Document:

exv10w9

 

Exhibit 10.9

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND

MINE OPERATING AGREEMENT

between

CANYON RESOURCES CORPORATION

and

NEW HORIZON URANIUM CORPORATION

EFFECTIVE DATE: January 23, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I	 	DEFINITIONS AND CROSS-REFERENCES	 	 	1	 
	 
	 	1.1	 	Definitions	 	 	1	 
	 
	 	1.2	 	Cross-References	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	NAME, PURPOSES AND TERM	 	 	1	 
	 
	 	2.1	 	General	 	 	1	 
	 
	 	2.2	 	Name	 	 	2	 
	 
	 	2.3	 	Purposes	 	 	2	 
	 
	 	2.4	 	Limitation	 	 	2	 
	 
	 	2.5	 	Term	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES	 	 	3	 
	 
	 	3.1	 	Representations and Warranties of Both Participants	 	 	3	 
	 
	 	3.2	 	Representations and Warranties of Canyon	 	 	3	 
	 
	 	3.3	 	Disclosures	 	 	5	 
	 
	 	3.4	 	Record Title	 	 	5	 
	 
	 	3.5	 	Loss of Title	 	 	5	 
	 
	 	3.6	 	Royalties, Production Taxes and Other Payments Based on Production	 	 	6	 
	 
	 	3.7	 	Indemnities/Limitation of Liability	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	RELATIONSHIP OF THE PARTICIPANTS	 	 	8	 
	 
	 	4.1	 	No Partnership	 	 	8	 
	 
	 	4.2	 	Federal Tax Elections and Allocations	 	 	8	 
	 
	 	4.3	 	State Income Tax	 	 	8	 
	 
	 	4.4	 	Tax Returns	 	 	8	 
	 
	 	4.5	 	Other Business Opportunities	 	 	8	 
	 
	 	4.6	 	Waiver of Rights to Partition or Other Division of Assets	 	 	9	 
	 
	 	4.7	 	Transfer or Termination of Rights to Properties	 	 	9	 
	 
	 	4.8	 	Implied Covenants	 	 	9	 
	 
	 	4.9	 	No Third Party Beneficiary Rights	 	 	9	 

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	 	 	 	 	 	 	Page	 
	ARTICLE V	 	CONTRIBUTIONS BY PARTICIPANTS	 	 	9	 
	 
	 	5.1	 	Participants’ Initial Contributions	 	 	9	 
	 
	 	5.2	 	Failure to Make Initial Contribution	 	 	11	 
	 
	 	5.3	 	Additional Contributions	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	INTERESTS OF PARTICIPANTS	 	 	13	 
	 
	 	6.1	 	Initial Participating Interests	 	 	13	 
	 
	 	6.2	 	Changes in Participating Interests	 	 	13	 
	 
	 	6.3	 	Elimination of Minority Interest	 	 	14	 
	 
	 	6.4	 	Continuing Liabilities Upon Adjustments of Participating Interests	 	 	15	 
	 
	 	6.5	 	Documentation of Adjustments to Participating Interests	 	 	15	 
	 
	 	6.6	 	Grant of Lien and Security Interest	 	 	16	 
	 
	 	6.7	 	Subordination of Interests	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	MANAGEMENT COMMITTEE	 	 	16	 
	 
	 	7.1	 	Organization and Composition	 	 	16	 
	 
	 	7.2	 	Decisions	 	 	17	 
	 
	 	7.3	 	Meetings	 	 	17	 
	 
	 	7.4	 	Action Without Meeting in Person	 	 	18	 
	 
	 	7.5	 	Matters Requiring Approval	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	MANAGER	 	 	18	 
	 
	 	8.1	 	Appointment	 	 	18	 
	 
	 	8.2	 	Powers and Duties of Manager	 	 	19	 
	 
	 	8.3	 	Standard of Care	 	 	23	 
	 
	 	8.4	 	Resignation; Deemed Offer to Resign	 	 	24	 
	 
	 	8.5	 	Payments To Manager	 	 	25	 
	 
	 	8.6	 	Transactions With Affiliates	 	 	25	 
	 
	 	8.7	 	Activities During Deadlock	 	 	25	 

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	 	 	 	 	 	 	Page	 
	ARTICLE IX	 	PROGRAMS AND BUDGETS	 	 	25	 
	 
	 	9.1	 	Initial Program and Budget	 	 	25	 
	 
	 	9.2	 	Operations Pursuant to Programs and Budgets	 	 	25	 
	 
	 	9.3	 	Presentation of Programs and Budgets	 	 	25	 
	 
	 	9.4	 	Review and Adoption of Proposed Programs and Budgets	 	 	26	 
	 
	 	9.5	 	Election to Participate	 	 	26	 
	 
	 	9.6	 	Recalculation or Restoration of Reduced Interest Based on Actual Expenditures	 	 	27	 
	 
	 	9.7	 	Pre-Feasibility Study Program and Budgets	 	 	28	 
	 
	 	9.8	 	Completion of Pre-Feasibility Studies and Selection of Approved Alternatives	 	 	30	 
	 
	 	9.9	 	Programs and Budgets for Feasibility Study	 	 	31	 
	 
	 	9.10	 	Development Programs and Budgets; Project Financing	 	 	31	 
	 
	 	9.11	 	Expansion or Modification Programs and Budgets	 	 	32	 
	 
	 	9.12	 	Budget Overruns; Program Changes	 	 	32	 
	 
	 	9.13	 	Emergency or Unexpected Expenditures	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X	 	ACCOUNTS AND SETTLEMENTS	 	 	33	 
	 
	 	10.1	 	Monthly Statements	 	 	33	 
	 
	 	10.2	 	Cash Calls	 	 	33	 
	 
	 	10.3	 	Failure to Meet Cash Calls	 	 	33	 
	 
	 	10.4	 	Cover Payment	 	 	34	 
	 
	 	10.5	 	Remedies	 	 	34	 
	 
	 	10.6	 	Audits	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI	 	DISPOSITION OF PRODUCTION	 	 	36	 
	 
	 	11.1	 	Taking In Kind	 	 	36	 
	 
	 	11.2	 	Failure of Participant to Take In Kind	 	 	36	 
	 
	 	11.3	 	Hedging	 	 	36	 

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	 	 	 	 	 	 	Page	 
	ARTICLE XII	 	WITHDRAWAL AND TERMINATION	 	 	37	 
	 
	 	12.1	 	Termination by Expiration or Agreement	 	 	37	 
	 
	 	12.2	 	Termination by Deadlock	 	 	37	 
	 
	 	12.3	 	Withdrawal	 	 	37	 
	 
	 	12.4	 	Continuing Obligations and Environmental Liabilities	 	 	37	 
	 
	 	12.5	 	Disposition of Assets on Termination	 	 	37	 
	 
	 	12.6	 	Non-Compete Covenants	 	 	38	 
	 
	 	12.7	 	Right to Data After Termination	 	 	38	 
	 
	 	12.8	 	Continuing Authority	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIII	 	ACQUISITIONS WITHIN AREA OF INTEREST	 	 	39	 
	 
	 	13.1	 	General	 	 	39	 
	 
	 	13.2	 	Notice to Non-Acquiring Participant	 	 	39	 
	 
	 	13.3	 	Option Exercised	 	 	39	 
	 
	 	13.4	 	Option Not Exercised	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIV	 	ABANDONMENT AND SURRENDER OF PROPERTIES	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XV	 	SUPPLEMENTAL BUSINESS AGREEMENT	 	 	 	 
	 
	 	15.1	 	Supplemental Business Agreement	 	 	40	 
	 
	 	15.2	 	Subdivided Area of Interest	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XVI	 	TRANSFER OF INTEREST; PREEMPTIVE RIGHT	 	 	41	 
	 
	 	16.1	 	General	 	 	41	 
	 
	 	16.2	 	Limitations on Free Transferability	 	 	41	 
	 
	 	16.3	 	Preemptive Right	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XVII	 	DISPUTES	 	 	44	 
	 
	 	17.1	 	Governing Law	 	 	44	 
	 
	 	17.2	 	Venue	 	 	44	 
	 
	 	17.3	 	Alternative Dispute Resolution	 	 	44	 
	 
	 	17.4	 	Fees and Costs	 	 	45	 

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	 	 	 	 	 	 	Page	 
	ARTICLE XVIII	 	CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION	 	 	45	 
	 
	 	18.1	 	Business Information	 	 	45	 
	 
	 	18.2	 	Participant Information	 	 	45	 
	 
	 	18.3	 	Permitted Disclosure of Confidential Business Information	 	 	46	 
	 
	 	18.4	 	Disclosure Required By Law	 	 	46	 
	 
	 	18.5	 	Public Announcements	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIX	 	GENERAL PROVISIONS	 	 	47	 
	 
	 	19.1	 	Notices	 	 	47	 
	 
	 	19.2	 	Gender	 	 	48	 
	 
	 	19.3	 	Currency	 	 	48	 
	 
	 	19.4	 	Headings	 	 	48	 
	 
	 	19.5	 	Waiver	 	 	48	 
	 
	 	19.6	 	Modification	 	 	48	 
	 
	 	19.7	 	Force Majeure	 	 	49	 
	 
	 	19.8	 	Rule Against Perpetuities	 	 	49	 
	 
	 	19.9	 	Further Assurances	 	 	49	 
	 
	 	19.10	 	Entire Agreement; Successors and Assigns	 	 	50	 
	 
	 	19.11	 	Memorandum	 	 	50	 
	 
	 	19.12	 	Counterparts	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	EXHIBIT A	 	ASSETS AND AREA OF INTEREST	 	 	 	 
	EXHIBIT B	 	ACCOUNTING PROCEDURES	 	 	 	 
	EXHIBIT C	 	TAX MATTERS	 	 	 	 
	EXHIBIT D	 	DEFINITIONS	 	 	 	 
	EXHIBIT E	 	PRODUCTION ROYALTY	 	 	 	 
	EXHIBIT F	 	INITIAL PROGRAM AND BUDGET	 	 	 	 

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CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

          This CONVERSE URANIUM PROJECT EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
(“Agreement”) is made as of January 23, 2006
(“ Effective Date”) between Canyon Resources Corporation, a Delaware corporation
(“Canyon”), with an office located at 14142 Denver West Parkway, Suite 250, Golden, CO 80401 and
New Horizon Uranium Corporation, a British Columbia corporation
(“ Horizon”), with an office located at 2221 East Street, Suite 200, Golden, Colorado 80401.

RECITALS

          A. Canyon owns or controls certain Properties and other Assets located in or concerning
Converse and Niobrara Counties, State of Wyoming, which Properties and other Assets are described
further in Exhibit A and defined in Exhibit D.

          B. Horizon wishes to participate with Canyon in the exploration, evaluation and if justified
the development and mining of mineral resources within the Properties, and Canyon is willing to
grant such rights to Horizon.

          NOW THEREFORE, in consideration of the covenants and conditions contained herein, Canyon and
Horizon agree as follows:

ARTICLE I

DEFINITIONS AND CROSS-REFERENCES

          1.1 Definitions. The terms defined in Exhibit D and elsewhere shall have the defined meaning
wherever used in this Agreement, including in Exhibits.

          1.2 Cross-References. References to “Exhibits,” “Articles,” “Sections” and “Subsections”
refer to Exhibits, Articles, Sections and Subsections of this Agreement. References to
“Paragraphs” and “Subparagraphs” refer to paragraphs and subparagraphs of the referenced Exhibits.

ARTICLE II

NAME, PURPOSES AND TERM

          2.1 General. Canyon and Horizon hereby enter into this Agreement for the purposes hereinafter
stated. All of the rights and obligations of the Participants in connection with the Assets or the
Area of Interest and all Operations shall be subject to and governed by this Agreement.

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          2.2 Name. The Assets shall be managed and operated by the Participants under the name of the
“Converse Joint Venture”. The Manager shall accomplish any registration required by applicable
assumed or fictitious name statutes and similar statutes.

          2.3 Purposes. This Agreement is entered into for the following purposes and for no others,
and shall serve as the exclusive means by which each of the Participants accomplishes such
purposes:

	 	(a)	 	to conduct Exploration within the Area of Interest,
	 
	 	(b)	 	to acquire additional real property and other interests within the Area of Interest
including contractual rights of access and use of land, water, and utilities,
	 
	 	(c)	 	to evaluate the possible Development and Mining of the Properties, and, if justified, to
engage in Development and Mining,
	 
	 	(d)	 	to engage in Operations on the Properties,
	 
	 	(e)	 	to engage in marketing Products, to the extent provided by Article XI,
	 
	 	(f)	 	to complete and satisfy all Environmental Compliance obligations and Continuing
Obligations affecting the Properties, and
	 
	 	(g)	 	to perform any other activity necessary, appropriate, or incidental to any of the
foregoing.

          2.4 Limitation. Unless the Participants otherwise agree in writing, the Operations shall be
limited to the purposes described in Section 2.3, and nothing in this Agreement shall be construed
to enlarge such purposes or to change the relationships of the Participants as set forth in Article
IV.

          2.5 Term. The term of this Agreement shall be for thirty (30) years from the Effective Date
and for so long thereafter as Products are produced from the Properties on a continuous basis, and
thereafter until all materials, supplies, equipment and infrastructure have been salvaged and
disposed of, any required Environmental Compliance is completed and accepted and the Participants
have agreed to a final accounting, unless the Business is earlier terminated as herein provided.
For purposes hereof, Products shall be deemed to be produced from the Properties on a “continuous

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basis” so long as production in commercial quantities is not halted for more than one year for
reasons other than Force Majeure as provided for in Section 19.7.

ARTICLE III

REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES

          3.1 Representations and Warranties of Both Participants. As of the Effective Date, each
Participant warrants and represents to the other that:

               (a) it is a corporation duly organized and in good standing in its state or province of
incorporation and it shall become qualified to do business and shall be in good standing in those
states where necessary in order to carry out the purposes of this Agreement within thirty (30)
calendar days following the Effective Date;

               (b) it has the capacity to enter into and perform this Agreement and all transactions
contemplated herein and that all corporate, board of directors, shareholder, surface and mineral
rights owner, lessor, lessee and other actions required to authorize it to enter into and perform
this Agreement have been properly taken;

               (c) it will not breach any other agreement or arrangement by entering into or performing this
Agreement;

               (d) it is not subject to any governmental order, judgment, decree, debarment, sanction or Laws
that would preclude the permitting or implementation of Operations under this Agreement; and

               (e) this Agreement has been duly executed and delivered by it and is valid and binding upon it
in accordance with its terms.

          3.2 Representations and Warranties of Canyon. As of the Effective Date, Canyon makes the
following representations and warranties to Horizon:

               (a) Canyon does not own any of the Properties in fee simple.

               (b) With respect to those Properties in which Canyon holds an interest under leases or other
contracts: (i) Canyon is in exclusive possession of such Properties; (ii) Canyon has not received
any notice of default of any of the terms or provisions of such leases or other contracts; (iii)
Canyon has the authority under such leases or other contracts to perform fully its obligations
under this Agreement; (iv) to Canyon’s knowledge, such leases and other contracts are valid and are
in good standing; (v) Canyon has no knowledge of any act or omission or any condition on the
Properties which could be considered or construed as a default under any such lease or other

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contract; and (vi) to Canyon’s knowledge, such Properties are free and clear of all Encumbrances or
defects in title except for those specifically identified in Paragraph 1.1 of Exhibit A.

               (c) Canyon has delivered to or made available for inspection by Horizon all Existing Data in
its possession or control, and true and correct copies of all leases or other contracts relating to
the Properties.

