THOSE PERSONS SET FORTH ON SCHEDULE A,

 

(a)

The Company was incorporated in Jersey under the Act under number 109058 and having its registered office at Ogier House, The Esplanade, St Helier, Jersey, JE4 9WG;

 

(b)

The Company is a no par value company and therefore there is no limit on the number of shares of any class which the company is authorised to issue.  As of the date hereof 100 ordinary shares have been issued to and are registered in the name of the Shareholders, namely Global Gold Corporation (“GGC”) and Consolidated Resources Armenia (“CRA”), as further described in Schedule “A”.  As of the date hereof, no other shares of the Company have been issued; and

 

(c)

The Company and the Shareholders now wish to enter into this Agreement for the purposes of setting forth, inter alia, their respective rights and obligations in respect of the issued and unissued shares of the Company, the management and conduct of the Company’s business and various other matters hereinafter set forth.

 

(a)

his or her spouse or natural born or legally adopted children;

 

(b)

trust, the sole beneficiaries of which are any Person or Persons specified in any one or more subsections of this definition, provided that the terms of the trust include a valid condition precedent that the Shares or securities of a Shareholder shall vest in the beneficiary of such trust only if such beneficiary has complied with the provisions of this Agreement, including the execution and delivery of an Assumption Agreement;

 

(c)

a corporation, partnership, limited partnership or other Person, all of the voting securities or other ownership interests of which are owned by the Person or by any Person or Persons specified in any one or more subsections of this definition; and

 

(d)

where such Person is a corporation, all of the voting securities or other ownership interests of which are owned by any Person or Persons specified in any one or more subsections of this definition, (i) such other Person or Persons, or (ii) a corporation, all of the voting securities or other ownership interests of which are owned by such other Person or Persons; and

 

(e)

with respect to any Subsidiary of GGC, GGC.

(1)

This Agreement shall come into force and effect on the date hereof and shall terminate on the earliest to occur of:

 

(a)

The date on which one Shareholder shall have acquired all of the issued and outstanding Shares;

 

(b)

The date that this Agreement is terminated by written agreement of the Parties;

 

(c)

The date on which all of the Shares are sold to a third party in compliance with this Agreement; and

 

(d)

The date upon which the Company completes an IPO.

(2)

Notwithstanding the foregoing, the obligations of the Parties set out in ARTICLE 12 shall continue in full force and effect after termination of this Agreement pursuant to Section 2.1(1)(a) through Section 2.1(1)(d) inclusive.

(3)

The termination of this Agreement shall have no effect upon any obligation of a Party to make a payment for any Shares purchased pursuant to the provisions of this Agreement or to pay any other amounts owing by it under this Agreement prior to the date of such termination.

(1)

Nomination.  Subject to the remainder of this Section 5.2(1), each of the Shareholders shall be entitled to nominate and have elected one (1) Director for every 20% of the Shares held by such Shareholder (including, for such purposes, its Permitted Transferees).  Pursuant to the immediately preceding sentence, if a Shareholder is entitled to nominate more than one Director, all but one Director nominated by such Shareholder shall be Independent, unless otherwise agreed by the Shareholders. Any remaining Director(s) to be nominated and elected to the Board of Directors to bring the total number of Directors to five (5) shall be so nominated and elected by a majority vote of the votes cast by the Shareholders present in person or represented by proxy at a meeting of the Shareholders.  Any such remaining Director shall be Independent.  Each member of the Board of Directors shall be qualified to act as a director under the Act.  

(2)

Replacement.  Any Shareholder entitled under Section 5.2(1) to nominate and have elected a Director may replace any Director nominated by such Shareholder at any time and from time to time, subject to Section 5.2(1).  If a nominee Director of any Shareholder resigns or is removed, for any reason, the vacancy will be filled by the election or appointment of a director nominated by such Shareholder, provided that such Shareholder is still entitled to do so as aforesaid.  The Directors will not transact any business or exercise any of their powers or functions until such vacancy is filled, except to elect or appoint the new Director.  If a replacement Director is not elected or appointed within five (5) days because the Shareholder has failed to nominate a replacement, the Directors then in office are entitled to transact business and exercise all of the powers and functions of the directors.  Subject to the foregoing, any Shareholder who wishes to replace a Director nominated by such Shareholder may have such Director replaced at any duly constituted meeting of the Shareholders of the Company, or by written resolution to that effect signed by that Shareholder sent to the other Shareholders and the Company not less than 48 hours before a meeting of Directors at which such replacement director is expected to attend.  Upon receipt of such written resolution, the Shareholders shall execute the resolution and promptly return it to the party initiating the same, who, upon receipt thereof, shall forward the signed resolution to the Company for filing in the corporate minute book.

(3)

Indemnity.  The Company hereby indemnifies each Director and his or her heirs and legal representatives, to the fullest extent permitted by Law, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal or administrative proceeding to which he or she is made a party by reason of being or having been a director of the Company, provided (i) he or she acted honestly and in good faith with a view to the best interests of the Company; and (ii) in the case of a criminal or administrative proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful.  If applicable Law is amended after the date hereof to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of a Director of the Company shall be eliminated or limited to the fullest extent permitted by such Law.

(1)

Quorum.  A quorum for a meeting of the Board of Directors shall consist of a majority of the Directors of the Company, provided that (i) at least one (1) Director present must be a nominee of GGC for so long as GGC is entitled to nominate a director, (ii) at least one (1) Director present must be a nominee of CRA for so long as CRA is entitled to nominate a director, and (iii) if there is a fifth Director elected by the Shareholders pursuant to Section 5.2(1), that Director must be present at the meeting.

(2)

Proceeding Without Quorum.  Notwithstanding the provisions of Section 5.7(1), if proper original notice of a meeting of the Board of Directors, specifying the business to be transacted at the meeting, is given and a quorum of Directors (as contemplated in Section 5.7(1)) is not present, then a meeting of the Board of Directors may thereafter be held on three (3) Business Days written notice of the second meeting to transact the business set forth in the original notice and, subject to the Act and the Articles, any members of the Board of Directors present at that meeting, provided that (i) at least one (1) Director present must be a nominee of GGC for so long as GGC is entitled to nominate a director, and (ii) at least one (1) Director present must be a nominee of CRA for so long as CRA is entitled to nominate a director, shall constitute a quorum for the transaction of the business set out in the original notice in respect of that meeting and such business may be transacted by a majority vote of those Directors in attendance at the meeting.

(3)

Notice.  Unless all of the Directors are present (except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called) or those absent waive notice, no meeting of the Directors shall be validly convened unless at least five (5) Business Days’ prior written notice thereof is given to each of the Directors.  The Directors may attend any meeting via telephone.

