accounting nature, be an
independent auditor of not less than 10 (ten) years' standing,
appointed by the senior partner of the Auditors; or
27.4.2 if the matter is primarily of a legal nature be an independent
attorney of not less than 10 (ten) years' standing or an
independent advocate of not less than 15 (fifteen) years'
standing appointed by the President for the time being of the
Johannesburg Bar Council or its successor body; or
27.4.3 if the matter is primarily of any other nature, a suitably
qualified person appointed by the senior partner of the
Auditors; or
27.5 If the Parties fail to agree as to whether the matter is primarily of
an accounting, legal or other nature, the matter shall be deemed to be
primarily of a legal nature.
27.6 The arbitrator shall have the fullest and freest discretion with
regard to the proceedings. Furthermore the arbitrator:
27.6.1 may dispense wholly or in part with formal submissions or
pleadings;
27.6.2 shall provide written reasons for decisions taken during the
course of the arbitration;
27.6.3 shall include such order as to costs as he deems just.
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27.7 Any Party shall have the right on written notice to the other Parties
given within 21 (twenty one) days of receipt of the decision of the
arbitrator to appeal the decision of the arbitrator to a panel of 3
(three) arbitrators to be appointed in the same manner mutatis
mutandis set out in clause 27.4.
27.8 The Parties shall be entitled to have the award made an order of court
of competent jurisdiction. The Parties record that they consent to the
jurisdiction of the Witwatersrand Local Division of the High Court
of South Africa or its successor in title.
27.9 This clause shall be binding on the Parties notwithstanding, and shall
survive, the termination of this Agreement.
28. MINE HEALTH AND SAFETY ACT APPOINTMENTS
28.1 Subject to the provisions of the Mine, Health and Safety Act No. 29 of
1996 as amended ("the MHS Act") and unless otherwise determined by the
Board --
28.1.1 ARM and Harmony shall each nominate an ARM Director and a Harmony
Director, respectively, to be designated in terms of Section
2A.(3) of the MHS Act as the persons to perform the functions of
the owner in terms of Section 2 of the MHS Act;
28.1.2 ARM and Harmony shall each nominate a person who may, but need
not be, an ARM Director or Harmony Director, respectively, to be
appointed in terms of Section 4.(1) of the MHS Act to perform the
functions entrusted to the employer by Sections 2. and 3. of the
MHS Act;
29. GENERAL
29.1 No Cancellation
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No Party shall be entitled to cancel this Agreement.
29.2 Remedies
Subject to the provisions of clause 27.1, no remedy conferred by this
Agreement is intended to be exclusive of any other remedy which is
otherwise available at law, by statute or otherwise. Each remedy shall
be cumulative and in addition to every other remedy given hereunder or
now or hereafter existing at law, by statute or otherwise. The
election of any one or more remedy by any of the Parties shall not
constitute a waiver by such Party of the right to pursue any other
remedy.
29.3 Severance
If any provision of this Agreement is rendered void, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the Parties shall endeavour in good
faith to agree an alternative provision to the void, illegal or
unenforceable provision.
29.4 Survival of Rights, Duties and Obligations
Termination of this Agreement for any cause shall not release a Party
from any liability which at the time of termination has already
accrued to such Party or which thereafter may accrue in respect of any
act or omission prior to such termination.
29.5 Costs
Each Party shall bear its own costs and expenses incurred by it in
connection with this Agreement.
29.6 Entire Agreement
This Agreement together with the Sale of Business Agreement
constitutes the entire agreement between the Parties and save as
otherwise expressly provided no modification, amendment or waiver of
any of the provisions of
59
this Agreement it shall be effective unless made in writing
specifically referring to this Agreement and duly signed by the
Parties.
29.7 Assignment.
29.7.1 This Agreement shall be binding on the Parties hereto and their
respective successors and assigns.
29.7.2 None of the Parties may assign this Agreement or any of its rights
and obligations under it except to a permitted transferee of that
Party's Shareholder's Interest who has complied with clause 11.2,
save that:
29.7.2.1 ARM shall be entitled to cede its rights under clause 15 either
out and out or as security to any Financier and/or the Debt
Guarantor; and
29.7.2.2 any Shareholder shall be entitled to cede its rights under clause
17 either out and out or as security to any Financier and/or the
Debt Guarantor.
29.8 Conflict with the Articles.
In the event of any ambiguity or discrepancy between this Agreement and
the Articles, this Agreement shall prevail. Accordingly the Parties
shall exercise all voting and other rights and powers available to them
so as to give effect to this Agreement and if necessary shall procure
any required amendment to the Articles.
29.9 No Partnership.
Nothing in this Agreement shall be deemed to constitute a partnership
between the Parties (or any of them) or constitute any Party the agent
of any other Party for any purpose.
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29.10 Further Assurance
Each Shareholder shall co-operate with the other Parties and execute
and deliver to the other Parties such other instruments and documents
and take such other actions as may be reasonably requested from time to
time in order to carry out, evidence and confirm their rights and the
intended purpose of this Agreement.