               (d) With respect to unpatented mining claims located by Canyon that are included within the
Properties, except as provided in Paragraph 1.1 of Exhibit A and subject to the paramount title of
the United States: (i) the
unpatented mining claims were properly laid out and monumented; (ii) all required location and
validation work was properly performed; (iii) location notices and certificates were properly
recorded and filed with appropriate governmental agencies; (iv) all assessment work required to
hold the unpatented mining claims has been performed and all Governmental Fees have been paid in a
manner consistent with that required of the Manager pursuant to Subsection 8.2(k) through the
assessment year ending August 31, 2006; (v) all affidavits of assessment work, evidence of payment
of Governmental Fees, and other filings required to maintain the claims in good standing have been
properly and timely recorded or filed with appropriate governmental agencies; (vi) the claims are
free and clear of Encumbrances or defects in title; and (vii) Canyon has no knowledge of
conflicting mining claims. Nothing in this Subsection, however, shall be deemed to be a
representation or a warranty that any of the unpatented mining claims contains a valuable mineral
deposit.

               (e) The Properties do not include any unpatented mining claims not located by Canyon.

               (f) With respect to the Properties, to Canyon’s knowledge, there are no pending or threatened
actions, suits, claims or proceedings, and there have been no previous transactions affecting its
interests in the Properties which have not been for fair consideration.

               (g) Except as to matters otherwise disclosed in writing to Horizon prior to the Effective
Date,

                    (i) to Canyon’s knowledge, the conditions existing on or with respect to the Properties and
its ownership and operation of the Properties are not in violation of any Laws (including without
limitation any Environmental Laws), nor causing or permitting any damage (including Environmental
Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on
the Properties or in the general vicinity of the Properties;

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                    (ii) to Canyon’s knowledge, there have been no past violations by it or by any of its
predecessors in title of any Environmental Laws or other Laws affecting or pertaining to the
Properties, nor any past creation of damage or threatened damage to the air, soil, surface waters,
groundwater, flora, fauna, or other natural resources on, about or in the general vicinity of the
Properties (“Environmental Damage”); and

                    (iii) Canyon has not received inquiry from or notice of a pending investigation from any
governmental agency or of any administrative or judicial proceeding concerning the violation of any
Laws.

               The representations and warranties set forth above shall survive the execution and delivery of
any documents of Transfer provided under this Agreement. For a representation or warranty made to
a Participant’s “knowledge,” the term “knowledge” shall mean actual knowledge on the part of the
officers, employees, and agents of the representing Participant or of facts that would reasonably
lead to the indicated conclusions.

          3.3 Disclosures. Each of the Participants represents and warrants that at the time this
Agreement is entered into and as of the Effective Date, if different, it is unaware of any material
facts or circumstances that have not been disclosed in this Agreement, which should be disclosed to
the other Participant in order to prevent the representations and warranties in this Article from
being materially misleading. Canyon has disclosed to Horizon all information it believes to be
relevant concerning the Assets, including without limitation all information in its possession
concerning Environmental Liabilities, and has provided to or made available for inspection by
Horizon all such information, but does not make any representation or warranty, express or implied,
as to the accuracy or completeness of the information (except as provided in Section 3.2) or as to
the boundaries or value of the Assets. Each Participant represents to the other that in
negotiating and entering into this Agreement it has relied solely on its own appraisals and
estimates as to the value of the Assets and upon its own geologic and engineering interpretations
related thereto.

          3.4 Record Title. Until directed otherwise by the Management Committee, title to the Assets
shall be held by Canyon for Canyon and Horizon, as their Participating Interests are determined
pursuant to this Agreement.

          3.5 Loss of Title. Any failure or loss of title to the Assets, and all costs of defending
title, shall be charged to the Business Account, except that all costs and losses arising out of or
resulting from breach of the representations and warranties of Canyon or Horizon as to title shall
be charged to Canyon or Horizon, as the case may be.

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          3.6 Royalties, Production Taxes and Other Payments Based on Production. The Manager shall
make all required payments of production royalties, taxes based on production of Products, and
other payments out of production to private parties and governmental entities with such payments
subject to timely reimbursement from each Participant in proportion to its
Participating Interest. The Manager undertakes to make such payments timely and otherwise in
accordance with applicable laws and agreements. The Manager may require each Participant to advance
its proportionate share and each Participant shall timely advance such funds. The Manager shall
record all funds received in the Business Account and maintain evidence of timely payment for all
such required payments. In the event that either Participant fails to advance or reimburse its
proportionate share of any such required payment, the other Participant shall have the right to
advance such funds to cover such payment and shall thereby become subrogated to the rights of such
third party; provided, however, that the reimbursement or advance of funds by the paying
Participant to cover the share of the other Participant shall not constitute acceptance by the
paying Participant of any liability to such third party for the underlying obligation.

          3.7 Indemnities/Limitation of Liability.

               (a) Each Participant shall indemnify the other Participant, its directors, officers,
employees, agents and attorneys, or Affiliates (collectively “Indemnified Participant”) from and
against the entire amount of any Material Loss. A “Material Loss” shall mean all costs, expenses,
damages or liabilities, including attorneys’ fees and other costs of litigation (either threatened
or pending) arising out of or based on a breach by a Participant (“Indemnifying Participant”) of
any representation, warranty or covenant contained in this Agreement, including without limitation:

                    (i) any failure by a Participant to timely advance or reimburse funds to the Manager for the
Participant’s proportionate share of required royalties, production taxes and other payments out of
production due to third parties as required by Section 3.6;

                    (ii) any action taken for or obligation or responsibility assumed on behalf of the other
Participant, its directors, officers, employees, agents and attorneys, or Affiliates by a
Participant, any of its directors, officers, employees, agents and attorneys, or Affiliates, in
violation of Section 4.1;

                    (iii) failure of a Participant or its Affiliates to comply with the non-compete or Area of
Interest provisions of Section 12.6 or Article XIII;

                    (iv) any Transfer that causes termination of the tax partnership established by Section 4.2,
against which the transferring Participant shall indemnify the non-transferring Participant as
provided in Article V of Exhibit C; and

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                    (v) failure of a Participant or its Affiliates to comply with the preemptive right under
Section 16.3.

               A Material Loss shall not be deemed to have occurred until, in the aggregate, an Indemnified
Participant incurs losses, costs, damages or liabilities in excess of One Hundred Thousand Dollars
($100,000) relating to breaches of warranties, representations and covenants contained in this
Agreement. Canyon’s aggregate liability to all Indemnified Participants under this Section for
breaches of the representations in Subsection 3.2(g) shall not, however, exceed Five Hundred
Thousand Dollars ($500,000).

               (b) If any claim or demand is asserted against an Indemnified Participant in respect of which
such Indemnified Participant may be entitled to indemnification under this Agreement, written
notice of such claim or demand shall promptly be given to the Indemnifying Participant. The
Indemnifying Participant shall have the right, but not the obligation, by notifying the Indemnified
Participant within thirty (30) days after its receipt of the notice of the claim or demand, to
assume the entire control of (subject to the right of the Indemnified Participant to participate,
at the Indemnified Participant’s expense and with counsel of the Indemnified Participant’s choice),
the defense, compromise, or settlement of the matter, including, at the Indemnifying Participant’s
expense, employment of counsel of the Indemnifying Participant’s choice. Any damages to the assets
or business of the Indemnified Participant caused by a failure by the Indemnifying Participant to
defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by
the Indemnified Participant, after the Indemnifying Participant has given notice that it will
assume control of the defense, compromise, or settlement of the matter, shall be included in the
damages for which the Indemnifying Participant shall be obligated to indemnify the Indemnified
Participant. Any settlement or compromise of a matter by the Indemnifying Participant shall
include a full release of claims against the Indemnified Participant which has arisen out of the
indemnified claim or demand.

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ARTICLE IV

RELATIONSHIP OF THE PARTICIPANTS

          4.1 No Partnership. Nothing contained in this Agreement shall be deemed to constitute either
Participant the partner of the other, or, except as otherwise herein expressly provided, to
constitute either Participant the agent or legal representative of the other, or to create any
fiduciary relationship between them. The Participants do not intend to create, and this Agreement
shall not be construed to create, any mining, commercial or other partnership. Neither
Participant, nor any of its directors, officers, employees, agents and attorneys, or Affiliates,
shall act for or assume any obligation or responsibility on behalf of the other Participant, except
as otherwise expressly provided herein, and any such action or assumption by a Participant’s
directors, officers, employees, agents and attorneys, or Affiliates shall be a breach by such
Participant of this Agreement. The rights, duties, obligations and liabilities of the Participants
shall be several and not joint or collective. Each Participant shall be responsible only for its
obligations as herein set out and shall be liable only for its share of the costs and expenses as
provided herein, and it is the express purpose and intention of the Participants that their
ownership of Assets and the rights acquired hereunder shall be as tenants in common.

          4.2 Federal Tax Elections and Allocations. Without changing the effect of Section 4.1, the
relationship of the Participants shall constitute a tax partnership within the meaning of Section
761(a) of the United States Revenue Code of 1986. Tax elections and allocations shall be made as
set forth in Exhibit C.

          4.3 State Income Tax. To the extent permissible under applicable law, the relationship of the
Participants shall be treated for state income tax purposes in the same manner as it is for federal
income tax purposes.

          4.4 Tax Returns. After approval of the Management Committee, any tax returns or other
required tax forms shall be filed in accordance with Exhibit C.

          4.5 Other Business Opportunities. Except as expressly provided in this Agreement, each
Participant shall have the right to engage in and receive full benefits from any independent
business activities or operations, whether or not competitive with this Business, without
consulting with, or obligation to, the other Participant. The doctrines of “corporate opportunity”
or “business opportunity” shall not be applied to this Business nor to any other activity or
operation of either Participant. Neither Participant shall have any obligation to the other with
respect to any opportunity to acquire any property outside the Area of Interest at any time, or,
except as otherwise provided in Section 12.6, within the Area of Interest after the termination of
the Business. Unless otherwise agreed in writing, neither Participant shall have any obligation to
process or otherwise treat any Products in any facility owned or controlled by such Participant.

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          4.6 Waiver of Rights to Partition or Other Division of Assets. The Participants hereby waive
and release all rights of partition, or of sale in lieu
thereof, or other division of Assets except as provided in Article XV, including any such rights
provided by Law.

          4.7 Transfer or Termination of Rights to Properties. Except as otherwise provided in this
Agreement or as expressly agreed to by the Participants in writing, neither Participant shall
Transfer all or any part of its interest in the Assets or this Agreement or otherwise permit or
cause such interests to terminate.

          4.8 Implied Covenants. There are no implied covenants contained in this Agreement other than
those of good faith and fair dealing.

          4.9 No Third Party Beneficiary Rights. This Agreement shall be construed to benefit the
Participants and their respective successors and assigns only, and shall not be construed to create
third party beneficiary rights in any other party or in any governmental organization or agency,
except to the extent required by Project Financing and as provided in Subsection 3.7(a).

ARTICLE V

CONTRIBUTIONS BY PARTICIPANTS

          5.1 Participants’ Initial Contributions.

               (a) Canyon, as its Initial Contribution, hereby contributes the Assets described in Exhibit A
to the purposes of this Agreement. The amount of Two Million Dollars ($2,000,000) shall be
credited to Canyon’s Equity Account on the Effective Date with respect to Canyon’s Initial
Contribution.

               (b) Subject to Horizon’s right of withdrawal as set forth in Section 5.2, Horizon, as its
Initial Contribution shall fund Operations under Subsection 5.1(e) totaling One Million Dollars
($1,000,000.00) on or before the third anniversary of the Effective Date, with Two Hundred Thousand
Dollars ($200,000) of the Initial Contribution estimated as the minimum to be funded in the first
year following the Effective Date, Three Hundred Thousand Dollars ($300,000) of the Initial
Contribution estimated to be funded in the second year following the Effective Date, and the
remaining Five Hundred Thousand Dollars ($500,000) of the Initial Contribution estimated to be
funded in the third year following the Effective Date. All funding by Horizon in excess of the
stated amount for each year shall be credited towards Horizon’s subsequent year(s) funding
commitment. Horizon may elect, at any time during the period ending on the third anniversary of
the Effective Date to complete the funding of the One Million Dollars ($1,000,000) Initial
Contribution amount, including by lump sum payment made to the Business Account

9

 

equal to the remaining unfunded portion of the One Million Dollar ($1,000,000) Initial Contribution
amount. In determining whether Horizon’s funding obligation has been met, only costs that are
properly chargeable to the Business Account under Exhibit B shall be included (“Qualifying
Expenses”); provided, however, Horizon shall not be entitled to an Administrative Charge during the
time it is making Qualifying Expenses. Upon completion of the Initial Contribution funding, such
amount shall be credited to Horizon’s Equity Account.

          (c) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and
concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1,
Horizon shall tender to Canyon five hundred thousand (500,000) Horizon common shares for no
additional consideration. Issuance of such common shares is subject to approval of Horizon’s
listing of common shares on the TSX Venture Exchange or an alternate stock exchange solely at
Horizon’s election of such exchange. Should Horizon not have such approval within one hundred
eighty (180) days of the Effective Date, the common shares shall be issued from Horizon’s treasury
shares.

          (d) Upon Horizon’s completion of its Initial Contribution under Subsection 5.1(b) and
concurrent with Horizon’s earn-in of its Initial Participating Interest set forth in Section 6.1,
Horizon shall also tender to Canyon a warrant for the acquisition of an additional five hundred
thousand (500,000) Horizon common shares at a price equal to one hundred twenty five percent (125%)
of the then current market price of Horizon stock. The “then current market price” shall be: i)
if Horizon is a public company trading on any Canadian or United States stock exchange at the date
of tender, the thirty (30) day trailing average price of Horizon common shares sold on the stock
exchange on which Horizon is traded on the date five (5) business days prior to tender; or ii) if
Horizon is not a publicly traded company at the date of tender, the price of the most recent
private placement completed for ownership in Horizon.

          (e) Subject only to the provisions of Sections 9.1 and 7.2, until Horizon has completed its
Initial Contribution, and if Horizon has elected to fund Additional Contribution(s) under
Subsections 5.3(a) and (b) then for so long thereafter as Horizon bears all Qualifying Expenses for
Operations, Horizon shall have the sole right to determine the nature, timing, scope, extent and
method of all Operations without obtaining the approval or consent of Canyon or the Management
Committee. In conducting such Operations, Horizon shall exercise the standard of care set forth in
Section 8.3. Horizon has agreed to fulfill the Manager’s monthly reporting requirements set forth
in Section 8.2(o) beginning as of the Effective Date. With the exception of Section 8.2(o), for so
long as Horizon bears all Qualifying Expenses for Operations, Horizon shall be
entitled, but shall not be obligated, to exercise any of the applicable powers of the Manager in
Section 8.2, except that until Horizon has completed its Initial Contribution it shall not be
entitled or required to perform the activities described in Subsections 8.2(g), (i), (l) and (s)
that would otherwise require consent of the Management Committee or of

10

 

Canyon. For all such Operations, Horizon shall provide for accrual of reasonably anticipated
Environmental Compliance expenses, which shall constitute Qualifying Expenses, and upon completion
of its Initial Contribution, Horizon shall transfer any accrued but unexpended amounts to the
Environmental Compliance Fund established under Paragraph 2.14 of Exhibit B.

               (f) Canyon shall provide Horizon with written notice of any exceptions it may have to the
statement of Qualifying Expenses submitted to it as provided above within three (3) months after
receipt of the statement. Failure to provide such notice within the three (3) month period shall
constitute acceptance by Canyon of the stated Qualifying Expenses, subject to audit provisions of
Section 10.6.

          5.2 Failure to Make Initial Contribution.

               (a) Horizon’s failure to make its Initial Contribution in accordance with the provisions of
this Article V, if not cured within thirty (30) days after notice by Canyon of such default, shall
be deemed to be a withdrawal of Horizon from the Business, the termination of its Participating
Interest hereunder and a transfer of its Participating Interest and Capital Account to Canyon.
Upon such deemed withdrawal, Horizon shall have no further right, title or interest in the Assets
and it shall take such actions as are necessary to ensure that all Assets are free and clear of any
Encumbrances arising by, through or under it, except for such Encumbrances to which the
Participants may have agreed. Subject to Subsection 5.2(b) below, Horizon’s withdrawal shall be
effective upon such failure, but such withdrawal shall not relieve Horizon of its obligation to
Canyon to fund Operations up to the amount of Horizon’s contractual obligations to third parties,
nor shall such withdrawal relieve Horizon of its responsibility to fund and satisfy Horizon’s share
of liabilities to third persons (regardless of whether such liabilities accrue before or after such
withdrawal), including Environmental Liabilities, Continuing Obligations and Environmental
Compliance, arising prior to Horizon’s withdrawal, which responsibility shall be based on Horizon’s
initial Participating Interest.