(4)

Content of Notice.  No resolution with respect to any matter may be put to any meeting of the Board of Directors unless the notice of the meeting contains reasonable detail of the matter or unless all of the Directors either are present and do not object to the matter being put to the meeting or otherwise waive the provisions of this Section 5.7(4).

(5)

Voting.  Subject to Section 5.7(2), except as otherwise herein provided, decisions of the Board of Directors shall be effective only if approved by a majority of the votes cast at a meeting of the Board of Directors (or by such greater percentage of votes as may be required by the Act).  The chairman of any meeting of the Directors will not have a second or deciding vote. Decisions of the directors may also be effective upon a written consent signed by all of the Directors entitled to vote on the applicable matter, and such written consent shall be as valid as if it had been passed at a meeting of Directors.

(6)

Conflict of Interest. A Director shall disclose to the Company, in writing or by requesting to have it entered in the minutes of meetings of Directors or of meetings of committees of Directors, the nature and extent of any interest that he or she has in any matter put to the Board of Directors.

(7)

Vacancies. If a vacancy on the Board of Directors arises for any reason whatsoever, such vacancy shall be filled by the election or appointment of a Director nominated by the Shareholder entitled to nominate a replacement in accordance with Section 5.2(2). Until such vacancy is filled, the Board of Directors shall not transact any business or exercise any of its powers or functions, save and except as may be necessary to elect or appoint the new Director and preserve the assets of the Company.  If a replacement Director is not elected within five (5) days of such vacancy occurring because of the failure of the Shareholder who is entitled to nominate a replacement Director to do so, the Directors then in office shall be entitled to transact business and exercise all of the powers and functions of the Board of Directors.  Subject to Section 5.7(5), a decision or action of the majority of the Directors then in office shall be deemed to be a decision or action of the majority of the Board of Directors and a decision or action of all of the Directors then in office shall be deemed to be the unanimous decision or action of the Board of Directors. For greater certainty, the Board may only transact business if the quorum provisions of this Section 5.7 are complied with.

(8)

Committees.  The Board of Directors may from time to time in its sole discretion appoint such committees (including, without limitation, an Audit Committee and a Compensation Committee) as the Board of Directors, by majority vote, determines to be necessary, and it may delegate to such committees, if any, the responsibility for making recommendations (and not approvals with respect to such matters, which shall be made exclusively by the Board of Directors) to the Board of Directors relating to such matters as the Board of Directors may determine.

(1)

Unless otherwise determined by the Board of Directors, the officers of the Company shall be those officers as may be appointed from time to time in accordance with this Agreement, the Articles and the Act.  All such officers shall have the duties and responsibilities prescribed by the Board of Directors.  The Board of Directors shall be entitled to appoint such additional officers from time to time as it may determine.

(2)

An executive management team (the “Management Team”) will be established to manage the day-to-day operations of the Company.  Subject to the foregoing, the Shareholders have agreed that the Management Team would initially consist of the following Persons:

 

(i)

Van Krikorian, Executive Chairman;

 

(ii)

Ashot Boghossian, Managing Director, Armenia;

 

(iii)

Jan Dulman, Interim Chief Financial Officer;

 

(iv)

New Hire, Chief Operating Officer, Armenia; and

 

(v)

Joseph Borkowski, Executive Vice President.

(3)

The Company has established a Short-Term Incentive Plan as well as an Omnibus Long-Term Incentive Plan (“LTIP”), which allows for the granting of up to 10% of the common shares outstanding (“CSO”), for all employees of the Company including those employed by MG and GMC as a performance incentive for current and future employees.  The STIP is to be based on the performance measurement criteria and corporate goals as approved by the Board of Directors.

(4)

The transfer of MG and GMC to the Company at closing shall not impact the continued employment of Armenian employees of MG and GMC.

(1)

Notwithstanding any other provision to the contrary in the Articles, the Memorandum or this Agreement, subject to Section 5.10(2) and Section 5.10(4), the following matters shall, in addition to any requirements imposed by Law, require the unanimous approval of the Board of Directors:

 

(a)

hiring any Person to serve on the Management Team or in any position as a senior manager of the Company;

 

(b)

allotting, reserving, setting aside or issuing any Shares or other securities of the Company or issuing or granting any rights, warrants or options to purchase, acquire or otherwise obtain any unissued Shares or other securities of the Company other than the issuance of Management Shares under the LTIP;

 

(c)

creating, assuming, incurring or amending any Debt, including loans to Shareholders, other than credit facilities obtained by the Company from a reputable financial institution in an amount not exceeding the amount contemplated by an Annual Business Plan;

 

(d)

the signing of off-take agreements excluding existing Industrial Minerals SA agreement terms; and

 

(e)

approving annual operating and capital budgets and the Annual Business Plan.

(2)

With respect to the matters set forth in Section 5.10(1), (i) for so long as GGC is entitled to nominate a director, no vote of the Board of Directors shall be valid unless one of the Directors nominated and elected by GGC votes, whether for or against a resolution, or delivers a notice to the Company waiving the right to vote on the resolution, and (ii) for so long as CRA is entitled to nominate a director, no vote of the Board of Directors shall be valid unless one of the Directors nominated and elected by CRA votes, whether for or against a resolution, or delivers a notice to the Company waiving the right to vote on the resolution.  In the event of any deadlock of the Board of Directors on any such matter, such matter may be addressed through the continuance of the Business based upon the execution of the then pre-existing Annual Business Plan.

(3)

Subject to Section 5.10(4), none of the Company’s Subsidiaries may make a decision about, take action on or implement any of the matters listed in Section 5.10(1) without the unanimous approval of the Board of Directors as aforesaid.

(4)

With respect to the matters set forth in Section 5.10(1)(c), in the event that the unanimous approval of the Board of Directors is not obtained within the ten (10) day period following the submission of the applicable matter to the Board of Directors, such matter may be approved by a majority vote of the Directors notwithstanding any provision hereof to the contrary; provided there shall be at least one designated Director of each Shareholder (to the extent such Shareholder is entitled to designate a Director) in such majority.

(1)

Notwithstanding any other provision to the contrary in the Articles, the Memorandum or this Agreement, the matters listed in Schedule 5.11(1) shall, in addition to any requirements imposed by Law, require the approval of one nominee director of each of GGC and CRA, respectively, in each case for so long as such Shareholder is entitled to nominate a director to serve on the Board of Directors.

(2)

None of the Company’s Subsidiaries may make a decision about, take action on or implement any of the matters listed in Schedule 5.11(1) without the unanimous approval of the Board of Directors as aforesaid.