29.11 Counterparts
This Agreement may be signed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any
Party may enter into this Agreement by signing any such counterpart.
29.12 Successors Bound
This Agreement shall be binding on and shall inure for the benefit of
the successors and assigns and personal representatives (as the case
may be) of each of the Parties.
29.13 Good Faith
Each of the Parties undertakes with each of the others to do all things
reasonably within its power which are necessary or desirable to give
effect to the spirit and intent of this Agreement.
29.14 Governing Law
The validity of this Agreement, its interpretation, the respective
rights and obligations of the parties and all other matters arising in
any way out of it or its expiration or earlier termination for any
reason shall be determined in accordance with the laws of the Republic.
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30. ADDRESSES FOR LEGAL PROCESSES AND NOTICES
30.1 The Parties choose for the purposes of this Agreement the
following addresses, telefax numbers and, for the purpose of any
notices, designated officers:
30.1.1 ARM ARM House
29 Impala Road
Chislehurston
Sandton
Telefax No: (011) 883 5609
For the attention of the Financial Director
30.1.2 Harmony Block 27
Randfontein Office Park
Cnr Main Reef Road & Ward Avenue
Randfontein
Telefax No: (011) 692 3879
For the attention of the Company Secretary
30.1.3 Freegold Block 27
Randfontein Office Park
Cnr Main Reef Road & Ward Avenue
Randfontein
Telefax No: (011) 692 3879
For the attention of the Company Secretary
and
ARM House
62
29 Impala Road
Chislehurston
Sandton
Telefax No: (011) 883-5609
For the attention of the Financial Director
30.2 Any legal process to be served on any of the Parties may be
served on it at the address specified for it in clause 30.1 and it
chooses that address as its domicillium citandi et executandi for all
purposes under this Agreement.
30.3 Any notice or other communication to be given to any of the
Parties in terms of this Agreement shall be valid and effective only
if it is given in writing, provided that any notice given by telefax
shall be regarded for this purpose as having been given in writing.
30.4 A notice to any Party which is delivered to the Party by hand at the
address specified for it in clause 30.1 shall be deemed to have been
received on the day of delivery, provided it was delivered to a
responsible person during ordinary business hours, and the notice and
the envelope in which it is delivered are both marked for the
attention of the Party's designated officer specified in clause 30.1
30.5 A notice by telefax to a Party at the telefax number specified for it
in Clause 30.1 shall be deemed to have been received (unless the
contrary is proved) within 24 (twenty four) hours of transmission if
it is transmitted during normal business hours of the receiving Party
or within 24 (twenty four) hours of the beginning of the next Business
Day at the destination after it is transmitted, if it is transmitted
outside those business hours, provided it is marked for the attention
of the Party's designated officer specified in clause 30.1
30.6 Notwithstanding anything to the contrary in this clause 30, a written
notice or other communication actually received by any Party (and for
which written receipt has been obtained) shall be adequate written
notice or communication to it notwithstanding that the notice was not
sent to or delivered at its chosen address, provided it is marked for
the attention of the Party's designated officer specified in clause
29.1.
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30.5 A notice by telefax to a Party at the telefax number specified for it
in clause 30.1 shall be deemed to have been received (unless the
contrary is proved) within 24 (twenty four) hours of transmission if
it is transmitted during normal business hours of the receiving Party
or within 24 (twenty four) hours of the beginning of the next Business
Day at the destination after it is transmitted, if it is transmitted
outside those business hours, provided it is marked for the attention
of the Party's designated officer specified in clause 30.1
30.6 Notwithstanding anything to the contrary in this clause 30, a written
notice or other communication actually received by any Party (and for
which written receipt has been obtained) shall be adequate written
notice or communication to it notwithstanding that the notice was not
sent to or delivered at its chosen address, provided it is marked for
the attention of the Party's designated officer specified in clause
29.1.
30.7 Any Party may by written notice to the other Parties change its
address or telefax number for the purposes of clause 30.1 to any other
address (other than a post office box number) provided that the change
shall become effective on the seventh day after the receipt of the
notice.
31. STATUS OF THIS AGREEMENT
This Agreement supersedes the first joint venture agreement and
accordingly, with effect on the Signature Date, the first joint venture
agreement is hereby cancelled.
SIGNED at SANDTON on 5 APRIL 2002.
For: AFRICAN RAINBOW
MINERALS GOLD LIMITED
/s/
----------------------------------
Signatory: P. TALJAARD
66
Capacity: DIRECTOR
Authority: BOARD APPROVAL
SIGNED at Sandton on 5 April 2002.
For: HARMONY GOLD MINING
COMPANY LIMITED
/s/ FRANK ABBOTT
------------------------------------
Signatory: Frank Abbott
Capacity: Director
Authority: Board Resolution
SIGNED at Sandton on 5 April 2002.
For: CLIDET NO 383 (PROPRIETARY)
LIMITED
/s/ FRANK ABBOTT /s/ P. TALJAARD
---------------------------------------------
Signatory: Frank Abbott P. Taljaard
Capacity: Director Director
Authority: Board Resolution Board Resolution