               (b) Notwithstanding Subsection 5.2(a) above, Horizon shall have the right, within ninety (90)
days after the Effective Date, to conduct an investigation and perform a baseline assessment of the
environmental conditions of the Properties including sampling and analyses as Horizon deems advisable. Upon
completion of such baseline assessment, Horizon shall promptly provide the report and any
analytical results to Canyon. If Horizon determines that conditions may exist on the Properties
which may, in Horizon’s judgment, result in violation of Environmental Laws, Horizon shall have the
right to withdraw from the Business by giving written notice to Canyon of such withdrawal.
Horizon’s withdrawal shall be effective upon receipt by Canyon of such notice, but such withdrawal
shall not relieve Horizon of its obligation to fund Operations up to the amount of Horizon’s agreed
contribution to the Initial Program and Budget. Such withdrawal shall, however, relieve Horizon of
its responsibility to fund and satisfy

11

 

Horizon’s share of liabilities to third parties (regardless of whether such liabilities accrue
before or after such withdrawal), including Environmental Liabilities, Continuing
Obligations and Environmental Compliance, other than those arising out of Operations
conducted by Horizon after the Effective Date and prior to its withdrawal. Horizon shall
fund and satisfy one hundred percent (100%) of such liabilities only until it has contributed
the full amount of its agreed contribution to the Initial Program and Budget. Except as
provided in this Subsection and except as may be otherwise expressly provided herein,
Horizon’s withdrawal shall relieve Horizon from any other obligation to make
contributions hereunder.

     5.3 Additional Contribution(s). At such time as Horizon has
contributed the full amount of its Initial Contribution under
Subsection
 5.1(b), Horizon
may elect to increase its Participating Interest by funding one or both Additional
Contribution(s) described in Subsections 5.3(a) and(b) below.

          (a) Horizon may elect, at its sole discretion, by advance notice to
Canyon within forty-five (45) days prior to the completion of its Initial Contribution, to
solely fund the next One Million Dollars ($1,000,000) of Operations within the two (2) year
period following completion of the funding of its Initial Contribution and thereby earn an
additional twenty percent (20%) Participating Interest. During this period of sole funding
by Horizon, Canyon shall have no obligation to fund its pro rata share of expenditures and
Horizon shall have the sole right and control over Operations consistent with Subsection
5.1(e). Upon completion of Horizon’s Additional Contribution described within this
Subsection, One Million Dollars ($1,000,000) shall be credited to Horizon’s Equity Account,
Horizon’s Participating Interest shall be increased by twenty percent (20%) to a total of
seventy percent (70%), and Canyon’s Participating Interest shall be decreased by twenty
percent (20%) to a total of thirty percent (30%).

          (b) Horizon may elect, at its sole discretion and by advance notice to
Canyon within forty-five (45) days prior to the completion of its funding of the second One
Million Dollar ($1,000,000) contribution described in Subsection 5.3(a), to acquire an
additional twenty percent (20%) Participating Interest, by funding a Feasibility Study
prepared by a Feasibility Contractor and thereby earning an additional five percent (5%)
Participating Interest, for a total of seventy-five percent (75%) Participating Interest at the
time the Feasibility Study is completed and paid for. If Horizon elects to fund a Feasibility
Study prepared by a Feasibility Contractor, Horizon shall proceed with reasonable
diligence to complete the same within a reasonable time following completion of Horizon’s
funding of the second One Million Dollar ($1,000,000) contribution. During this period of
sole funding by Horizon, Canyon shall have no obligation to fund its pro rata share of
expenditures and Horizon shall have the sole right and control over Operations consistent
with Subsection 5.1(e). Upon completion of such funding, an amount equal to the cost of
such Feasibility Study shall be credited to Horizon’s Equity Account, Horizon’s
Participating Interest shall be increased by five percent (5%) to a total of seventy-five

12

 

percent (75%), and Canyon’s Participating Interest shall be decreased by five percent (5%)
to a total of twenty-five percent (25%).

          (c) Upon the Management Committee’s decision to construct a
Mining facility based on the Feasibility Study and subject to applicable securities laws and
regulations, Horizon shall tender to Canyon either the number of common shares of
Horizon equal in value to Two Million Dollars ($2,000,000) if at that date Horizon is a
publicly traded company, or a payment of Two Million Dollars ($2,000,000) if Horizon is
not a publicly traded company. The price to be used for the determination of the number
of such shares to be transferred to Canyon shall be consistent with the pricing mechanism
set forth in Subsections 5.1(d)(i) and (ii).

          (d) If Horizon does not elect to increase its initial Participating
Interest pursuant to Subsections 5.3(a) and (b), the Participants, subject to any election
permitted by Subsection 9.5(a), shall be obligated to contribute funds to adopted Programs
and Budgets in proportion to their respective initial Participating Interests set forth in
Section 6.1.

ARTICLE VI

INTERESTS OF PARTICIPANTS

     6.1 Initial Participating Interests. Horizon’s initial Participating Interest
set forth below shall become effective immediately once Horizon has fulfilled its Initial
Contribution obligations set forth in Section 5.1. Once Horizon has earned its initial
Participating Interest, the Participants shall have the following Participating Interests:

	 	 	 	 	 
	Canyon
	 	 	50	%
	Horizon
	 	 	50	%

     6.2 Changes in Participating Interests. The Participating Interests shall
be eliminated or changed as follows:

          (a) Upon withdrawal or deemed withdrawal as provided in
Sections 5.2, 6.3, and Article XII;

          (b) Upon an election by a Participant pursuant to Section 9.5 to
contribute more or less to an adopted Program and Budget than the percentage equal to its
Participating Interest, or to contribute nothing to an adopted Program and Budget;

          (c) In the event of default by either Participant in making its
agreed-upon contribution to an adopted Program and Budget, followed by an election by
the other Participant to invoke any of the remedies in Section 10.5;

13

 

          (d) Upon Transfer by either Participant of part or all of its
Participating Interest in accordance with Article XVI; or

          (e) Upon acquisition by either Participant of part or all of the
Participating Interest of the other Participant, including any elections by Horizon to
increase its Participating Interest by completing Additional Contribution(s) in accordance
with Section 5.3.

     6.3 Elimination of Minority Interest.

          (a) At such time as a Reduced Participant’s Recalculated
Participating Interest drops to less than fifteen percent (15%), its Recalculated Participating
Interest shall automatically be converted to a three percent (3%) production royalty as
calculated in accordance with Exhibit E (“Production Royalty”). Once converted to a
Production Royalty, the Reduced Participant shall be deemed to have relinquished its
entire Participating Interest free and clear of any Encumbrances arising by, through or
under the Reduced Participant, except any such Encumbrances listed in Paragraph 1.1 of
Exhibit A or to which the Participants have agreed. Such relinquished Participating
Interest shall be deemed to have accrued automatically to the other Participant. The
Reduced Participant’s Capital Account shall be transferred to the remaining Participant.
Upon conversion of its Recalculated Participating Interest to the Production Royalty, and
subject to Section 6.4, the Reduced Participant shall thereafter have no other further right,
title, or interest in the Assets or under this Agreement, and the tax partnership established
by Exhibit C shall dissolve pursuant to Paragraph 4.2 of Exhibit C. In such event, the
Reduced Participant shall execute and deliver an appropriate conveyance of all of its right,
title and interest in the Assets to the remaining Participant in consideration of the other
Participant’s execution and delivery of a royalty deed conveying the Production Royalty.

          (b) The relinquishment, withdrawal and entitlements for which
this Section provides shall be effective as of the effective date of the recalculation under
Sections 9.5 or 10.5. However, if the final adjustment provided under Section 9.6 for any
recalculation under Section 9.5 results in a Recalculated Participating Interest of fifteen
percent (15%) or more: (i) the Recalculated Participating Interest shall be deemed, effective
retroactively as of the first day of the Program Period, to have automatically revested; (ii)
the Reduced Participant shall be reinstated a Participant, with all of the rights and
obligations pertaining thereto; (iii) the right to the Production Royalty under Subsection
6.3(a) shall terminate; and (iv) the Manager, on behalf of the Participants, shall make any
necessary reimbursements, reallocations of Products, contributions and other adjustments
as provided in Subsection 9.6(d). Similarly if such final adjustment under Section 9.6
results in a Recalculated Participating interest of less than fifteen percent (15%) for a
Program Period as to which the provisional calculation under Section 9.5 had not resulted

14

 

in a Participating Interest of less than fifteen percent (15%), then such Participant, at its
election within thirty (30) days after notice of the final adjustment, may contribute an
amount resulting in a revised final adjustment and resultant Recalculated Participating
Interest of fifteen percent (15%). If no such election is made, such Participant shall be
deemed to have withdrawn under the terms of Subsection 6.3(a) as of the beginning of
such Program Period, and the Manager, on behalf of the Participants, shall make any
necessary reimbursements, reallocations of Products, contributions, and other adjustments
as provided in Subsection 9.6(d), to which such Participant may be entitled for such
Program Period.

     6.4 Continuing Liabilities Upon Adjustments of Participating Interests.
Any reduction or conversion of either Participant’s Participating Interest under Section 6.2
shall not relieve such Participant of its share of any liability, including, without limitation,
Continuing Obligations, Environmental Liabilities and Environmental Compliance,
whether arising, before or after such reduction or conversion, out of acts or omissions
occurring or conditions existing prior to the Effective Date or out of Operations conducted
during the term of this Agreement but prior to such reduction or conversion, regardless of
when any funds may be expended to satisfy such liability. For purposes of this Section,
such Participant’s share of such liability shall be equal to its Participating Interest at the
time the act or omission giving rise to the liability occurred after first taking into account
any reduction, readjustment and restoration of Participating Interests under Sections 6.3,
9.5, 9.6 and 10.5 (or, as to such liability arising out of acts or omissions occurring or
conditions existing prior to the Effective Date, equal to such Participant’s initial
Participating Interest). Should the cumulative cost of satisfying Continuing Obligations be
in excess of cumulative amounts accrued or otherwise charged to the Environmental
Compliance Fund as described in Exhibit B, each of the Participants shall be liable for its
proportionate share (i.e., Participating Interest at the time of the act or omission giving rise
to such liability occurred) after first taking into account any reduction, readjustment and
restoration of Participating Interests under Sections 6.3, 9.5, 9.6 and 10.5, of the cost of
satisfying such Continuing Obligations, notwithstanding that either Participant has
previously withdrawn from the Business or that its Participating Interest has been reduced
or converted to a Production Royalty pursuant to Subsection 6.3(a).

     6.5 Documentation of Adjustments to Participating Interests.
Adjustments to the Participating Interests need not be evidenced during the term of this
Agreement by the execution and recording of appropriate instruments, but each
Participant’s Participating Interest and related Equity Account balance shall be shown in
the accounting records of the Manager, and any adjustments thereto, including any
reduction, readjustment, and restoration of Participating Interests under Sections 9.5, 9.6
and 10.5, shall be made monthly. However, either Participant, at any time upon the
request of the other Participant, shall execute and acknowledge instruments necessary to
evidence such adjustments in form sufficient for filing and recording in the jurisdiction
where the Properties are located.

15

 

     6.6 Grant of Lien and Security Interest.

          (a) Subject to Section 6.7, each Participant grants to the other
Participant a lien upon and a security interest in its Participating Interest, including all of
its right, title and interest in the Assets, whenever acquired or arising, and the proceeds
from and accessions to the foregoing.

          (b) The liens and security interests granted by Subsection 6.6(a)
shall secure every obligation or liability of the Participant granting such lien or security
interest created under this Agreement, including the obligation to repay a Cover Payment
in accordance with Section 10.4. Each Participant hereby agrees to take all action necessary
to perfect such lien and security interest and hereby appoints the other Participant its
attorney-in-fact to execute, file and record all financing statements and other documents
necessary to perfect or maintain such lien and security interest.

     6.7 Subordination of Interests. Each Participant shall, from time to time,
take all necessary actions, including execution of appropriate agreements, to pledge and
subordinate its Participating Interest, any liens it may hold which are created under this
Agreement including those created pursuant to Section 6.6 hereof, and any other right or
interest it holds with respect to the Assets (other than any statutory lien of the Manager) to
any secured borrowings for Operations approved by the Management Committee,
including any secured borrowings relating to Project Financing, and any modifications or
renewals thereof.

ARTICLE VII

MANAGEMENT COMMITTEE

     7.1 Organization and Composition. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures, methods
and actions under this Agreement. The Management Committee shall consist of an equal
number of member(s) appointed by Canyon and Horizon. Each Participant may appoint
one or more alternates to act in the absence of a regular member. A Participant shall have
at least one member until such time as its Participating Interest is converted to a
Production Royalty pursuant to Section 6.3. Appointments by a Participant shall be made
or changed by notice to the other members.

     7.2 Decisions. After Horizon has completed the funding of its Initial
Contribution, each Participant, acting through its appointed member(s) in attendance at
the meeting, shall have the votes on the Management Committee in proportion to its
Participating Interest. Except for
 super-majority voting matters identified herein or as
otherwise provided in this Agreement, the vote of the Participant with a Participating

16

 

Interest greater than fifty percent (50%) shall determine the decisions of the Management
Committee. Unanimous consent of the Participants shall be required for the following
matters designated as super-majority voting matters: (i) the sale or other disposition of
Assets in accordance with Section 8.2(i) and Article XIV; (ii) the initiation of litigation
against third parties in accordance with Section 8.2(g); (iii) liquidation or wind-up of the
Business except in accordance with Article XII; (iv) changes to the Administrative Charge
provided for in Exhibit B in accordance with Section 8.5; (v) disbursements from the
Business Account or other distributions to the Manager except disbursements due the
Manager Participant from its share of Products, other distributions made to all
Participants, or otherwise as authorized by this Agreement; and (vi) disbursements from
the Environmental Compliance Fund for any purpose other than ongoing Environmental
Compliance conducted during Operations, mine closure, post-Operations Environmental
Compliance or Continuing Obligations.

     7.3 Meetings.

          (a) Beginning as of the Effective Date, the Management
Committee shall hold regular meetings at least quarterly in Golden, Colorado, or at other
agreed places. The Manager shall give fourteen (14) days notice to the Participants of such
meetings. Additionally, either Participant may call a special meeting upon seven (7) days
notice to the other Participant. In case of an emergency, reasonable notice of a special
meeting shall suffice. There shall be a quorum if at least one member representing each
Participant is present; provided, however, that if a Participant fails to attend two consecutive
properly called meetings, then a quorum shall exist at the second meeting if the other
Participant is represented by at least one appointed member, and a vote of such Participant
shall be considered the vote required for the purposes of the conduct of all business
properly noticed even if such vote would otherwise require unanimity.

          (b) If business cannot be conducted at a regular or special meeting
due to the lack of a quorum, either Participant may call the next meeting upon thirty (30)
days notice to the other Participant.

          (c) Each notice of a meeting shall include an itemized agenda
prepared by the Manager in the case of a regular meeting or by the Participant calling the
meeting in the case of a special meeting, but either Participant may add matters to the
agenda at least three (3) days before the meeting or with the consent of the other
Participant. The Manager shall prepare and distribute minutes of all meetings to the other
Participant within fifteen (15) days after the meeting. Either Participant may electronically
record the proceedings of a meeting with the consent of the other Participant. The other
Participant shall sign and return or object to the minutes prepared by the Manager within
thirty (30) days after receipt, and failure to do either shall be deemed acceptance of the
minutes as prepared by the Manager. The minutes, when signed or deemed accepted by
both Participants, shall be the official record of the decisions made by the Management

17

 

Committee. Decisions made at a Management Committee meeting shall be implemented
in accordance with adopted Programs and Budgets. If a Participant timely objects to
minutes proposed by the Manager, the members of the Management Committee shall
seek, for a period not to exceed thirty (30) days from receipt by the Manager of notice of the
objections, to agree upon minutes acceptable to both Participants. If the Management
Committee does not reach agreement on the minutes of the meeting within such thirty (30)
day period, the minutes of the meeting as prepared by the Manager together with the other
Participant’s proposed changes shall collectively constitute the record of the meeting. If
personnel employed in Operations are required to attend a Management Committee
meeting, reasonable costs incurred in connection with such attendance shall be charged to
the Business Account. All other costs shall be paid by the Participants individually.