(1)

The quorum for the transaction of business at any meeting of the Shareholders shall be two Persons present in person or by proxy together holding more than fifty percent (50%) of the Shares entitled to vote at the meeting.  Subject to (3), no meeting shall continue with the transaction of business in the absence of a quorum.  At least five (5) days’ prior written notice to each Shareholder shall be given with respect to the calling of each meeting of the Shareholders unless the giving of such notice is waived by each Shareholder not present or represented at the meeting. Such notice of meeting shall set out in reasonable detail the business to be considered at such meeting and no other business shall be transacted at such meeting without the consent of all of the Shareholders.

(2)

All questions before the Shareholders shall be decided by a majority of the votes cast by the Shareholders present in person or represented by proxy at the meeting of the Shareholders.  The chairman of each meeting of the Shareholders shall be appointed by a majority of the votes cast by the Shareholders present in person or represented by proxy at the meeting of the Shareholders.  The chairman of the meeting of the Shareholders will not have a second or deciding vote.

(3)

Subject to the Articles and notwithstanding the provisions of Section 5.12(1), if proper notice of a meeting of the Shareholders is given and a quorum of Shareholders is not present, then a meeting of the Shareholders may thereafter be held on at least seven (7) days’ prior written notice of the second meeting to transact the business set forth in the original notice and, subject to the Articles and the Act, any Shareholders present at that meeting shall constitute a quorum for the transaction of the business set out in the original notice in respect of that meeting and such business may be transacted by a majority of voting Shares of Shareholders in attendance at the meeting.

(1)

The Shareholders shall direct management of the Company to prepare a draft annual business plan before the start of each Financial Year for consideration and approval by the Board of Directors as soon as practicable and, in any event not later than thirty (30) days prior to the end of the preceding Financial Year.  The draft annual business plan shall contain a detailed monthly financial budget with respect to the Company and its Subsidiaries.  Such budget shall consist of a pro forma balance sheet, income statement and statement of changes in financial position of the Company and its Subsidiaries for such Financial Year, shall include comparison statements from the previous Financial Year, shall be accompanied by a statement of the nature and amount of all capital expenditures to be incurred during such Financial Year, and shall be supported by the explanations, notes and information upon which the projections underlying the annual business plan have been based.  In addition, the draft annual business plan shall include the details of any advances, salaries, bonuses, consulting fees, management fees, incentive compensation or other amounts, or any other benefits, proposed to be paid to  any Director, former director, officer, Shareholder, employee or Affiliate of the Company.

(2)

The Directors will review the draft annual business plan and upon approval by the Directors as provided in Section 5.10(1), the draft annual business plan becomes the “Annual Business Plan” for the applicable Financial Year.  In the event that the Directors are unable to approve any annual business plan in whole or in part prior to the start of a Financial Year, the financial budget contained in the Annual Business Plan for the preceding Financial Year, excluding any provisions contained therein relating to capital expenditures, will continue to apply to the extent of such disagreement until a complete annual business plan is approved in accordance with this Section 6.1.

 

(a)

Interim Statements – as soon as possible and, in any event, within thirty (30) days after the end of each month a monthly and fiscal year to date financial report consisting of consolidated unaudited financial statements of the Company and its Subsidiaries, consisting of a balance sheet, a statement of retained earnings, a statement of income and a statement of changes in financial position on a consolidated basis, along with a comparison to budget and the previous fiscal year and management discussion on any significant variances from budget and any other information that a Shareholder may reasonably request; and

 

(b)

Annual Financial Statements - as soon as practicable, and in any event within one hundred and twenty (120) days after the end of each Financial Year of the Company, the audited financial statements of the Company, consisting of a balance sheet, a statement of retained earnings, a statement of income and a statement of changes in financial position as at the end of and for the period commencing with the end of the previous fiscal year and ending with the end of the current fiscal year, setting forth, in each case, in comparative form, the figures for the previous fiscal year.

(1)

Subject to compliance with the provisions of Section 5.10 and Section 5.11, this Section 7.2 and applicable Law, the Board of Directors may, in its discretion, authorize the issuance of such number of additional Shares or other securities of the Company or Debt authorized under the Articles, the Memorandum or the Act, as the case may be, (the “Offered Securities”), at such price and upon such terms and conditions and to such Persons as the Board of Directors determines to be in the best interests of the Company.  Notwithstanding the foregoing, any issuances or grants by the Company with respect to (i) the Company's Convertible Notes issued pursuant to the Binding Term Sheet and any convertible note instrument which may be executed by the Company from time to time in connection with the Binding Term Sheet (the “Convertible Notes”) and (ii) the Management Shares, shall not be subject to this Section 7.2.

(2)

In the event that the Company proposes to issue Offered Securities other than the IPO, the Company shall first deliver an offering notice in writing (the “Offering Notice”) to each Shareholder.  Each Shareholder shall be entitled to the irrevocable pre-emptive rights hereinafter set forth in this Section 7.2.

(3)

The Offering Notice shall specify (i) the total number or principal amount, as the case may be, of Offered Securities, (ii) the rights, privileges, restrictions, terms and conditions of such Offered Securities, (iii) the consideration for which each of such Offered Securities is being offered, which consideration shall be the same for all of such Offered Securities, and (iv) the scheduled date of closing which shall not be earlier than the date which is thirty (30) days after the date of the Offering Notice.

(4)

Each Person receiving an Offering Notice as provided in Section 7.2(2), shall have the option, exercisable within twenty (20) days after receipt of the Offering Notice (the “Option Period”), by written notice given to the Company, to subscribe for such Person’s pro rata portion of the Offered Securities, based on the proportion that the aggregate of the number of Shares owned by such Person bears to the aggregate of the number of Shares then held by all of the Shareholders.

(5)

In addition to the pro rata right to subscribe for Offered Securities set forth in Section 7.2(4), in the event that one or more Shareholders receiving an Offering Notice as provided in Section 7.2(2) elects to purchase such Shareholder’s pro rata portion of the Offered Securities, and one or more of such Shareholders declines to elect to so purchase, the Shareholders who have elected to purchase their pro rata portion of the Offered Securities in accordance with Section 7.2(4) shall have the further right and option, exercisable by notice in writing to the Company, delivered within five (5) days of being notified by the Company that one or more of the Persons receiving an Offering Notice as provided in Section 7.2(2) has declined to purchase its pro rata portion of the Offered Securities, to purchase the portion of the Offered Securities not subscribed for in accordance with Section 7.2(4). Each such Shareholder delivering an additional notice to the Company as aforesaid shall be entitled to subscribe for such Shareholder’s pro rata portion of the Offered Securities not previously subscribed for, based on the proportion that the aggregate of the number of Shares held by such Shareholder bears to the aggregate of the number of Shares then held by the Shareholders entitled to subscribe for Offered Securities not subscribed for in accordance with this Section 7.2(5) (or in such other proportions as they may agree among themselves). The procedure set forth in this Section 7.2(5) shall be repeated as often as is necessary until the Offered Securities have been fully subscribed for, or until there remains Offered Securities for which no Shareholder has elected to subscribe.