     7.4 Action Without Meeting in Person. In lieu of meetings in person, the
Management Committee may conduct meetings by telephone or video conference, so long
as minutes of such meetings are prepared in accordance with Subsection 7.3(c). The
Management Committee may also take actions in writing signed by all members.

     7.5 Matters Requiring Approval. Except as provided in Subsection
5.1(e) and as otherwise delegated to the Manager in Section 8.2, the Management
Committee, acting in accordance with Section 7.2, shall have exclusive authority to
determine all matters related to overall policies, objectives, procedures, methods and
actions under this Agreement.

ARTICLE VIII

MANAGER

     8.1 Appointment. The Participants hereby appoint Horizon as the initial
Manager with overall management responsibility for Operations. Horizon hereby agrees
to serve until it resigns or has been deemed to resign as provided in Section 8.4. The
Participants agree that notwithstanding Horizon’s appointment as Manager, for up to one
(1) year from the Effective Date, Canyon shall continue to maintain all mining claims and
lease rights and take all other actions to maintain the Properties until Horizon expressly
assumes this responsibility. Horizon shall promptly reimburse expenses directly incurred
by Canyon to maintain the Properties following receipt of invoice and reasonable
supporting documentation.

     8.2 Powers and Duties of Manager. Subject to the terms and provisions
of this Agreement, the Manager shall have the following powers and duties, which shall be
discharged in accordance with adopted Programs and Budgets.

          (a) The Manager shall manage, direct and control Operations, and
shall prepare and present to the Management Committee proposed Programs and Budgets
as provided in Article IX.

18

 

          (b) The Manager shall implement the decisions of the
Management Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if it lacks sufficient
funds to carry out its responsibilities under this Agreement.

          (c) The Manager shall use reasonable efforts to: (i) purchase or
otherwise acquire all material, supplies, equipment, water, utility and transportation
services required for Operations, such purchases and acquisitions to be made to the extent
reasonably possible on the best terms available, taking into account all of the
circumstances; (ii) obtain such customary warranties and guarantees as are available in
connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of
all Encumbrances, except any such Encumbrances listed in Paragraph 1.1 of Exhibit A and
those existing at the time of, or created concurrent with, the acquisition of such Assets, or
mechanic’s or materialmen’s liens (which shall be contested, released or discharged in a
diligent matter) or Encumbrances specifically approved by the Management Committee.
The Manager shall use its best efforts to obtain bids from multiple third party suppliers for
individual, or related aggregate, purchases or purchase commitments that exceed Fifty
Thousand Dollars ($50,000).

          (d) The Manager shall conduct such title examinations of the
Properties and cure such title defects pertaining to the Properties as may be advisable in its
reasonable judgment.

          (e) Except as to be performed by Canyon under Section 8.1, the
Manager shall: (i) make or arrange for all payments required by leases, licenses, permits,
contracts and other agreements with third parties related to the Assets; (ii) pay all taxes,
assessments and like charges on Operations and Assets except taxes determined or
measured by a Participant’s sales revenue or net income, and shall otherwise promptly pay
and discharge expenses incurred in Operations; provided, however, that the Manager shall
have the right to contest (in the courts or otherwise) the validity or amount of any taxes,
assessments or charges or take other reasonable steps or proceedings to seek a reduction or
readjustment prior to payment but in no event shall the Manager permit or allow title to
the Assets to be lost as the result of the nonpayment of any taxes, assessments or like
charges; and (iii) do all other acts reasonably necessary to maintain the Assets.

          (f) The Manager shall: (i) apply for all necessary permits, licenses
and approvals; (ii) comply with all Laws; (iii) notify promptly the Management Committee
of any actual or alleged substantial violations thereof; and (iv) maintain records and
prepare and file all reports or notices required for or as a result of Operations. The
Manager shall not be in breach of this provision if a violation has occurred in spite of the
Manager’s good faith efforts to comply consistent with its standard of care under Section
8.3. In the event of any such violation, the Manager shall timely cure or dispose of such

19

 

violation on behalf of both Participants through performance, payment of fines and
penalties, or both, and the cost thereof shall be charged to the Business Account.

          (g) The Manager shall prosecute and defend, but shall not initiate
without unanimous consent of the Participants in accordance with Section 7.2, all litigation
against third parties or administrative proceedings arising out of Operations. The
non-managing Participant shall have the right to participate, at its own expense, in such
litigation or administrative proceedings. The non-managing Participant shall approve in
advance any settlement involving payments, commitments or obligations in excess of Fifty
Thousand Dollars ($50,000) in cash or value.

          (h) The Manager shall provide insurance for the benefit of the
Participants as follows or as may otherwise be determined from time to time by the
Management Committee. The Manager shall, at all times while conducting Operations,
comply fully with the applicable worker’s compensation laws and purchase, or provide
protection for the Participants comparable to that provided under standard form insurance
policies for the following risk categories: (i) comprehensive general liability and property
damage with combined limits of not less than Two Million Dollars ($2,000,000) for bodily
injury and property damage; (ii) automobile insurance with combined limits of not less
than One Million Dollars ($1,000,000); and (iii) adequate and reasonable insurance against
risk of fire and other risks ordinarily insured against in similar operations. Insurance
coverage and limits shall be subject to annual review and approval by the Management
Committee. Each Participant shall self-insure or purchase for its own account such
additional insurance as it deems necessary.

          (i) Except as expressly authorized in Article XII, unanimous consent
of both Participants in accordance with Section 7.2 is required before the Manager may: (i)
abandon or surrender Properties as provided in Article XIV; (ii) dispose of Assets in any
one transaction (or in any series of related transactions) having a value in excess of Fifty
Thousand Dollars ($50,000); (iii) begin a liquidation or initiate wind up of the Business; or
(iv) dispose of Assets necessary to achieve the purposes of the Business.

          (j) The Manager shall have the right to carry out its
responsibilities hereunder through agents, Affiliates or independent contractors subject to
Section 8.6 and prior disclosure to the Management Committee of the scope of
responsibilities to be carried out by agents, Affiliates or independent contractors.

          (k) Except as to be performed by Canyon under Section 8.1, the
Manager shall perform or cause to be performed all assessment and other work, and shall
pay all Governmental Fees required by Law in order to maintain the unpatented mining
claims, mill sites and tunnel sites included within the Properties. The Manager shall have
the right to perform the assessment work required hereunder pursuant to a common plan
of exploration and continued actual occupancy of such claims and sites shall not be

20

 

required. The Manager shall not be liable on account of any determination by any court or
governmental agency that the work performed by the Manager does not constitute the
required annual assessment work or occupancy for the purposes of preserving or
maintaining ownership of the claims, provided that the work done is pursuant to an
adopted Program and Budget and is performed in accordance with the Manager’s
standard of care under Section 8.3. The Manager shall timely record with the appropriate
county and file with the appropriate United States agency any required affidavits, notices
of intent to hold and other documents in proper form attesting to the payment of
Governmental Fees, the performance of assessment work or intent to hold the claims and
sites, in each case in sufficient detail to reflect compliance with the requirements applicable
to each claim and site. The Manager shall not be liable on account of any determination by
any court or governmental agency that any such document submitted by the Manager
does not comply with applicable requirements, provided that such document is prepared
and recorded or filed in accordance with the Manager’s standard of care under Section 8.3.

          (l) If authorized by the Management Committee, the Manager
may: (i) locate, amend or relocate any unpatented mining claim or mill site or tunnel site,
(ii) locate any fractions resulting from such amendment or relocation, (iii) apply for patents
or mining leases or other forms of mineral tenure for any such unpatented claims or sites,
(iv) abandon any unpatented mining claims for the purpose of locating mill sites or
otherwise acquiring from the United States rights to the ground covered thereby,
(v) abandon any unpatented mill sites for the purpose of locating mining claims or
otherwise acquiring from the United States rights to the ground covered thereby, (vi)
exchange with or convey to the United States any of the Properties for the purpose of
acquiring rights to the ground covered thereby or other adjacent ground, and (vii) convert
any unpatented claims or mill sites into one or more leases or other forms of mineral
tenure pursuant to any Law hereafter enacted.

          (m) The Manager shall keep and maintain all required accounting
and financial records pursuant to the procedures described in Exhibit B and in accordance
with generally accepted accounting principles used by companies based in the United
States (“US GAAP”) as further described in Exhibit B, and shall ensure appropriate
separation of accounts unless otherwise agreed by the Participants.

          (n) The Manager shall maintain Equity Accounts for each
Participant. Each Participant’s Equity Account shall be credited with the value of such
Participant’s contributions under Subsections 5.1(a), 5.1(b), 5.3(a), and 5.3(b) and shall be
credited with amounts contributed by such Participant under Subsection 5.3(d). Each
Participant’s Equity Account shall be charged with the cash and the fair market value of
property distributed to such Participant (net of liabilities assumed by such Participant and
liabilities to which such distributed property is subject). Contributions and distributions
shall include all cash contributions or distributions plus the agreed value (expressed in
dollars) of all in-kind contributions or distributions. Solely for purposes of determining

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the Equity Account balances of the Participants, the Manager shall reasonably estimate the
fair market value of all Products distributed to the Participants, and such estimated value
shall be used regardless of the actual amount received by each Participant upon
disposition of such Products.

          (o) Subject to Section 8.3, the Manager shall keep the
Management Committee advised of all Operations by submitting in writing to the
members of the Management Committee: (i) monthly progress reports that include
statements of expenditures and comparisons of such expenditures to the adopted Budget;
(ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations;
(iv) a detailed final report within sixty (60) days after completion of each Program and
Budget, which shall include comparisons between actual and budgeted expenditures and
comparisons between the objectives and results of Programs; and (v) such other reports as
any member of the Management Committee may reasonably request. Subject to Article
XVIII, at all reasonable times and upon reasonable advance notice the Manager shall
provide the Management Committee, or other authorized representative of a Participant
access to, and the right to inspect and, at such Participant’s cost and expense, copies of the
Existing Data and all maps, drill logs and other drilling data, core, pulps, reports, surveys,
assays, analyses, production reports, operations, technical, accounting and financial
records, and other Business Information, in the possession of the Manager, subject to
Article XVIII. In addition, the Manager shall allow authorized representatives of the
non-managing Participant, at the latter’s sole risk, cost and expense, and subject to
reasonable safety regulations, to inspect the Assets and Operations at all reasonable times
and upon reasonable advance notice, so long as the representative does not unreasonably
interfere with Operations.

          (p) The Manager shall prepare an Environmental Compliance
plan for all Operations consistent with applicable Laws or contractual obligations and shall
include in each Program and Budget sufficient funding to implement the Environmental
Compliance plan and to satisfy the financial assurance requirements of any applicable Law
or contractual obligation pertaining to Environmental Compliance. To the extent practical,
the Environmental Compliance plan shall incorporate concurrent reclamation of Properties
disturbed by Operations.

          (q) The Manager shall undertake Continuing Obligations when
and as economic and appropriate, whether before or after termination of the Business. As
part of each Program and Budget submittal, the Manager shall specify the measures to be
taken for performance of Continuing Obligations and the cost of such measures and shall
describe the Manager’s efforts to discharge Continuing Obligations. Authorized
representatives of each Participant upon reasonable advance notice shall have the right
from time to time to enter the Properties to inspect work directed toward satisfaction of
Continuing Obligations and audit books, records, and accounts related thereto.

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          (r) The Environmental Compliance Fund shall be maintained by
the Manager as a separate, interest bearing cash management account, which may include,
but is not limited to, money market investments and/or in longer term investments if
approved by the Management Committee. Such funds shall be used solely for
Environmental Compliance and Continuing Obligations, including the committing of such
funds, interests in property, insurance or bond policies, or other security to meet financial
assurance obligations for the reclamation or restoration of the Properties, and for other
Environmental Compliance requirements.

          (s) If Participating Interests are adjusted in accordance with this
Agreement the Manager shall propose from time to time one or more methods for fair pro
rata allocation of costs for Continuing Obligations.

          (t) The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing, and to implement the policies, objectives, procedures,
methods and actions determined by the Management Committee pursuant to Section 7.1.

     8.3 Standard of Care. The Manager shall discharge its duties under
Section 8.2 and conduct all Operations in a good, workmanlike and efficient manner, in
accordance with sound mining and other applicable industry standards and practices, and
in accordance with Laws and with the terms and provisions of leases, licenses, permits,
contracts and other agreements pertaining to the Assets. Without limiting the generality of
the foregoing, all statements, reports or compilations of factual, financial or other data, and
summaries of such data presented by Manager to the Management Committee shall be
prepared to at least the level of detail, care and attention as those statements, reports or
compilations prepared by the Manager Participant for its own use. The Manager shall not
be liable to the other Participant for any act or omission resulting in damage or loss except
to the extent caused by or attributable to the Manager’s willful misconduct or gross
negligence. The Manager shall not be in default of any of its duties under Section 8.2 if its
inability or failure to perform results from the failure of the other Participant to perform
acts or to contribute amounts required of it by this Agreement.

     8.4 Resignation; Deemed Offer to Resign. The Manager may resign
upon not less than six (6) months’ prior notice to the other Participant, in which case the
other Participant may elect to become the new Manager by notice to the resigning
Participant within sixty (60) days after receipt of the notice of resignation. The Manager
shall be deemed to have resigned upon the occurrence of the event described in each of the
following Subsections, with the other Participant to appoint itself or a third party as the
successor Manager at a subsequently called meeting of the Management Committee, at
which the Manager shall not be entitled to vote.

          (a) The aggregate Participating Interest of the other Participant
and its Affiliates becomes greater than fifty percent (50%);

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          (b) Except for conditions of Force Majeure, the Manager fails to
perform a material obligation imposed upon it under this Agreement and such failure
continues for a period of sixty (60) days after notice from the other Participant demanding
performance;

          (c) The Manager fails to pay or contest in good faith its bills and
Business debts as such obligations become due;

          (d) A receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for a substantial part of its assets is appointed and such
appointment is neither made ineffective nor discharged within sixty (60) days after the
making thereof, or such appointment is consented to, requested by, or acquiesced in by the
Manager;

          (e) The Manager commences a voluntary case under any
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or consents to
the entry of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official of any substantial part of its assets; or makes a general
assignment for the benefit of creditors; or takes corporate or other action in furtherance of
any of the foregoing; or

          (f) Entry is made against the Manager of a judgment, decree or
order for relief affecting its ability to serve as Manager, or a substantial part of its
Participating Interest or its other assets by a court of competent jurisdiction in an
involuntary case commenced under any applicable bankruptcy, insolvency or other similar
law of any jurisdiction now or hereafter in effect.

Under Subsections (d), (e) or (f) above, the appointment of a successor Manager shall be
deemed to pre-date the event causing a deemed resignation.

     8.5 Payments To Manager. The Manager shall be compensated for its
services and reimbursed for its costs hereunder in accordance with Exhibit B. Unanimous
consent of both Participants is required to increase the Administrative Charge, described in
Paragraph 2.13 of Exhibit B, due Manager under this Agreement. Except as specifically
set out in this Agreement including Exhibit B or agreed to by unanimous consent of both
Participants, the Manager may not collect additional costs, expenses, fees, charges, or other
disbursements from the Business Account.

     8.6 Transactions With Affiliates. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no less favorable than would be the case
in arm’s-length transactions with unrelated persons.

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     8.7 Activities During Deadlock. If the Management Committee for any
reason fails to adopt a proposed Program or Budget, the Manager shall continue
Operations at levels sufficient to maintain the then current Operations and Properties.
Additionally, if Mining has already been established, the Manager shall continue Mining
Operations at a level comparable with the last adopted Mining Program and Budget
exclusive of capital items. All of the foregoing shall be subject to the contrary direction of
the Management Committee and the receipt of necessary funds.

ARTICLE IX

PROGRAMS AND BUDGETS

     9.1 Initial Program and Budget. The Initial Program and Budget to
which both Participants have agreed is hereby adopted and is attached as Exhibit F.

     9.2 Operations Pursuant to Programs and Budgets. Except as otherwise
provided in Subsection 5.1(e), Section 9.13, and Article XIII, Operations shall be
conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to
adopted Programs and Budgets. Every Program and Budget adopted pursuant to this
Agreement shall provide for cash accrual of reasonably anticipated Environmental
Compliance expenses for all Operations contemplated under the Program and Budget in
accordance with Paragraph 2.14 of Exhibit B.

     9.3 Presentation of Programs and Budgets. Proposed Programs and
Budgets shall be prepared by the Manager to encompass a period of one (1) year or any
other period and broken out by quarterly periods as approved by the Management
Committee, and shall be submitted to the Management Committee for review and
consideration. All proposed Programs and Budgets may include Exploration,
Pre-Feasibility Studies, Feasibility Study, Development, Mining and Expansion or
Modification Operations components, or any combination thereof, and shall be reviewed
and adopted upon a vote of the Management Committee in accordance with Sections 7.2
and 9.4. Each Program and Budget adopted by the Management Committee, shall be
reviewed quarterly at a meeting of the Management Committee. At least three (3) months
prior to the expiration of the then current annual Program and Budget, a proposed
Program and Budget for the succeeding period shall be submitted to the Management
Committee for review and consideration.

     9.4 Review and Adoption of Proposed Programs and Budgets. A
Participant shall be deemed to have approved and voted to adopt a proposed Plan and
Budget unless it submits in writing to the Management Committee, within thirty (30) days
after receipt, its rejection of or proposed modification(s) to any or all of the components of
the proposed Plan and Budget. If a Participant timely submits its rejection or proposed

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modification(s) to the Management Committee then the Manager working with the other
Participant shall seek for a period of time not to exceed twenty (20) days to develop a
complete Program and Budget acceptable to both Participants. The Manager shall then call
a Management Committee meeting in accordance with Section 7.3 for purposes of
reviewing and voting upon the proposed Program and Budget.

     9.5 Election to Participate.

          (a) By notice to the Management Committee within twenty (20)
days after the final vote adopting a Program and Budget, and notwithstanding its vote
concerning adoption of a Program and Budget, a Participant may elect to participate in the
approved Program and Budget: (i) in proportion to its respective Participating Interest,
(ii) in some lesser amount than its respective Participating Interest, (iii) not at all; or (iv) if
a Reduced Participant, some greater amount than its Recalculated Participating Interest
subject to Subsection 9.5(d). In case of an election under Subsection 9.5(a)(ii) or (iii), its
Participating Interest shall be recalculated as provided in Subsection 9.5(b) below, with
dilution effective as of the first day of the Program Period for the adopted Program and
Budget. If a Participant fails to so notify the Management Committee of the extent to
which it elects to participate, the Participant shall be deemed to have elected to contribute
to such Program and Budget in proportion to its respective Participating Interest as of the
beginning of the Program Period.

          (b) If a Participant elects to contribute to an adopted Program and
Budget some lesser amount than in proportion to its respective Participating Interest, or
not at all, and the other Participant elects to fund all or any portion of the deficiency, the
Participating Interest of the Reduced Participant shall be provisionally recalculated by
dividing: (A) the sum of (1) the amount credited to the Reduced Participant’s Equity
Account with respect to its Initial Contribution under Section 5.1, (2) the total of all of the
Reduced Participant’s contributions under Section 5.3, and (3) the amount, if any, the
Reduced Participant elects to contribute to the adopted Program and Budget; by (B) the
sum of (1), (2) and (3) above for both Participants; and then multiplying the result by one
hundred. The Participating Interest of the other Participant shall be increased by the
amount of the reduction in the Participating Interest of the Reduced Participant, and if the
other Participant elects not to fund the entire deficiency, the Manager shall adjust the
Program and Budget to reflect the funds available.

          (c) Whenever the Participating Interests are recalculated pursuant
to this Section 9.5, (i) the Equity Accounts of both Participants shall be revised to bear the
same ratio to each other as their recalculated Participating Interests; and (ii) the portion of
Capital Account attributable to the reduced Participating Interest of the Reduced
Participant shall be transferred to the other Participant.

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          (d) Until such time as a Reduced Participant’s Recalculated
Participating Interest drops to less than fifteen percent (15%) and is converted to a
Production Royalty in accordance with Section 6.3, a Reduced Participant may elect to
restore its diluted Participating Interest by participating in an approved Program and
Budget in an amount greater than in proportion to its Recalculated Participating Interest.
At such time as the Reduced Participant has (i) funded its share of the current Program
and Budget at least in proportion to its current Recalculated Participating Interest, as well
as (ii) contributed funds to the Business Account equal to one hundred fifty percent (150%)
or more of the amount the Reduced Participant should have contributed to any prior
Program and Budget in order to maintain its Participating Interest in effect on the first day
of the Program Period for such Program and Budget, the Reduced Participant’s
Participating Interest shall be recalculated in accordance with Subsection 9.5(b) and shall
be effective in accordance with Subsection 9.6(d).

     9.6 Recalculation or Restoration of Reduced Interest Based on Actual Expenditures.

          (a) If a Participant makes an election under Subsection 9.5(a)(ii)
or (iii), then within thirty (30) days after the conclusion of such Program and Budget, the
Manager shall report the total amount of money expended plus the total obligations
incurred by the Manager for such Budget.

          (b) If the Manager expended or incurred obligations that were
more or less than the adopted Budget, the Participating Interests shall be recalculated
pursuant to Subsection 9.5(b) by substituting each Participant’s actual contribution to the
adopted Budget for that Participant’s estimated contribution at the time of the Reduced
Participant’s election under Subsection 9.5(a). Such recalculation shall take into account
any payments or contributions made by a Reduced Participant pursuant to Subsection
9.5(d).

          (c) If the Manager expended or incurred obligations of less than
eighty percent (80%) of the adopted Budget, within twenty (20) days of receiving the
Manager’s report on expenditures, the Reduced Participant may reimburse the other
Participant for the difference between any amount contributed by the Reduced Participant
to such adopted Program and Budget and the Reduced Participant’s proportionate share
(at the Reduced Participant’s former Participating Interest) of the actual amount expended
or incurred for the Program, plus interest on the difference accruing at the rate described in
Section 10.3 plus three (3) percentage points. Failure of the Reduced Participant to timely
reimburse shall result in dilution occurring in accordance with this Article IX and shall bar
the Reduced Participant from its rights under this Subsection 9.6(c) concerning the
relevant adopted Program and Budget.

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          (d) All recalculations under this Article IX shall be effective as of
the first day of the Program Period for the Program and Budget. The Manager, on behalf
of both Participants, shall make such adjustments so that, to the extent possible, each
Participant will be placed in the position it would have been in had its Participating
Interests as recalculated under this Section been in effect as of the first day of the Program
Period for such Program and Budget. If the Participants are required to make
contributions, reimbursements or other adjustments pursuant to this Section, the Manager
shall have the right to purchase or sell a Participant’s share of Products in the same manner
as under Section 11.2 and to apply the proceeds of such sale to satisfy that Participant’s
obligation to make such contributions, reimbursements or adjustments.

          (e) Whenever the Participating Interests are recalculated pursuant
to this Section, (i) the Participants’ Equity Accounts shall be revised to bear the same ratio
to each other as their Recalculated Participating Interests; and (ii) the portion of Capital
Account attributable to the reduced Participating Interest of the Reduced Participant shall
be transferred to the other Participant.

     9.7 Pre-Feasibility Study Program and Budgets.

          (a) At such time as either Participant is of the good faith and
reasonable opinion that economically viable Mining Operations may be possible on the
Properties, the Participant may propose by written notice to the other Participant that a
Pre-Feasibility Study Program and Budget component be prepared. Such proposal shall
reference the data upon which the proposing Participant bases its opinion, and shall call a
meeting of the Management Committee pursuant to Section 7.3. If such proposal is
adopted by the Management Committee, the Manager shall cause to have prepared a Pre-
Feasibility Study Program and Budget component as approved by the Management
Committee and shall submit the same to the Management Committee within thirty (30)
days following adoption of the proposal.

          (b) Pre-Feasibility Studies may be conducted by the Manager,
Feasibility Contractors, or both, or may be conducted by the Manager and audited by
Feasibility Contractors, as the Management Committee determines. A Pre-Feasibility
Study Program shall include the work approved in the proposal adopted by the
Management Committee, which may include some or all of the following:

               (i) analyses of various alternatives for mining, processing
and treating of Products;

               (ii) analyses of alternative rates of mining, processing and
treating of Products;

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               (iii) analyses of alternative sites for placement of facilities
(i.e., water supply facilities, transport facilities, reagent storage, offices, shops, warehouses,
stock yards, explosives storage, handling facilities, housing, public facilities);

               (iv) analyses of alternatives for waste treatment and
handling (including a description of each alternative of the method of tailings disposal and
the location of the proposed disposal site);

               (v) estimates of recoverable proven and probable reserves
of Products and of related substances, in terms of technical and economic constraints
(extraction and treatment of Products), including the effect of grade, losses, and impurities,
and the estimated mineral composition and content thereof, and review of mining rates
commensurate with such reserves;

               (vi) analyses of environmental impacts of the various
alternatives, including an analysis of the permitting, environmental liability and other
Environmental Law implications of each alternative, and costs of Environmental
Compliance for each alternative;

               (vii) tests to determine the efficiency of alternative
extraction, recovery and processing techniques, including an estimate of water, power, and
reagent consumption requirements;

               (viii) hydrologic studies related to any required use of water
or dewatering; and

               (ix) other studies and analyses approved by the
Management Committee.

          (c) If data results reasonably support a conclusion that further
work would be unwarranted for a particular alternative, the Manager shall have no
obligation to continue expenditures on other Pre-Feasibility Studies related solely to such
alternative.

     9.8 Completion of Pre-Feasibility Studies and Selection of Approved
Alternatives. As soon as reasonably practical following completion of all Pre-Feasibility
Studies required to evaluate fully the alternatives studied, the Manager shall prepare a
report summarizing all Pre-Feasibility Studies and shall submit the same to the
Management Committee. Such report shall incorporate the following:

          (a) the results of the analyses of the alternatives and other matters
evaluated by the Pre-Feasibility Programs;

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          (b) reasonable estimates of capital costs for the Development and
start-up of the facilities required by the Development and Mining alternatives evaluated
(based on flowsheets, piping and instrumentation diagrams, and other major engineering
diagrams), which cost estimates shall include reasonable estimates of:

               (i) capitalized pre-stripping expenditures, if an open pit or
surface mine is proposed;

               (ii) expenditures required to purchase, construct and install
all machinery, equipment and other facilities and infrastructure (including contingencies)
required to bring a mine into commercial production, including an analysis of costs of
equipment or supply contracts in lieu of Development costs for each Development and
Mining alternative evaluated;

               (iii) expenditures required to perform all other related work
required to commence commercial production of Products and, if applicable, process
Products (including reasonable estimates of working capital requirements); and

               (iv) all other direct and indirect costs and general and
administrative expenses that may be required for a proper evaluation of the Development
and Mining alternatives and annual production levels evaluated. The capital cost
estimates shall include a schedule of the timing of the estimated capital requirements for
each alternative;

          (c) a reasonable estimate of the monthly expenditures required for
the first year of Operations after completion of the capital program described in
Subsection 9.8(b) for each Development alternative evaluated, and for subsequent
quarters of Operations, including estimates of annual production, processing,
administrative, operating and maintenance expenditures, taxes (other than income taxes),
working capital requirements, royalty and purchase obligations, equipment leasing or
supply contract expenditures, work commitments, Environmental Compliance costs, post-
Operations Environmental Compliance and Continuing Obligations funding requirements
and all other anticipated costs of such Operations. This analysis shall also include an
estimate of the number of workers required to conduct such Operations for each
alternative;

          (d) a review of the nature, extent and rated capacity of the mine,
machinery, equipment and other facilities preliminarily estimated to be required for the
purpose of producing and marketing Products under each Development and Mining
alternative analyzed;

          (e) an analysis (and sensitivity analyses reasonably requested by
either Participant), based on various target rates of return and price assumptions requested

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by either Participant, of whether it is technically, environmentally, and economically
feasible to place a prospective ore body or deposit within the Properties into commercial
production for each of the Development and Mining alternatives analyzed (including a
discounted cash flow rate of return investment analysis for each alternative and net present
value estimate using various discount rates requested by either Participant); and

          (f) such other information as the Management Committee deems
appropriate.

Within sixty (60) days after delivery of the Pre-Feasibility Study summary to the
Participants, a Management Committee meeting shall be convened for the purposes of
reviewing the Pre-Feasibility Study summary and selecting one or more Approved
Alternatives, if any.

     9.9 Programs and Budgets for Feasibility Study. Within ninety (90)
days following the selection of an Approved Alternative, the Manager shall submit to the
Management Committee a Program and a Budget component, which shall include
necessary Operations, for the preparation of a Feasibility Study. A Feasibility Study shall
be prepared by Feasibility Contractors.

     9.10 Development Programs and Budgets; Project Financing.

          (a) Unless otherwise determined by the Management Committee,
the Manager shall not submit to the Management Committee a Program and Budget
component including Development of the mine described in a completed Feasibility Study
until ninety (90) days following the receipt by Manager of a favorable Feasibility Study.
The Program and Budget, which includes Development of the mine described in the
completed Feasibility Study, shall be based on the estimated cost of Development
described in the Feasibility Study for the Approved Alternative, unless otherwise directed
by the Management Committee.

          (b) Promptly following adoption of the Program and Budget,
which includes Development as described in a completed Feasibility Study the Manager
shall submit to the Management Committee a report on material bids received for
Development work (“Bid Report”). If bids described in the Bid Report result in the
aggregate cost of Development work exceeding one hundred twenty percent (120%) of the
Development cost estimates that formed the basis of the Development component of the
adopted Program and Budget, the Program and Budget, which includes relevant
Development, shall be deemed to have been resubmitted to the Management Committee
based on the aggregate costs as described in the Bid Report on the date of receipt of the Bid
Report and shall be reviewed and adopted in accordance with Sections 7.2 and 9.4.

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          (c) If the Management Committee approves the Development of
the mine described in a Feasibility Study and also decides to seek Project Financing for
such mine, each Participant shall, at its own cost, cooperate in seeking to obtain Project
Financing for such mine; provided, however, that all fees, charges and costs (including
attorneys and technical consultants fees) paid to the Project Financing lenders shall be
borne by the Participants in proportion to their Participating Interests, unless such fees are
capitalized as a part of the Project Financing.

     9.11 Expansion or Modification Programs and Budgets. Any Program
and Budget proposed by the Manager involving Expansion or Modification shall be based
on a Feasibility Study prepared by the Manager, Feasibility Contractors, or both, or
prepared by the Manager and audited by Feasibility Contractors, as the Management
Committee determines. The Program and Budget, which include Expansion or
Modification, shall be submitted for review and approval by the Management Committee
within ninety (90) days following receipt by the Manager of such Feasibility Study.

     9.12 Budget Overruns; Program Changes. For Programs and Budgets
adopted after completion of Horizon’s Initial Contribution, the Manager shall immediately
notify the Management Committee of any material departure from an adopted Program
and Budget. If the Manager exceeds an adopted Budget by more than twenty percent
(20%) in the aggregate, then the excess over ten percent (10%), except to the extent caused
by a Force Majeure condition, emergency or unexpected expenditure made pursuant to Section 9.13 or unless otherwise authorized or ratified by the Management Committee,
shall be for the sole account of the Manager and such excess shall not be included in the
calculations of the Participating Interests nor deemed a contribution under this Agreement.
Budget overruns of twenty percent (20%) or less in the aggregate shall be borne by the
Participants in proportion to their respective Participating Interests.