(6)

If, after complying with the foregoing procedures there remains Offered Securities for which no Shareholder has elected to subscribe, the Company may (i) proceed with the financing subscribed for under this Section 7.2, and (ii) pursue any additional capital requirements through other sources on terms and conditions no more favourable to the subscriber than the terms and conditions specified in the Offering Notice, as approved by the Board of Directors.

(7)

Where the calculation of a Shareholder’s pro rata portion of the Offered Securities results in a fraction, such Shareholder’s pro rata portion of the Offered Securities shall be increased or decreased to the nearest whole number.

(8)

For greater certainty, if a Shareholder fails to deliver a written notice to the Company exercising such Shareholder’s rights to subscribe for the Offered Securities in accordance with Section 7.2(4) within the Option Period, or fails to deliver any additional notice within the time period specified in Section 7.2(5), as the case may be, any rights which such Shareholder may have had to subscribe for any of the Offered Securities within the Option Period pursuant to Section 7.2(4), or Offered Securities not otherwise subscribed for pursuant to Section 7.2(5), as the case may be, shall be extinguished.

(9)

Each notice delivered by a Shareholder to the Company pursuant to this Section 7.2 shall constitute a binding agreement by the Shareholder delivering such notice to subscribe for the number of Offered Securities subscribed for therein upon the terms and conditions specified in the Offering Notice.

(10)

The rights granted to the Shareholders pursuant to this Section 7.2 shall not apply with respect to the issuance Offered Securities by the Company as follows:

 

(i)

in connection with an Initial Public Offering or the Convertible Notes;

 

(ii)

in connection with the entering into of employment agreements with senior management personnel of the Company; and

 

(iii)

in connection with the payment of a portion of the purchase price under the terms of purchase agreements entered into by the Company for acquisitions in connection with the Business.

(1)

No Shareholder shall Transfer any of the Shares owned by it except in the manner expressly permitted in this Agreement.  Any attempted Transfer of Shares made in violation of this Agreement shall be null and void.  Neither the Board of Directors nor the Shareholders shall approve or ratify any Transfer of Shares made in contravention of this Agreement and the Company shall not permit any such Transfer to be recorded on the share register of the Company maintained for the Shares.

(2)

No Transfer or issuance of any Shares shall be or become effective until the transferee executes and delivers to the Company and the Shareholders an Assumption Agreement.  No such Transfer shall release such Shareholder from any of its liabilities or obligations under this Agreement until it becomes effective and then only to the extent provided in this Agreement.

(3)

From and after the date of an attempted Transfer in contravention of the terms and conditions of this Agreement, unless otherwise expressly provided in this Agreement, all rights of the Shareholder purporting to make the Transfer shall be suspended and inoperative and, without limitation, no Person shall be entitled to vote such Shares or receive dividends or other distributions until the Transfer is rescinded by the transferor and transferee.

(1)

Subject to the provisions of this Section 8.2, each Shareholder (for the purposes of this Section 8.2, a “Transferor”) shall be entitled, upon prior written notice to the Company and the other Shareholders, to Transfer the whole or any part of the Shares owned by the Transferor to any Permitted Transferee of the Transferor.  No such Transfer shall be or become effective until the Permitted Transferee executes and delivers to the Company and the other Shareholders an Assumption Agreement.  No such Transfer shall release or discharge the Transferor from any of its liabilities or obligations under this Agreement until it becomes effective and then only to the extent provided in this Agreement.

(2)

The Transferor shall, at all times after the transfer of Shares to a Permitted Transferee, (i) be jointly and severally liable with the Permitted Transferee for the observance and performance of the covenants and obligations of the Permitted Transferee under this Agreement, (ii) cause the Permitted Transferee to remain a Permitted Transferee of the Transferor so long as the Permitted Transferee shall have any registered or beneficial interest in the Shares, and (iii) indemnify the other Parties against any loss, damage or expense incurred as a result of the failure by the Permitted Transferee to comply with the provisions of this Agreement.

(1)

Subject to the provisions of ARTICLE 8, if a Shareholder (the “Offeror”) wishes to sell or dispose of all or any portion of the Shares owned by the Offeror (the “Offered Shares”), each of the other Shareholders (the “Offerees”) shall have the prior right to purchase the Offered Shares in accordance with the procedure hereinafter described.

(2)

The Offeror shall give to the Company and the Offerees notice in writing of the Offeror’s intention to sell or otherwise dispose of the Offered Shares (the “Offer”).  The Offer shall set out the number of Offered Shares, the price and terms and payment which the Offeror is willing to accept for the Offered Shares and the terms and conditions of payment and price, together with an affidavit or certificate of the Offeror to the effect that such offer is a bona fide binding offer which the Offeror wishes to accept.

(3)

Each Offeree shall have the right, exercisable within thirty (30) days after receipt of the Offer (the “Exercise Period”), to initially purchase all such Offeree’s pro rata portion of the Offered Shares, based on the proportion that the number of Shares held by such Offeree bears to the total number of Shares held by all of the Offerees, on the same terms and conditions set forth in the Offer, by notice in writing (the “Exercise Notice”) to the Offeror and the Company setting out the number of Offered Shares which such Offeree elects to purchase.

(4)

In addition to the pro rata right to purchase Offered Shares set forth in Section 9.2(3), in the event that one or more Offerees elects to purchase their pro rata portion of the Offered Shares, and one or more of such Offerees declines to elect to so purchase, the Offerees who have elected to purchase their pro rata portion of the Offered Shares shall have the further right and option, exercisable by notice in writing to the Company and the Offeror, delivered within five (5) days of being notified by the Offeror that one or more of the Offerees has declined to purchase their pro rata portion of the Offered Shares, to purchase the portion of the Offered Shares not otherwise purchased in accordance with the foregoing.  Each such Offeree delivering an additional notice to the Company and the Offeror as aforesaid shall be entitled to purchase such Offeree’s pro rata portion of the Offered Shares not previously purchased, based on the proportion that the aggregate of the number of Shares held by such Offeree bears to the aggregate of the number of Shares then held by the Offerees entitled to subscribe for Offered Shares not purchased by the other Offerees (or in such other proportions as they may agree among themselves). The procedure set forth in this Section 9.2(4) shall be repeated as often as is necessary until the Offerees have elected to purchase all of the Offered Shares, or until there remains Offered Shares for which no Offeree has elected to purchase.  