     9.13 Emergency or Unexpected Expenditures. In case of emergency, the
Manager may take any reasonable action it deems necessary to protect life or property, to
protect the Assets or to comply with Laws. The Manager may make reasonable
expenditures on behalf of the Participants for unexpected events that are beyond its
reasonable control and that do not result from a breach by it of its standard of care. The
Manager shall promptly notify the Participants of the emergency or unexpected
expenditure, and the Manager shall be reimbursed for all resulting costs by the Participants
in proportion to their respective Participating Interests.

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ARTICLE X

ACCOUNTS AND SETTLEMENTS

     10.1 Monthly Statements. The Manager shall promptly submit to the Management Committee
monthly statements of account reflecting in reasonable detail the charges and credits to the
Business Account during the preceding month in accordance with Section 8.3.

     10.2 Cash Calls. Following Horizon’s Initial Contribution under Subsection 5.1(b) and any
Additional Contribution(s) it elects under Section 5.3, on the basis of each adopted Program and
Budget, the Manager shall submit prior to the last day of each month a billing for estimated cash
requirements for the next month. Within ten (10) days after receipt of each billing, or a billing
made pursuant to Section 9.13 or 12.4, each Participant shall advance its proportionate share of
such cash requirements. The Manager shall record all funds received in the Business Account. All
funds received from a Participant in excess of the Participant’s pro rata cash requirement or other
funding commitment under this Agreement, or in excess of actual Program expenditures shall be
credited towards the Participant’s future pro rata cash requirement or other funding commitment.
The Manager shall at all times maintain a cash balance approximately equal to the rate of
disbursement for up to ninety (90) days. All funds in excess of immediate cash requirements shall
be invested by the Manager for the benefit of the Business in cash management accounts and
investments selected at the discretion of the Manager, which accounts may include, but are not
limited to, money market investments and money market funds.

     10.3 Failure to Meet Cash Calls. A Participant that fails to meet cash calls in the amount and
at the times specified in Section 10.2 shall be in default, and the amounts of the defaulted cash
call shall bear interest from the date due at an annual rate equal to two (2) percentage points
over the Prime Rate, but in no event shall the rate of interest exceed the maximum permitted by
Law. Such interest shall accrue to the benefit of and be payable to the non-defaulting Participant,
but shall not be deemed as amounts contributed by the non-defaulting Participant in the event
dilution occurs in accordance with Article VI. In addition to any other rights and remedies
available to it by Law, the non-defaulting Participant shall have those other rights, remedies, and
elections specified in Sections 10.4 and 10.5.

     10.4 Cover Payment. If a Participant defaults in making a contribution or cash call required
by an adopted Program and Budget, the non-defaulting Participant may, but shall not be obligated
to, advance some portion or all of the amount in default on behalf of the defaulting Participant (a
“Cover
Payment”). Each and every Cover Payment shall constitute a demand loan bearing interest from the
date of the advance at the rate provided in Section 10.3. If more than one Cover Payment is made,
the Cover Payments shall be aggregated and the rights and remedies described herein pertaining to
an

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individual Cover Payment shall apply to the aggregated Cover Payments. The failure to repay such
loan upon demand shall be a default.

     10.5 Remedies. The Participants acknowledge that if either Participant defaults in making a
contribution required by Article V or a cash call, or in repaying a loan, as required under
Sections 10.2, 10.3 or 10.4, whether or not a Cover Payment is made, it will be difficult to
measure the damages resulting from such default (it being hereby understood and agreed that the
Participants have attempted to determine such damages in advance and determined that the
calculation of such damages cannot be ascertained with reasonable certainty). Both Participants
acknowledge and recognize that the damage to the non-defaulting Participant could be significant.
In the event of such default, as reasonable liquidated damages, the non-defaulting Participant may,
with respect to any such default not cured within thirty (30) days after notice to the defaulting
Participant of such default, elect any of the following remedies by giving notice to the defaulting
Participant. Such election may be made with respect to each failure to meet a cash call relating to
a Program and Budget, regardless of the frequency of such cash calls, provided such cash calls are
made in accordance with Section 10.2.

          (a) The defaulting Participant grants to the non-defaulting Participant a power of sale as to
all or any portion of its interest in any Assets or in its Participating Interest that is subject
to the lien and security interest granted in Section 6.6 (whether or not such lien and security
interest has been perfected), upon a default under Sections 10.3 or 10.4. Such power shall be
exercised in the manner provided by applicable Law or otherwise in a commercially reasonable manner
and upon reasonable notice. If the non-defaulting Participant elects to enforce the lien or
security interest pursuant to the terms of this Subsection, the defaulting Participant shall be
deemed to have waived any available right of redemption, any required valuation or appraisal of the
secured property prior to sale, any available right to stay execution or to require a marshaling of
assets, and any required bond in the event a receiver is appointed, and the defaulting Participant
shall be liable for any deficiency.

          (b) The non-defaulting Participant may elect to have the defaulting Participant’s
Participating Interest diluted or eliminated. The Reduced Participant’s Participating Interest
shall be recalculated by dividing: (X) the sum
of (1) the value of the Reduced Participant’s Initial Contribution under Section 5.1, (2) the total
of all of the Reduced Participant’s contributions under Section 5.3, and (3) the amount, if any,
the Reduced Participant contributed to the adopted Program and Budget with respect to which the
default occurred; by (Y) the sum of (1), (2) and (3) above for both Participants; and then
multiplying the result by one hundred. Dilution under this Subsection 10.5(b) shall be effective as
of the date of the original default, and Section 9.6 shall not apply. The amount of any Cover
Payment under Section 10.4 and interest thereon, or any interest accrued in accordance with Section
10.3, shall be deemed to be amounts contributed by the non-defaulting Participant, and not as
amounts contributed by the defaulting Participant.

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Whenever the Participating Interests are recalculated pursuant to this Subsection 10.5(b), (A) the
Equity Accounts of both Participants shall be adjusted to bear the same ratio to each other as
their recalculated Participating Interests; and (B) the portion of Capital Account attributable to
the reduced Participating Interest of the Reduced Participant shall be transferred to the other
Participant.

     10.6 Audits.

          (a) After completion of Horizon’s Initial Contribution, within six (6) months after the end of
each calendar year, at the request of a Participant, an audit shall be completed by certified
public accountants who are independent of the Manager and reasonably acceptable to both
Participants. The audit shall be conducted in accordance with generally accepted auditing
standards and shall cover all books and records maintained by the Manager pursuant to this
Agreement, all Assets and Encumbrances, and all transactions and Operations conducted during such
calendar year, including production and inventory records and all costs for which the Manager
sought reimbursement under this Agreement, together with all other matters customarily included in
such audits. All written exceptions to and claims upon the Manager for discrepancies disclosed by
such audit shall be made not more than three (3) months after receipt of the audit report, unless
either Participant elects to conduct an independent audit pursuant to Subsection 10.6(b) which is
ongoing at the end of such three (3) month period, in which case such exceptions and claims may be
made within the period provided in Subsection 10.6(b). Failure to make any such exception or claim
within such period shall mean the audit is deemed to be correct and binding upon the Participants.
The cost of all audits under this Subsection shall be charged to the Business Account.

          (b) Notwithstanding the annual audit conducted by certified public accountants selected by the
Manager, each Participant shall have the right to have an independent audit of all Business books,
records and
accounts, including all charges to the Business Account. This audit shall review all issues raised
by the requesting Participant, with all costs borne by the requesting Participant. The requesting
Participant shall give the other Participant thirty (30) days prior notice of such audit. Any
audit conducted on behalf of either Participant shall be made during the Manager’s normal business
hours and shall not interfere with Operations. Neither Participant shall have the right to audit
records and accounts of the Business relating to transactions or Operations more than twenty-four
(24) months after the calendar year during which such transactions, or transactions related to such
Operations, were charged to the Business Account. All written exceptions to and claims upon the
Manager for discrepancies disclosed by such audit shall be made not more than three (3) months
after completion and delivery of such audit, or they shall be deemed waived.

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ARTICLE XI

DISPOSITION OF PRODUCTION

     11.1 Taking In Kind. Each Participant shall take in kind or separately dispose of its share
of all Products in proportion to its Participating Interest. Any extra expenditure incurred in the
taking in kind or separate disposition by either Participant of its proportionate share of Products
shall be borne by such Participant. Nothing in this Agreement shall be construed as providing,
directly or indirectly, for any joint or cooperative marketing or selling of Products or permitting
the processing of Products owned by any third party at any processing facilities constructed by the
Participants pursuant to this Agreement. The Manager shall give notice in advance of the
anticipated delivery date upon which Products will be available. Each Participant agrees to report
promptly to the Manager the prices it receives for its share of Products to enable the Manager to
pay taxes, royalties and other payments due third parties on a weighted average basis.

     11.2 Delegation of Authority to Sell Products Taken In Kind. Unless Participant expressly
notifies the Manager that the Participant will sell its share of Products, a Participant will be
deemed to have authorized the Manager to sell Participant’s share of Products taken in kind for
Producer’s account and the Manager shall have the right, but not the obligation, for a period of
time consistent with the minimum needs of the industry, but not to exceed one (1) year from the
notice date described in Section 11.1, to purchase the Participant’s share for its own account or
to sell such share as agent for the Participant at not less than the prevailing market price in the
area. Subject to the terms of any such contracts of sale then outstanding, during any period that
the Manager is purchasing or selling a Participant’s share of production, the Participant may elect
by notice to the Manager to terminate its delegation of authority and sell all
or part of its share of Products taken in kind. The Manager shall be entitled to deduct from
proceeds of any sale by it for the account of a Participant reasonable expenses incurred in such a
sale.

     11.3 Hedging. Neither Participant shall have any obligation to account to the other
Participant for, nor have any interest or right of participation in any profits or proceeds nor
have any obligation to share in any losses from, futures contracts, forward sales, trading in puts,
calls, options or any similar hedging, price protection or marketing mechanism employed by a
Participant with respect to its proportionate share of any Products produced or to be produced from
the Properties.

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ARTICLE XII

WITHDRAWAL AND TERMINATION

     12.1 Termination by Expiration or Agreement. This Agreement shall terminate as expressly
provided in Section 2.5, unless earlier terminated by written agreement.

     12.2 Termination by Deadlock. If the Management Committee fails to adopt a Program and Budget
within twelve (12) months after the expiration of the latest adopted Program and Budget, either
Participant may elect to terminate the Business by giving sixty (60) days notice of termination to
the other Participant.

     12.3 Withdrawal. Horizon shall be deemed to have withdrawn from the Business if it fails to
complete its Initial Contributions as required by Subsection 5.1(b). Either Participant may
withdraw from the Business by giving notice to the other Participant of the effective date of
withdrawal, which shall be the later of the end of the then current Program Period or thirty (30)
days after the date of the notice. Upon such withdrawal, the Business shall terminate, and the
withdrawing Participant shall be deemed to have transferred to the remaining Participant all of its
Participating Interest, including all of its interest in the Assets, without cost and free and
clear of all Encumbrances arising by, through or under such withdrawing Participant, except those
described in Paragraph 1.1 of Exhibit A and those to which both Participants have agreed. The
withdrawing Participant shall execute and deliver all instruments as may be necessary in the
reasonable judgment of the other Participant to effect the transfer of its interests in the Assets
to the other Participant. If within a sixty (60) day period both Participants elect to withdraw,
then the Business shall instead be deemed to have been terminated by the consent of the
Participants pursuant to Section 12.1.

     12.4 Continuing Obligations and Environmental Liabilities. On termination of the Business
under Sections 12.1, 12.2 or 12.3, each Participant shall remain liable for its respective share of
liabilities to third persons (whether such arises before or after such withdrawal), including
Environmental Liabilities and Continuing Obligations. The withdrawing Participant’s share of such
liabilities shall be equal to its Participating Interest at the time such liability was incurred,
after first taking into account any reduction, readjustment, and restoration of Participating
Interests under Sections 6.3, 9.5, 9.6 and 10.5 (or, as to liabilities arising prior to the
Effective Date, its initial Participating Interest).

     12.5 Disposition of Assets on Termination. Promptly after termination under Sections 12.1 or
12.2, the Manager shall take all action necessary to wind up the activities of the Business, in
accordance with Exhibit C. All costs and expenses incurred in connection with the termination of
the Business shall be expenses chargeable to the Business Account.

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     12.6 Non-Compete Covenants. Neither a Participant that withdraws pursuant to Section 12.3, or
is deemed to have withdrawn pursuant to Sections 5.2, 6.3 or 10.5, nor any Affiliate of such a
Participant, shall directly or indirectly acquire any interest or right to explore or mine, or
both, on any property any part of which is within the Area of Interest for twelve (12) months after
the effective date of withdrawal. If a withdrawing Participant, or the Affiliate of a withdrawing
Participant, breaches this Section 12.6, such Participant shall be obligated to offer to convey to
the non-withdrawing Participant, without cost, any such property or interest so acquired (or ensure
its Affiliate offers to convey the property or interest to the non-withdrawing Participant, if the
acquiring party is the withdrawing Participant’s Affiliate). Such offer shall be made in writing
and can be accepted by the non-withdrawing Participant at any time within ten (10) days after the
offer is received by such non-withdrawing Participant. Failure of a Participant’s Affiliate to
comply with this Section 12.6 shall be a breach by such Participant of this Agreement.

     12.7 Right to Data After Termination. After termination of the Business pursuant to Sections
12.1 or 12.2, each Participant shall be entitled to make copies of all applicable information
acquired hereunder before the effective date of termination not previously furnished to it, but a
terminating or withdrawing Participant shall not be entitled to any such copies after any other
termination or withdrawal.

     12.8 Continuing Authority. On termination of the Business under Sections 12.1, 12.2 or 12.3
or the deemed withdrawal of either Participant pursuant to Sections 5.2 or 10.5, the Participant
which was the Manager prior to
such termination or withdrawal (or the other Participant in the event of a withdrawal by the
Manager) shall have the power and authority to do all things on behalf of both Participants which
are reasonably necessary or convenient to: (a) wind up Operations and (b) complete any transaction
and satisfy any obligation, unfinished or unsatisfied, at the time of such termination or
withdrawal, if the transaction or obligation arises out of Operations prior to such termination or
withdrawal. The Manager shall have the power and authority to grant or receive extensions of time
or change the method of payment of an already existing liability or obligation, prosecute and
defend actions on behalf of both Participants and the Business, encumber Assets, and take any other
reasonable action in any matter with respect to which the former Participants continue to have, or
appear or are alleged to have, a common interest or a common liability.

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ARTICLE XIII

ACQUISITIONS WITHIN AREA OF INTEREST

     13.1 General. Any interest or right to acquire any interest in real property or water rights
related thereto within the Area of Interest either acquired or proposed to be acquired during the
term of this Agreement by or on behalf of either Participant
(“Acquiring Participant”) or any Affiliate of such Participant shall be subject to the terms and
provisions of this Agreement. Canyon and Horizon and their respective Affiliates for their separate
account shall be free to acquire lands and interests in lands outside the Area of Interest and to
locate mining claims outside the Area of Interest. Failure of any Affiliate of either Participant
to comply with this Article XIII shall be a breach by such Participant of this Agreement.

     13.2 Notice to Non-Acquiring Participant. Within thirty (30) days after the acquisition or
proposed acquisition, as the case may be, of any interest or the right to acquire any interest in
real property or water rights wholly or partially within the Area of Interest (except real property
acquired by the Manager pursuant to a Program), the Acquiring Participant shall notify the other
Participant of such acquisition by it or its Affiliate; provided further that if the acquisition of
any interest or right to acquire any interest pertains to real property or water rights partially
within the Area of Interest, then all such real property (i.e., the part within the Area of
Interest and the part outside the Area of Interest) shall be subject to this Article XIII. The
Acquiring Participant’s notice shall describe in detail the acquisition, the acquiring party if
that party is an Affiliate, the lands and minerals covered thereby, any water rights related
thereto, the cost thereof, and the reasons why the Acquiring Participant believes that the
acquisition (or proposed acquisition) of the interest is in the best interests of the Participants
under this Agreement. In addition to such notice, the
Acquiring Participant shall make any and all information concerning the relevant interest available
for inspection by the other Participant.