(5)

Where the calculation of an Offerees’s pro rata portion of the Offered Shares results in a fraction, such Offerees’s pro rata portion of the Offered Shares shall be increased or decreased to the nearest whole number.

(6)

For greater certainty, if an Offeree fails to deliver an Exercise Notice to the Company and the Offeror exercising such Offerees’s rights to purchase Offered Shares in accordance with Section 9.2(3) within the Exercise Period, or fails to deliver any additional notice within the time period specified in Section 9.2(4), as the case may be, then any rights which such Offeree may have had to purchase Offered Shares within the Exercise Period pursuant to Section 9.2(3), or Offered Shares not otherwise purchased pursuant to Section 9.2(4), as the case may be, shall be extinguished.

(7)

If, after complying with the foregoing procedures, the Offerees have not elected to purchase all of the Offered Shares, the Offeror may, at the Offeror’s option, (i) sell to the Offerees the number of Offered Shares for which they have elected to purchase on the terms and conditions specified in the Offer or, (ii) notwithstanding that one or more Offerees has elected to purchase Offered Shares, sell the Offered Shares to a third party subject to compliance with the terms and conditions of Section 9.3.

(8)

Each notice delivered by an Offeree to the Company and the Offeror pursuant to this Section 9.2 shall constitute a binding agreement by the Offeree delivering such notice to purchase the number of Offered Shares specified in such notice.  With respect to each Offeree who has delivered a notice or notices, as the case may be, pursuant to this Section 9.2, such Offeree hereby agrees to deposit the entire amount payable to the Offeror by such Offeree in connection therewith to the credit of the Offeror in the main branch of the Company’s bankers on or prior to the date that is two (2) Business Days prior to the Date of Closing (as provided in Section 9.2(9)).

(9)

The closing of the transaction of purchase and sale of the Offered Shares to the Offerees pursuant to this Section 9.2 (a “Sale Transaction”) shall take place at the Place of Closing at the Time of Closing as soon as practicable after the full acceptance of the Offer by the Offerees and, in any event, not earlier than the date which is fifteen (15) days after the later of (i) the expiration of the Exercise Period, and (ii) the expiration of the five (5) day period following the delivery of the notice, if applicable, given to the Offerees pursuant to Section 9.2(4) (the “Date of Closing”), or earlier or later date as the parties to the Sale may agree.  The Sale Transaction under this Section 9.2 shall be effected in accordance with this Section 9.2 and the general sale provisions of ARTICLE 11.

(1)

If, after complying with the procedures set out in Section 9.2, the Offeror is entitled to and proposes to Transfer the Offered Shares to any Person (the “Third Party”), the Offeror shall give notice of the proposed Transfer (a “Disposition Notice”) to the other Shareholders.  The Disposition Notice must (i) be in writing and (ii) specify the minimum consideration per Offered Share that would be payable by the Third Party which may not be less than the consideration contained in the Offer under Section 9.2.

(2)

Each of the other Shareholders shall have the right, at their respective option, to require the Third Party to purchase Shares held by them in the same proportion that the Offered Shares represent to the total number of Shares owned by the Offeror, such that each of the other Shareholders shall be entitled to sell from their respective holdings of Shares a fraction of the number of Shares owned by such other Shareholder, on the same terms and conditions as the Offeror proposes to Transfer the Offered Shares. For the purposes of this Section 9.3, such fraction of the number of Shares owned by each other Shareholder shall have as its denominator the number of Shares owned by such other Shareholder, and as its numerator the number of Shares owned by such other Shareholder required to make such fraction equivalent to the fraction which has the number of Offered Shares as the numerator and the total number of Shares owned by the Offeror as the denominator.  This right may be exercised by delivering an irrevocable and unconditional notice in writing to the Offeror, the Company and the Third Party (the “Piggy-Back Notice”) within a period of seven (7) days of receiving the Disposition Notice.

(3)

Failure of a Shareholder to submit a Piggy-Back Notice shall be construed as a decision by such Shareholder not to exercise its piggy-back rights hereunder.

(4)

If any Shareholder gives a Piggy-Back Notice within the specified time period, neither the Offeror nor any of the other Shareholders shall be permitted to sell to the Third Party any of its Shares pursuant to this Section 9.3 unless the Third Party also purchases from the Shareholders giving Piggy-Back Notices all of the Shares entitled to be sold by such Shareholders pursuant to this Section 9.3, at the time of completion of, and on the same terms and conditions applicable to, the Transfer of Offered Shares by the Offeror.

(5)

If the Third Party wishes to purchase a number of Shares (the “Alternative Number of Shares”) which is less than the aggregate of the Offered Shares and the Shares entitled to be sold by the other Shareholders who have submitted Piggy-Back Notices pursuant to this Section 9.3, the Offeror and the other Shareholders who have submitted a Piggy-Back Notice shall, collectively, be entitled to sell the Alternative Number of Shares to the Third Party as follows: (i) in the case of the Offeror, the number of Shares equal to the product obtained by multiplying the Alternative Number of Shares by the quotient obtained by dividing the total number of Shares owned by the Offeror by the total number of Shares owned by the Offeror and the other Shareholders who have submitted a Piggy-Back Notice, and (ii) in the case of each of the other Shareholders who have submitted a Piggy-Back Notice, the number of Shares equal to the product obtained by multiplying the Alternative Number of Shares by the quotient obtained by dividing the total number of Shares owned by such Shareholder by the total number of Shares owned by the Offeror and the other Shareholders who have submitted Piggy-Back Notices.

(6)

The closing of the transaction of purchase and sale of Shares pursuant to this Section 9.3 shall be completed at the Place of Closing at the Time of Closing contemporaneously with the sale by the Offeror to the Third Party (each a “Sale Transaction”). The Sale Transaction under this Section 9.3 shall be effected in accordance with this Section 9.3 and the general sale provisions of ARTICLE 11.

(1)

If, after complying with the procedures set out in Section 9.2 and Section 9.3, the Piggy-Back Rights in Section 9.3 have not been exercised, the Offeror shall be free for a period of one hundred and twenty (120) days following the day on which it is determined that the Offerees have not elected to purchase all of the Offered Shares or exercise their Piggy-Back Rights pursuant to Section 9.3, to Transfer all but not less than all of the Offered Shares to any other Person (a “Third Party Sale”). The consideration for the Offered Shares in any Third Party Sale must not be less than that contained in the Offer and there must be no collateral benefit to the Offeror contained in the terms and conditions applicable to the Transfer of the Offered Shares.