     13.3 Option Exercised. Within forty-five (45) days after receiving the Acquiring
Participant’s notice, the other Participant may notify the Acquiring Participant of its election to
accept a proportionate interest in the acquired interest equal to its Participating Interest.
Promptly upon such notice, the Acquiring Participant shall convey or cause its Affiliate to convey
to the Participants, in proportion to their respective Participating Interests, by special warranty
deed with title held as described in Section 3.4, all of the Acquiring Participant’s (or its
Affiliate’s) interest in such acquired interest, free and clear of all Encumbrances arising by,
through or under the Acquiring Participant (or its Affiliate) other than those to which both
Participants have agreed. The acquired interests shall become a part of the Properties for all
purposes of this Agreement immediately upon such notice. The other Participant shall promptly pay
to the Acquiring Participant its proportionate share of the latter’s actual out-of-pocket
acquisition costs.

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     13.4 Option Not Exercised. If the other Participant does not give such notice within the
forty-five (45) day period set forth in Section 13.3, it shall have no interest in the acquired
interests, and the acquired interests shall not be a part of the Assets or continue to be subject
to this Agreement.

ARTICLE XIV

ABANDONMENT AND SURRENDER OF PROPERTIES

     In accordance with Sections 7.2 and 8.2(i), unanimous consent of both Participants is required
to authorize the Manager to surrender or abandon part or all of the Properties. If the Management
Committee does not authorize such surrender or abandonment, the Participant that desires to
surrender or abandon shall assign to the objecting Participant, by special warranty deed and
without cost to the objecting Participant, all of the abandoning Participant’s interest in the
Properties sought to be abandoned or surrendered, free and clear of all Encumbrances created by,
through, or under the abandoning Participant other than those to which both Participants have
agreed. Upon the assignment, such properties shall cease to be part of the Properties. The
Participant that desires to abandon or surrender shall remain liable for its share (determined by
its Participating Interest as of the date of such abandonment, after first taking into account any
reduction, readjustment, and restoration of Participating Interests under Sections 6.3, 9.5, 9.6
and 10.5) of any liability with respect to such Properties, including, without limitation
Continuing Obligations, Environmental Liabilities and Environmental Compliance, whether accruing
before or after such abandonment, arising out of activities prior to the Effective Date and out of
Operations conducted prior to the date of such abandonment, regardless of when any funds may be
expended to satisfy such liability.

ARTICLE XV

SUPPLEMENTAL BUSINESS AGREEMENT

     15.1 Supplemental Business Agreement. At any time during the term of this Agreement, the
Management Committee may determine by unanimous vote of both Participants after Horizon’s Initial
Contribution obligations have been fully satisfied that it is appropriate to segregate the Area of
Interest into areas subject to separate Programs and Budgets for purposes of conducting further
Exploration, Pre-Feasibility or Feasibility Studies, Development, or Mining. At such time, the
Management Committee shall designate which portion of the Properties will comprise an area of
interest under a separate business arrangement (“Supplemental Business”), and the Participants
shall enter into a new agreement (“Supplemental Business Agreement”) for the purpose of further
exploring, analyzing, developing, and mining such portion of the Properties. The Supplemental
Business Agreement shall be in substantially the same form as this Agreement, with the Participants
agreeing to new Capital and Equity Accounts. Upon its

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execution, the Supplemental Business Agreement shall govern the Properties covered by the
Supplemental Business Agreement.

     15.2 Subdivided Area of Interest. Following the completion and delivery of any Pre-Feasibility
Study or Feasibility Study, if one Participant desires to proceed with further Studies or
Development and the other Participant does not, the Participants agree to take the actions
necessary to subdivide or otherwise carve-out the Area of Interest and Business and enter into a
Supplemental Business Agreement that will govern the new Supplemental Business in accordance with
Section 15.1. Upon the effective date of the Supplemental Business Agreement, the Participants’
initial Participating Interests in the Supplemental Business shall be equal to their then current
respective Participating Interests under this Agreement. However, the Participants’ respective
Participating Interests shall be recalculated as a Participant contributes a lesser amount than in
proportion to its respective Participating Interest consistent with the dilution and Account
recalculation mechanisms described in Subsections 9.5(b) and (c). Until such time as a Reduced
Participant’s Recalculated Participating Interest drops to less than fifteen percent (15%) and is
converted to a Production Royalty in accordance with Section 6.3, a Reduced Participant may take
actions to restore its diluted Participating Interest, but only in accordance with
Subsection 9.5(d).

ARTICLE XVI

TRANSFER OF INTEREST; PREEMPTIVE RIGHT

     16.1 General. A Participant shall have the right to Transfer to a third party an interest in
its Participating Interest, including an interest in this Agreement or the Assets, solely as
provided in this Article XVI.

     16.2 Limitations on Free Transferability. Any Transfer by either Participant under Section
16.1 shall be subject to the following limitations:

          (a) Neither Participant shall Transfer any interest in this Agreement or the Assets
(including, but not limited to, any royalty, profits, or other interest in the Products) except in
conjunction with the Transfer of part or all of its Participating Interest;

          (b) No transferee of all or any part of a Participant’s Participating Interest shall have the
rights of a Participant unless and until the transferring Participant has provided to the other
Participant notice of the Transfer, and, except as provided in Subsections 16.2(g) and 16.2(h), the
transferee, as of the effective date of the Transfer, has committed in writing to assume and be
bound by this Agreement to the same extent as the transferring Participant;

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          (c) Neither Participant, without the consent of the other Participant, shall make a Transfer
that shall violate any Law, or result in the cancellation of any permits, licenses, or other
similar authorization;

          (d) No Transfer permitted by this Article XVI shall relieve the transferring Participant of
its share of any liability, whether accruing before or after such Transfer, which arises out of
Operations conducted prior to such Transfer or exists on the Effective Date;

          (e) [Intentionally Omitted]

          (f) In the event of a Transfer of less than all of a Participating Interest, the transferring
Participant and its transferee shall act and be treated as one Participant by notifying the
non-transferring Participant of their designated Agent to act on their behalf with respect to all
matters pertaining to this Agreement and the Business. The transferring Participant and its
transferee
may change the Agent (but such replacement must be one of them) by giving notice to the other
Participant. Such notices must conform to Subsection 16.2(f)(ii).

          (g) If the Transfer is the grant of an Encumbrance in a Participating Interest to secure a
loan or other indebtedness of either Participant in a bona fide transaction, other than a
transaction approved unanimously by the Management Committee or Project Financing approved by the
Management Committee, such Encumbrance shall be granted only in connection with such Participant’s
financing payment or performance of that Participant’s obligations under this Agreement and shall
be subject to the terms of this Agreement and the rights and interests of the other Participant
hereunder (including without limitation under Section 6.7). Any such Encumbrance shall be further
subject to the condition that the holder of such Encumbrance
(“Chargee”) first enter into a written agreement with the other Participant in form satisfactory to
the other Participant, acting reasonably, binding upon the Chargee, to the effect that:

               (i) the Chargee shall not enter into possession or institute any proceedings for foreclosure
or partition of the encumbering Participant’s Participating Interest and that such Encumbrance
shall be subject to the provisions of this Agreement;

               (ii) the Chargee’s remedies under the Encumbrance shall be limited to the sale of the whole
(but only of the whole) of the encumbering Participant’s Participating Interest to the other
Participant, or, failing such a sale, at a public auction to be held at least ten (10) days after
prior notice to the other Participant, such sale to be subject to the purchaser entering into a
written agreement with the other Participant whereby such purchaser assumes all obligations of the
encumbering Participant under the terms of this Agreement. The price of any preemptive sale to the
other Participant shall be

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the remaining principal amount of the loan plus accrued interest and related expenses, and such
preemptive sale shall occur within sixty (60) days of the Chargee’s notice to the other Participant
of its intent to sell the encumbering Participant’s Participating Interest. Failure of a sale to
the other Participant to close by the end of such period, unless failure is caused by the
encumbering Participant or by the Chargee, shall permit the Chargee to sell the encumbering
Participant’s Participating Interest at a public sale; and

               (iii) the charge shall be subordinate to any then-existing debt, including Project Financing
previously approved by the
Management Committee, encumbering the transferring Participant’s Participating Interest;

          (h) If a sale or other commitment or disposition of Products or proceeds from the sale of
Products by either Participant upon distribution to it pursuant to Article XI creates in a third
party a security interest by Encumbrance in Products or proceeds therefrom prior to such
distribution, such sales, commitment or disposition shall be subject to the terms and conditions of
this Agreement including, without limitation,
Section 6.7.

     16.3 Preemptive Right. Any Transfer by either Participant under Section 16.1 and any Transfer
by an Affiliate of Control of either Participant shall be subject to a preemptive right of the
other Participant as described below.

          (a) If either Participant intends to Transfer all or any part of its Participating Interest,
or an Affiliate of either Participant intends to Transfer Control of such Participant
(“Transferring Entity”), such Participant shall promptly notify the other Participant of such
intent. The notice shall state the price and all other pertinent terms and conditions of the
intended Transfer, and shall be accompanied by a copy of the offer or the contract for sale. If the
consideration for the intended transfer is, in whole or in part, other than monetary, the notice
shall describe such consideration and its monetary equivalent (based upon the fair market value of
the non-monetary consideration and stated in terms of cash or currency).

          (b) The other Participant shall have ninety (90) days from the date such notice is received to
notify the Transferring Entity whether it elects to acquire the offered interest at the same price
(or its monetary equivalent in cash or currency) and on the same terms and conditions as set forth
in the notice. If it does so elect, the acquisition by the other Participant shall be consummated
promptly after notice of such election is delivered.

          (c) If the other Participant fails to so elect within the period provided for above, the
Transferring Entity shall have one hundred eighty (180) days following the expiration of such
period to consummate the Transfer to the third party at a price and on terms no less favorable to
the Transferring Entity than those offered. If the Transferring

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Entity fails to consummate the Transfer to a third party within the period set forth above, the
preemptive right of the other Participant in such offered interest
shall be deemed to be revived. Any subsequent proposal to Transfer such interest shall be
conducted in accordance with all of the procedures set forth in this Subsection.

          (d) These procedures shall not apply to the following:

               (i) Transfer by either Participant of all or any part of its Participating Interest to an
Affiliate; pursuant to an incorporation, or corporate consolidation or reorganization of a
Participant by which the surviving entity shall possess substantially all of the stock or all of
the property rights and interests, and be subject to substantially all of the liabilities and
obligations of that Participant; or corporate merger or amalgamation by which the surviving entity
or amalgamated company shall possess all of the stock or all of the property rights and interests,
and be subject to substantially all of the liabilities and obligations of that Participant.

               (ii) Subject to Subsection 16.2(g) of the Agreement, the grant by either Participant of a
security interest in its Participating Interest by Encumbrance.

               (iii) the creation by any Affiliate of either Participant of an Encumbrance affecting its
Control of such Participant.

               (iv) a sale or other commitment or disposition of Products or proceeds from sale of Products
by either Participant upon distribution to it pursuant to Article XI of the Agreement.

          (e) Failure of a Participant’s Affiliate to comply with this Article XVI shall be a breach by
such Participant of this Agreement.

ARTICLE XVII

DISPUTES

     17.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Colorado, without regard for any conflict of laws or choice of laws
principles that would permit or require the application of the laws of any other jurisdiction.

     17.2 Venue. The Participants agree that the location for any arbitration proceeding shall be
Golden, Colorado.

     17.3 Alternative Dispute Resolution. The Participants prefer to attempt to settle and resolve
any controversy or claim relating to this Agreement informally

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through good faith face to face negotiations between executive representatives of each Participant
having the authority to settle. The Participants’ representatives agree to meet within sixty (60)
days of a Participant’s written notice to the other of a dispute requiring resolution. If the
Participants have not reached a mutually agreeable resolution to such dispute within thirty (30)
days of the meeting, either Participant may seek resolution via binding arbitration pursuant to the
American Arbitration Association rules of arbitration.

     17.4 Fees and Costs. All disputes arising under or in connection with this Agreement which
cannot be resolved by agreement between the Participants shall be resolved in accordance with
applicable Law. If any legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection
with any of the provisions of this Agreement, the successful or substantially prevailing
Participant shall be entitled to recover reasonable attorneys’ fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it or they may be entitled.

ARTICLE XVIII

CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION

     18.1 Business Information. All Business Information shall be owned jointly by the
Participants as their Participating Interests are determined pursuant to this Agreement. Except as
provided in Sections 18.3 and 18.4, or with the prior written consent of the other Participant,
each Participant shall keep confidential and not disclose to any third party or the public any
portion of the Business Information that constitutes Confidential Information.

     18.2 Participant Information. In performing its obligations under this Agreement, neither
Participant shall be obligated to disclose any Participant Information. If a Participant elects to
disclose Participant Information in performing its obligations under this Agreement, such
Participant Information, together with all improvements, enhancements, refinements and incremental
additions to such Participant Information that are developed, conceived, originated or obtained by
either Participant in performing its obligations under this Agreement (“Enhancements”), shall be
owned exclusively by the Participant that originally developed, conceived, originated or obtained
such Participant Information. Each Participant may use and enjoy the benefits of such Participant
Information and Enhancements in the conduct of the Business hereunder, but the Participant that did
not originally develop, conceive, originate or obtain such Participant Information may not use such
Participant Information and Enhancements for any other purpose. Except as provided in Section 18.4,
or with
the prior written consent of the other Participant, which consent may be withheld in such
Participant’s sole discretion, each Participant shall keep confidential and not disclose to any
third party or the public any

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portion of Participant Information and Enhancements owned by the other Participant that constitutes
Confidential Information.

     18.3 Permitted Disclosure of Confidential Business Information. Either Participant may
disclose Business Information that is Confidential Information: (a) to a Participant’s officers,
directors, partners, members, employees, Affiliates, shareholders, agents, attorneys, accountants,
consultants, contractors, subcontractors or advisors, for the sole purpose of such Participant’s
performance of its obligations under this Agreement; (b) to any bona fide potential transferee to
whom the disclosing Participant contemplates a Transfer of all or any part of its Participating
Interest, for the sole purpose of evaluating the proposed Transfer; (c) to any actual or potential
lender, underwriter or investor for the sole purpose of evaluating whether to make a loan to or
investment in the disclosing Participant; or (d) to a third party with whom the disclosing
Participant contemplates any independent business activity or operation.

          The Participant disclosing Confidential Information pursuant to this Section 18.3, shall
disclose such Confidential Information to only those parties who have a bona fide need to have
access to such Confidential Information for the purpose for which disclosure to such parties is
permitted under this Section 18.3 and who have agreed in writing supplied to, and enforceable by,
the other Participant to protect the Confidential Information from further disclosure, to use such
Confidential Information solely for such purpose and to otherwise be bound by the provisions of
this Article XVIII. Such writing shall not preclude parties described in Subsection 18.3(b) from
discussing and completing a Transfer with the other Participant. The Participant disclosing
Confidential Information shall be responsible and liable for any use or disclosure of the
Confidential Information by such parties in violation of this Agreement and such other writing.

     18.4 Disclosure Required By Law. Notwithstanding anything contained in this Article XVIII, a
Participant may disclose any Confidential Information if, in the opinion of the disclosing
Participant’s legal counsel: (a) such disclosure is legally required to be made in a judicial,
administrative or governmental proceeding pursuant to a valid subpoena or other applicable order;
or (b) such disclosure is legally required to be made pursuant to the rules
or regulations of a stock exchange or similar trading market applicable to the disclosing
Participant.