(2)

If the Offeror does not Transfer the Offered Shares within the one hundred and twenty (120) day period set out in Section 9.4(1), no Transfer of Shares may be made without the Offeror again complying with the terms of this ARTICLE 9.

 

(a)

Section 3.4 is complied with; and

 

(b)

all Debt owing to the Company by each Shareholder Transferring Shares to the Third Party has been repaid or assumed and transferred to the Third Party.

(1)

If any one or more Shareholders receive a Take-Over Bid, the recipient Shareholders of the Take-Over Bid must give notice of the Take-Over Bid to the other Shareholders and the Company. Such notice must be in writing and accompanied by a copy of the Take-Over Bid.  A “Take-Over Bid” is an offer to acquire all of the issued and outstanding Shares that shall satisfy the following conditions:

 

(a)

it is a written bona fide bid from a Person dealing at arm’s length with the Parties (the “Bidder”);

 

(b)

the entire consideration for the Shares is payable in cash or Marketable Securities on the closing date;

 

(c)

the per Share consideration shall be supported by a fairness opinion conducted by a reputable M&A advisor;

 

(d)

no collateral benefit is provided to any one Shareholder or any of its Affiliates or any other Person with whom the Shareholder does not deal at arm’s length that is not provided to all Shareholders and fully disclosed in the bid, other than management, consulting or other fees or the payment of salary which is fair consideration for future services;

 

(e)

Shareholders who hold any Debt or other securities issued by the Company other than Shares are entitled to receive, in consideration of the Debt and other securities, an amount equal to, (i) the face amount or liquidation preference of the debt or securities, plus (ii) any accrued but unpaid interest or dividends on the debt or securities, plus (iii) any prepayment or redemption premium or penalty contained in the agreements evidencing the debt or securities;

 

(f)

the liability of each Shareholder under the bid, including any liability for breach of any representation, warranty or covenant or under any indemnity, is several and not joint and several and does not, under any circumstances, exceed the lesser of the Shareholder’s pro-rata proportion of any claim and the consideration paid to the Shareholder;

 

(g)

it does not contain any provision which would affect a Shareholder’s right to own, use or exploit its assets or prevent or restrict in any way a Shareholder’s business or its ability to make investments in any business;

 

(h)

there are no conditions other than customary closing conditions for similar transactions;

 

(i)

all guarantees, indemnities, covenants and security made or granted by any Shareholder to secure any Debt, liability or obligation of the Company will be cancelled or the Shareholder will be indemnified against all Damages which may be paid, suffered or incurred with respect to the guarantees, indemnities, covenants or security;

 

(j)

Shareholders are not obligated to make any out-of-pocket expenditures prior to the completion of the Take-Over Bid (excluding modest expenditures for postage, copies, etc.), and each Shareholder is only required to pay its pro-rata share of reasonable expenses incurred in connection with a completed bid, to the extent such costs are incurred for the benefit of all Shareholders and are not otherwise paid by the Company or the Bidder.  Costs incurred by or on behalf of a Shareholder for its sole benefit are not considered costs of the bid.

(2)

If Shareholders holding not less than ninety percent (90%) of the Shares want to accept the Take-Over Bid, they have the right to require the other Shareholders to sell all of their Shares to the Bidder pursuant to the Take-Over Bid. Such right may be exercised by notice in writing (a “Compulsory Sale Notice”) delivered to the other Shareholders at least 10 days prior to the closing of the transaction contemplated by the Take-Over Bid.  Subject to Section 10.2, each Shareholder receiving a Compulsory Sale Notice is obligated to sell all of its Shares to the Bidder on the terms of the Take-Over Bid.

(1)

Any Shareholder required to Transfer its Shares to the Bidder pursuant to a Compulsory Sale Notice shall be required to give the same representations and warranties to the Bidder as the Shareholder or Shareholders who delivered the Compulsory Sale Notice, provided that, for greater certainty, the liability of each Shareholder under the Take-Over Bid,  including any liability for breach of any representation, warranty or covenant or under any indemnity, shall be several and not joint and several and shall not, under any circumstances, exceed the lesser of the Shareholder’s pro-rata proportion of any claim and the consideration paid to the Shareholder.

(2)

Each Shareholder must endorse the share certificates representing the Shareholder’s Shares for transfer to the Bidder or deliver an irrevocable share transfer power of attorney with the share certificates executed in blank.

(3)

The Parties acknowledge that the completion of any Transfer of Shares to the Bidder is subject to all filings, notices and Authorizations necessary to complete the Transfer being made, given or obtained. The time for completion of the Take-Over Bid will be extended for up to 45 days if necessary for such purposes.

(4)

If at the time for completion of the Take-Over Bid (i) the Shares are not free and clear of all Liens, the Bidder may, without prejudice to any other rights it may have, purchase the Shares subject to such Liens. In that event, the Bidder will, at completion, assume all obligations and liabilities with respect to such Liens, and the purchase price payable by the Bidder for the Shares shall be satisfied, in whole or in part, as the case may be, by such assumption or payment and the amount so assumed or paid, as determined by the Bidder acting reasonably, will be deducted from the purchase price payable to the applicable Shareholder at completion.

 

(a)

the Shareholder selling Shares (the “Vendor”) shall take all necessary steps and corporate proceedings to Transfer such Shares to the Purchaser with a good and marketable title free and clear of any Liens whatsoever, and deliver the share certificate(s) representing the Shares duly endorsed for transfer to the Purchaser or otherwise as directed by it, together with a certificate duly executed by the Vendor (or, in the case of a corporate Vendor, a senior officer of the Vendor) in which the Vendor represents and warrants that the Shares are being transferred to the Purchaser with a good and marketable title free and clear of any Liens whatsoever; and

 

(b)

the Vendor shall deliver to the Company and the Purchaser all necessary documents (which documents shall be in form and substance reasonably satisfactory to the Purchaser, acting reasonably) required to transfer to the Purchaser the Shares, or to otherwise comply with the intent of this Agreement.

 

(a)

the Transfer of the Shares to the Purchaser must be exempt from the prospectus, offering memorandum and registration requirements of applicable securities Laws; and

 

(b)

all guarantees, indemnities, covenants and security made or granted by the Vendor or its Affiliates to secure any Debt, liability or obligation of the Company (i) must be cancelled; or (ii) the Purchaser must indemnify the Vendor and its Affiliates against all damages which may be paid, suffered or incurred with respect to the guarantees, indemnities, covenants or security.

(1)

The completion of a Sale Transaction will take place at the Place of Closing at the Time of Closing on the Date of Closing or at such other place, on such other date and at such other time as the parties to the Sale Transaction may agree to in writing.

(2)

Subject to satisfaction or waiver by the relevant party to the Sale Transaction of the conditions of closing, at the closing of the Sale Transaction:

 

(a)

the Vendor will assign and transfer title and deliver actual possession of the Shares to the Purchaser and endorse the share certificates representing the Shares for transfer to the Purchaser;

 

(b)

subject to Section 11.4(2)(c), unless otherwise agreed pursuant to the applicable Sale Transaction and permitted by this Agreement, the Purchaser will pay or satisfy the purchase price for the Purchased Shares by delivering to the Vendor a certified cheque, bank draft or wire transfer of immediately available funds in the full amount of the purchase price for the Purchased Shares; and

 

(c)

all Debt owing by the Vendor to the Company will be repaid or assumed and transferred to the Purchaser. If the Vendor fails to repay the Debt and it is not transferred to the Purchaser, the Purchaser will pay the amount of the Debt from the purchase price and the amount of the purchase price payable to the Vendor will be reduced accordingly.

(3)

In connection with the completion of a Sale Transaction, the Board of Directors would hold a meeting to approve (i) the transfer of Shares pursuant to the Sale Transaction, and (ii) the issuance of a new share certificate or certificates in the name of the Purchaser representing the Shares so transferred by the Vendor.

(1)

If the Vendor fails to complete the Sale Transaction, the Purchaser shall have the right, if not in default under this Agreement, without prejudice to any other rights which it may have, to make payment of the purchase price payable to the Vendor by depositing such amount to the credit of the Vendor in the main branch of the Company's bankers.  Such deposit shall constitute valid and effective payment of such amount to the Vendor.  If the purchase price has been so paid, then from and after the date of deposit, the Sale Transaction shall be deemed to have been fully completed and all right, title, benefit and interest, both at law and in equity and to the Shares being sold pursuant to such Sale Transaction shall conclusively be deemed to have been transferred to and become vested in the Purchaser and all right, title, benefit and interest, both at law and in equity, in and to such shall cease and determine.  The Purchaser shall also have the right to execute and deliver, on behalf of and in the name of the Vendor, such deeds, transfers, share certificates and other documents that may be necessary to complete the Sale Transaction, and each Shareholder, to the extent it may be a Vendor, irrevocably appoints any Shareholder who becomes a Purchaser in a Sale Transaction its true and lawful attorney, with full power of substitution in the name of and on behalf of such Shareholder, in accordance with The Powers of Attorney Act (Ontario), with no restriction or limitation in that regard and declaring that this power of attorney being coupled with an interest may be exercised during any subsequent legal incapacity on its part, to execute and deliver all such agreements and documents as may be necessary to permit the completion of the applicable Sale Transaction as provided in this Agreement.  This power of attorney shall not be revoked or terminated by any act or thing unless this Agreement is terminated or unless such Shareholder ceases to be bound by the provisions of this Agreement.

(2)

The Vendor shall be entitled to receive the amount deposited with the Company's bankers pursuant to Section 11.5(1) on delivery to the Purchaser of the documents referred to in Section 11.2 and in compliance with all other provisions of this Agreement.

(1)

Each Shareholder will keep all Confidential Information confidential and will not disclose any Confidential Information to any Person or use any Confidential Information except as permitted by this Agreement.  A Shareholder may disclose Confidential Information to its employees and advisors but only to the extent that they need to know the Confidential Information, they have been informed of the confidential nature of the Confidential Information and they agree to be bound by and act in accordance with this Section.  Each Shareholder will notify the Company as soon as practicable of the identity of each employee and advisor to whom any Confidential Information has been disclosed.

(2)

For the purposes of this ARTICLE 12, “Confidential Information” means all information relating to the business, operations, assets, liabilities, plans, prospects and other affairs of the Company and its Subsidiaries, in whatever form, and includes all information on clients, customers, consumers, suppliers, distributors, consultants, agents and dealers; employees, compensation and employment records; pricing, costs and budgets; contracts; research and development activities; trade secrets, know-how, technology, inventions, algorithms, prototypes, designs, drawing and sketches; computer data, files, tapes, disks, programs and the information contained therein; sales or marketing techniques or plans; operations and service manuals; business, statistical and technical data, reports, records and files; procedures, processes, proposals and plans; formulae, financial information and projections; business and legal information and communications, mail, notes, correspondence, discussions and memoranda, but shall exclude all such information relating to other properties or prospects of the Parties in the Territory.

 

(a)

is or becomes generally available to the public;

 

(b)

is required to be disclosed by Law; or

 

(c)

is permitted in writing to be disclosed by the Person who owns such Confidential Information.

(1)

Subject to Section 13.2, in the case of each Shareholder, such Shareholder shall not, on its own behalf or on behalf of or in connection with any Person, directly or indirectly, in any capacity whatsoever or by and through any Person or otherwise, carry on, be engaged in, have any financial or other interest in or be otherwise commercially involved in any endeavour, activity or business in all or any part of the Territory which is substantially the same as or is in competition with the Company, except GGC and its subsidiaries may carry on all operations and activities which relate to any property or interest it owns in the Territory at the date of this Agreement as well as any prospects disclosed confidentially by GGC to CRA prior to the date of this Agreement.

(2)

During the Non-Compete Period, each Shareholder shall not, on its own behalf or on behalf of or in connection with any Person, directly or indirectly, in any capacity whatsoever or by and through any Person or otherwise:

 

(i)

induce or attempt to induce any employee of the Company or any of its Subsidiaries to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, or

 

(ii)

induce or attempt to induce any customer, supplier or other business relation of the Company or any Subsidiary to cease doing business with the Company or any Subsidiary, or in any way interfere with the relationship between any such customer, supplier or business relation and the Company or any Subsidiary (including, without limitation, making any negative or disparaging statements or communications regarding the Company or any Subsidiary).

(1)

Any notice, direction or other communication to be given under this Agreement shall be in writing and given by delivering it or sending it by facsimile or other similar form of recorded communication addressed to the address for notice specified in the signature page to this Agreement for each Party.

(2)

Any such communication shall be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (New York time) and otherwise on the next Business Day, or (ii) if transmitted by facsimile or similar means of recorded communication on the Business Day following the date of transmission.  Any Party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such Party at its changed address.

(1)

This Agreement shall become effective when executed by all the Parties and after that time shall be binding upon and enure to the benefit of the Parties and their respective successors, heirs, personal representatives and permitted assigns.

(2)

Except as otherwise provided in this Agreement, neither this Agreement nor any of the rights or obligations under this Agreement shall be assignable or transferable by any Party without the prior written consent of the other Parties unless (i) the assignor transfers all Shares owned by it to the assignee and such transfer is permitted under and completed in accordance with this Agreement, and (ii) the assignee executes and delivers an Assumption Agreement.

By:

Name:

Title:

Address:

Attention:

Telephone:

Fax:

Address:

59 Hillside Road

Greenwich, CT 06830

Attention:

Jeffrey R. Marvin

Telephone:

Fax:

All of the parties to the shareholders agreement (the “Agreement”) dated [●], made among each of those Persons set forth on Schedule “A” thereto and designated as Shareholders (each a “Shareholder” and, collectively, the “Shareholders”) and Global Gold Consolidated Resources Limited (the “Company”).

1.

The Transferee acknowledges receipt of a copy of the Agreement.

2.

The Transferee covenants and agrees to be bound by all of the terms and conditions of the Agreement, as it may be amended from time to time, as though the Transferee was an original signatory to the Agreement, and the Transferee shall be deemed for all purposes of the Agreement to be a Shareholder (as such term is defined in the Shareholders Agreement).

3.

Each of the parties hereto covenants and agrees that it will take all such steps, execute all such documents and do all such acts and things as may be necessary to give full effect to this Assumption Agreement and to implement to the fullest extent the provisions hereof.

4.

This Assumption Agreement shall be governed by and construed in accordance will the laws of New York.

5.

Time shall be of the essence of this Assumption Agreement.

6.

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Agreement.

7.

This Assumption Agreement shall be binding upon the undersigned and the heirs, executors, administrators, successors, permitted assigns and legal representatives of the undersigned.

8.

This Assumption Agreement may be executed in counterparties (including counterparts by facsimile) and all such counterparts taken together shall be deemed to constitute one and the same instrument.  Any party executing and delivering a copy of this Assumption Agreement by facsimile shall promptly deliver an original to the Company following such facsimile delivery.

By:

Authorized Signing Officer

Witness

 

(a)

Amending, replacing or superseding the Articles or the Memorandum, except to (i) resolve any conflict in favour of this Agreement, (ii) change the name of the Company or (iii) change the registered office of the Company.

 

(b)

Changing the location of the registered or head office of the Company.

 

(c)

Allotting, reserving, setting aside or issuing any securities of the Company or issuing or granting any rights, warrants or options to purchase, acquire or otherwise obtain any unissued securities of the Company other than Management Shares.

 

(d)

Declaring or paying any dividend or other distribution on or in respect of any securities of the Company.

 

(e)

Purchasing, redeeming or acquiring any securities of the Company, except as expressly permitted by this Agreement.

 

(f)

Paying or distributing amounts out of any stated capital account, reducing any stated capital account, distributing any surplus or earnings, or returning any capital.

 

(g)

Changing the authorized capital of the Company, changing the number of issued and outstanding securities or increasing or reducing the capitalization of the Company, by way of split, conversion, exchange of securities or otherwise.

 

(h)

Approving any transfer of shares by any Shareholder, except in accordance with this Agreement.

 

(i)

Creating, assuming or incurring any debt, including shareholder loans, other than credit facilities obtained by the Company from a chartered bank or other reputable financial institution in an amount not exceeding $100,000, or such greater or lesser amount as is contemplated by the Annual Business Plan other than the Convertible Notes.

 

(j)

Creating, assuming or incurring any liability or obligation of any nature which assures or guarantees in any way the payment or performance (or payment of damages in the event of non performance) of any debt or other liability or obligation of any Person.

 

(k)

Granting or permitting to exist any lien on the assets of the Company.

 

(l)

Amending an Annual Business Plan after it is approved.

 

(m)

Approving the annual financial statements.

 

(n)

Appointing, changing or removing the auditors, if any, of the Company.

 

(o)

Making or filing any material tax election.

 

(p)

Changing the Financial Year of the Company.

 

(q)

Selling, transferring, leasing, exchanging or otherwise disposing of any assets of the Company out of the ordinary course of the Business, or granting any right, option or privilege to do so, except as contemplated by an Annual Business Plan.

 

(r)

Selling, transferring or otherwise disposing of any securities or other ownership, equity or proprietary interest in any other person, including securities held by the Company in any of its subsidiaries, except as contemplated by an Annual Business Plan.

 

(s)

Purchasing, leasing or otherwise acquiring any property or assets out of the ordinary course of the Business, or making any commitment to do so, except as contemplated by an Annual Business Plan.

 

(t)

Purchasing or otherwise acquiring any securities or other ownership, equity or proprietary interests in any other person, or incorporating or creating any subsidiary, except as contemplated by an Annual Business Plan.

 

(u)

Making any loan or advance to any Person, except as contemplated by an Annual Business Plan.

 

(v)

Amalgamating, merging or entering into an arrangement or other corporate reorganization involving the Company or the continuance of the Company into any other jurisdiction.

 

(w)

(i) Acknowledging the insolvency of the Company or the inability of the Company to pay its debts as they become due; (ii) making an assignment for the benefit of the creditors of the Company; (iii) appointing or allowing the appointment of any receiver, receiver-manager, trustee, liquidator or other person acting in a similar capacity; (iv) instituting any proceeding seeking to have the Company adjudicated a bankrupt or insolvent; or (v) taking any action or instituting any proceeding for the purpose of, or leading to, the liquidation, dissolution, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of the Company or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors.

 

(x)

(i) Commencing any action, suit or proceeding, (ii) compromising or settling any action, suit, proceeding, (iii) compromising or settling any material administrative proceeding or investigation, or (iv) submitting to binding arbitration.

 

(y)

(i) paying any advance, salary, bonus, consulting fee, management fee, incentive compensation or other amount, or granting any other benefits, to any director, former director, officer, shareholder, employee or affiliate of the Company, (ii) entering into any Contract which would obligate the Company to make any such payment or grant such benefits, except to the extent that such advances, salaries, bonuses, fees, incentive compensation or other amounts or benefits constituting normal remuneration payable to bona fide employees of the Company as contemplated by the annual business plan; or (iii) making any such payment to any person related by blood, adoption or marriage to any of the above or to any Company not dealing at arm’s length with any such person or entering into any contract which would obligate the Company to make any such payment except as provided in Section 5.9 and the agreements contemplated thereby.

 

(z)

Making or entering into any contract or amending, modifying, restoring, replacing or supplementing any contract which the Company is a party to, which provides for the expenditure of $250,000 or more in one instance or in the aggregate during any twelve month period.

 

(aa)

Changing materially the Business or taking any action which may lead to or result in such change.

 

(bb)

proceeding with an IPO.