          Prior to any disclosure of Confidential Information under this Section 18.4, the disclosing
Participant shall give the other Participant at least ten (10) days prior written notice (unless
less time is required by such rules, regulations or proceeding) and, in making such disclosure, the
disclosing Participant shall disclose only that portion of Confidential Information required to be
disclosed and shall take all reasonable steps to preserve the confidentiality thereof, including,
without limitation, obtaining protective orders and supporting the other Participant in
intervention in any such proceeding.

46

 

     18.5 Public Announcements. Prior to making or issuing any press release or other
public announcement or disclosure of Business Information that is not
Confidential Information, a Participant shall first consult with the other Participant as to the
content and timing of such announcement or disclosure, unless in the good faith judgment of such
Participant, there is not sufficient time to consult with the other
Participant before such announcement or disclosure must be made under applicable Laws; but in
such event, the disclosing Participant shall notify the other Participant, as soon as
possible, of the pendency of such announcement or disclosure, and it shall notify the other
Participant before such announcement or disclosure is made if at all reasonably possible. Any press
release or other public announcement or disclosure to be issued by either Participant relating to
this Business shall also identify the other Participant.

ARTICLE XIX

GENERAL PROVISIONS

     19.1 Notices. All notices, payments and other required or permitted
communications (“Notices”) to either Participant shall be in writing, and shall be addressed respectively as follows:

	 	 	 	 	 	 	 	 	 
	 	 	If to Canyon:	 	 	 	14142 Denver West Parkway
	 

	 	 	 	 	 	 	 	Suite 250
	 

	 	 	 	 	 	 	 	Golden, CO 80401
	 

	 	 	 	Attention:
	 	 	 	James K. B. Hesketh
	 

	 	 	 	Telephone:
	 	 	 	(303) 278-8464
	 

	 	 	 	Facsimile:
	 	 	 	(303) 279-3772
	 
	 	 	 	 	 	 	 	 
	 	 	            With a Copy to:	 	 	 	Bruce C. Kirchhoff
	 

	 	 	 	 	 	 	 	Carver Kirchhoff Schwarz
	 

	 	 	 	 	 	 	 	McNab & Bailey, LLC
	 

	 	 	 	 	 	 	 	Hudson’s Bay Centre
	 

	 	 	 	 	 	 	 	1600 Stout Street, Suite 1700
	 

	 	 	 	 	 	 	 	Denver, Colorado 80202
	 

	 	 	 	Telephone:
	 	 	 	(303) 531-6482
	 

	 	 	 	Facsimile:
	 	 	 	(303) 592-7680

47

 

	 	 	 	 	 	 	 	 	 
	 	 	If to Horizon:	 	 	 	2221 East Street
	 

	 	 	 	 	 	 	 	Suite 200
	 

	 	 	 	 	 	 	 	Golden, CO 80401
	 

	 	 	 	Attention:
	 	 	 	William R. Wilson
	 

	 	 	 	Telephone:
	 	 	 	(303) 422-7803
	 

	 	 	 	Facsimile:
	 	 	 	(303) 940-9572
	 
	 	 	 	 	 	 	 	 
	 	 	            With a Copy to:	 	 	 	Paul C. Jones
	 

	 	 	 	 	 	 	 	2221 East Street, Suite 200
	 

	 	 	 	 	 	 	 	Golden CO 80401
	 

	 	 	 	Telephone:
	 	 	 	(303) 277-1222
	 

	 	 	 	Facsimile:
	 	 	 	(303) 277-0006

          All Notices shall be given (a) by personal delivery to the Participant, (b) by electronic
communication, capable of producing a printed transmission, (c) by registered or certified mail
return receipt requested; or (d) by overnight or other express courier service. All Notices shall
be effective and shall be deemed given on the date of receipt at the principal address if received
during normal business hours, and, if not received during normal business hours, on the next
business day following receipt, or if by electronic communication, on the date of such
communication. Either Participant may change its address by Notice to the other Participant.

     19.2 Gender. The singular shall include the plural, and the plural the singular wherever the
context so requires, and the masculine, the feminine, and the neuter genders shall be mutually
inclusive.

     19.3 Currency. All references to “dollars” or “$” herein shall mean lawful currency of the
United States of America.

     19.4 Headings. The subject headings of the Sections and Subsections of this Agreement and the
Paragraphs and Subparagraphs of the Exhibits to this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any of its provisions.

     19.5 Waiver. The failure of either Participant to insist on the strict performance of any
provision of this Agreement or to exercise any right, power or remedy upon a breach hereof shall
not constitute a waiver of any provision of this Agreement or limit such Participant’s right
thereafter to enforce any provision or exercise any right.

     19.6 Modification. No modification of this Agreement shall be valid unless made in writing
and duly executed by both Participants.

48

 

     19.7 Force Majeure. Except for the obligation to make payments when due hereunder, the
obligations of a Participant shall be suspended to the extent and for the period that performance
is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control,
including, without limitation, labor disputes (however arising and whether or not employee demands
are reasonable or within the power of the Participant to grant); acts of God; Laws, instructions or
requests of any government or governmental entity; judgments or orders of any court; inability to
obtain on reasonably acceptable terms any public or private license, permit or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged, present or
prospective violation of Environmental Laws; action or inaction by any federal, state or local
agency that delays or prevents the issuance or granting of any approval or authorization required
to conduct Operations beyond the reasonable expectations of the Participant seeking the approval or
authorization; acts of war or conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm,
flood, sink holes, drought or other adverse weather condition; delay or failure by suppliers or
transporters of materials, parts, supplies, services or equipment or by contractors’ or
subcontractors’ shortage of, or inability to obtain, labor, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or
facilities; actions by native rights groups, environmental groups, or other similar special
interest groups; or any other cause whether similar or dissimilar to the foregoing. The affected
Participant shall promptly give notice to the other Participant of the suspension of performance,
stating therein the nature of the suspension, the reasons therefore, and the expected duration
thereof. The affected Participant shall resume performance as soon as reasonably possible. During
the period of suspension the obligations of both Participants to advance funds pursuant to Section
10.2 shall be reduced to levels consistent with then current Operations.

     19.8 Rule Against Perpetuities. The Participants do not intend that there shall be any
violation of the Rule Against Perpetuities, the Rule Against Unreasonable Restraints on the
Alienation of Property, or any similar rule. Accordingly, if any right or option to acquire any
interest in the Properties, in a Participating Interest, in the Assets, or in any real property
exists under this Agreement, such right or option must be exercised, if at all, so as to vest such
interest within time periods permitted by applicable rules. If, however, any such violation should
inadvertently occur, the Participants hereby agree that a court shall reform that provision in such
a way as to approximate most closely the intent of the Participants within the limits permissible
under such rules.

     19.9 Further Assurances. Each of the Participants shall take, from time to time and without
additional consideration, such further actions and
execute such additional instruments as may be reasonably necessary or convenient to implement and
carry out the intent and purpose of this Agreement or as may be reasonably required by lenders in
connection with Project Financing.

49

 

     19.10 Entire Agreement; Successors and Assigns. This Agreement contains the entire
understanding of the Participants and supersedes all prior agreements and understandings between
the Participants relating to the subject matter hereof. This Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the Participants.

     19.11 Memorandum. At the request of either Participant, a Memorandum or short form of this
Agreement, or a Financing Statement(s) (to which copies of the Memorandum or short form of this
Agreement shall be attached) shall be prepared by the Manager, executed and acknowledged by both
Participants, and delivered to the Manager for recording and filing in those appropriate recording
districts and Uniform Commercial Code filing offices as may be necessary to provide constructive
notice of this Agreement and the rights and obligations of the Participants hereunder. The Manager
shall record and file in the proper recording districts, county recording offices and Uniform
Commercial Code filing offices, all such documents delivered to it by the Participants. Unless
both Participants agree, this Agreement shall not be recorded.

     19.12 Counterparts. This Agreement may be executed in any number of counterparts, and it
shall not be necessary that the signatures of both Participants be contained on any counterpart.
Each counterpart shall be deemed an original, but all counterparts together shall constitute one
and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

Canyon

     By       /s/ James
K. B. Hesketh                                                 

                     James K. B. Hesketh

     Its            President

Horizon

     By       /s/ Paul
C. Jones                                                             

                     Paul C. Jones

     Its            Executive Vice President and Chief Operating Officer

50

 

EXHIBIT A

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

ASSETS AND AREA OF INTEREST

	1.1	 	PROPERTIES AND TITLE EXCEPTIONS

List of Mining Claims and Leases

     CONVERSE PROJECT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BLM	 	 	 	 	 	 	 	 	 	 	 	 
	CLAIMS	 	WMC #	 	WIDTH	 	LENGTH	 	AREA	 	ACRES	 	 	 	 
	Scott Ranch Area	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BC-1
	 	WMC 268577	 	 	50	 	 	 	1,450	 	 	 	72,500	 	 	 	1.66	 	 	 	1	 
	BC-2
	 	WMC 268578	 	 	50	 	 	 	1,450	 	 	 	72,500	 	 	 	1.66	 	 	 	2	 
	BC-3
	 	WMC 268579	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	3	 
	BC-4
	 	WMC 268580	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	4	 
	BC-5
	 	WMC 268581	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	5	 
	BC-6
	 	WMC 268582	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	6	 
	BC-7
	 	WMC 268583	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	7	 
	BC-8
	 	WMC 268584	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	8	 
	BC-9
	 	WMC 268585	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	9	 
	BC-10
	 	WMC 268586	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	10	 
	BC-11
	 	WMC 268587	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	11	 
	BC-12
	 	WMC 268588	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	12	 
	BC-13
	 	WMC 268589	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	13	 
	BC-14
	 	WMC 268590	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	14	 
	BC-15
	 	WMC 268591	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	15	 
	BC-16
	 	WMC 268592	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	16	 
	BC-17
	 	WMC 268593	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	17	 
	BC-18
	 	WMC 268594	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	18	 
	BC-19
	 	WMC 268595	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	19	 
	BC-20
	 	WMC 268596	 	 	600	 	 	 	1,450	 	 	 	870,000	 	 	 	19.97	 	 	 	20	 
	BC-21
	 	WMC 268597	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	21	 

EXHIBIT A

Page 1 of 9

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BLM	 	 	 	 	 	 	 	 	 	 	 	 
	CLAIMS	 	WMC #	 	WIDTH	 	LENGTH	 	AREA	 	ACRES	 	 	 	 
	BC-22
	 	WMC 268598	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	22	 
	BC-23
	 	WMC 268599	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	23	 
	BC-24
	 	WMC 268600	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	24	 
	BC-25
	 	WMC 268601	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	25	 
	BC-26
	 	WMC 268602	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	26	 
	BC-27
	 	WMC 268603	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	27	 
	BC-28
	 	WMC 268604	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	28	 
	BC-29
	 	WMC 268605	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	29	 
	BC-30
	 	WMC 268606	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	30	 
	BC-31
	 	WMC 268607	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	31	 
	BC-32
	 	WMC 268608	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	32	 
	BC-33
	 	WMC 268609	 	 	380	 	 	 	1,360	 	 	 	516,800	 	 	 	11.86	 	 	 	33	 
	BC-34
	 	WMC 268610	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	34	 
	BC-35
	 	WMC 268611	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	35	 
	BC-36
	 	WMC 268612	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	36	 
	BC-37
	 	WMC 268613	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	37	 
	BC-38
	 	WMC 268614	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	38	 
	BC-39
	 	WMC 268615	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	39	 
	BC-40
	 	WMC 268616	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	40	 
	BC-41
	 	WMC 268617	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	41	 
	BC-42
	 	WMC 268618	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	42	 
	BC-43
	 	WMC 268619	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	43	 
	BC-44
	 	WMC 268620	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	44	 
	BC-45
	 	WMC 268621	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	45	 
	BC-46
	 	WMC 268622	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	46	 
	BC-47
	 	WMC 268623	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	47	 
	BC-48
	 	WMC 268624	 	 	600	 	 	 	1,430	 	 	 	858,000	 	 	 	19.70	 	 	 	48	 
	BC-49
	 	WMC 268625	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	49	 
	BC-50
	 	WMC 268626	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	50	 
	BC-51
	 	WMC 268627	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	51	 
	BC-52
	 	WMC 268628	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	52	 
	BC-53
	 	WMC 268629	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	53	 
	BC-54
	 	WMC 268630	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	54	 
	BC-55
	 	WMC 268631	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	55	 
	BC-56
	 	WMC 268632	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	56	 
	BC-57
	 	WMC 268633	 	 	520	 	 	 	1,360	 	 	 	707,200	 	 	 	16.24	 	 	 	57	 
	BC-58
	 	WMC 268634	 	 	600	 	 	 	1,360	 	 	 	816,000	 	 	 	18.73	 	 	 	58	 
	BC-59
	 	WMC 268635	 	 	520	 	 	 	1,360	 	 	 	707,200	 	 	 	16.24	 	 	 	59	 
	BC-61
	 	WMC 268636	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	60	 
	BC-62
	 	WMC 268637	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	61	 
	BC-63
	 	WMC 268638	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	62	 
	BC-64
	 	WMC 268639	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	63	 
	BC-65
	 	WMC 268640	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	64	 
	BC-66
	 	WMC 268641	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	65	 
	BC-67
	 	WMC 268642	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	66	 
	BC-68
	 	WMC 268643	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	67	 
	BC-69
	 	WMC 268644	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	68	 

EXHIBIT A

Page 2 of 9

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BLM	 	 	 	 	 	 	 	 	 	 	 	 
	CLAIMS	 	WMC #	 	WIDTH	 	LENGTH	 	AREA	 	ACRES	 	 	 	 
	BC-70
	 	WMC 268645	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	69	 
	BC-71
	 	WMC 268646	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	70	 
	BC-72
	 	WMC 268647	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	71	 
	BC-73
	 	WMC 268648	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	72	 
	BC-74
	 	WMC 268649	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	73	 
	BC-75
	 	WMC 268650	 	 	390	 	 	 	1,320	 	 	 	514,800	 	 	 	11.82	 	 	 	74	 
	BC-76
	 	WMC 268651	 	 	150	 	 	 	1,500	 	 	 	225,000	 	 	 	5.17	 	 	 	75	 
	BC-77
	 	WMC 268652	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	76	 
	BC-78
	 	WMC 268653	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	77	 
	BC-79
	 	WMC 268654	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	78	 
	BC-80
	 	WMC 268655	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	79	 
	BC-81
	 	WMC 268656	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	80	 
	BC-82
	 	WMC 268657	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	81	 
	BC-83
	 	WMC 268658	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	82	 
	BC-84
	 	WMC 268659	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	83	 
	BC-85
	 	WMC 268660	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	84	 
	BC-86
	 	WMC 268661	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	85	 
	BC-87
	 	WMC 268662	 	 	160	 	 	 	1,500	 	 	 	240,000	 	 	 	5.51	 	 	 	86	 
	BC-88
	 	WMC 268663	 	 	160	 	 	 	1,500	 	 	 	240,000	 	 	 	5.51	 	 	 	87	 
	BC-89
	 	WMC 268664	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	88	 
	BC-90
	 	WMC 268665	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	89	 
	BC-91
	 	WMC 268666	 	 	83	 	 	 	1,200	 	 	 	99,600	 	 	 	2.29	 	 	 	90	 
	BC-92
	 	WMC 268667	 	 	83	 	 	 	1,350	 	 	 	112,050	 	 	 	2.57	 	 	 	91	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Acres  	 	 	 	1655.18	 	 	 	 	 
	S. Douglas Area	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SD-9
	 	WMC 268767	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	1	 
	SD-10
	 	WMC 268768	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	2	 
	SD-11
	 	WMC 268769	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	3	 
	SD-12
	 	WMC 268770	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	4	 
	SD-13
	 	WMC 268771	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	5	 
	SD-14
	 	WMC 268772	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	6	 
	SD-15
	 	WMC 268773	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	7	 
	SD-16
	 	WMC 268774	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	8	 
	SD-17
	 	WMC 268775	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	9	 
	SD-18
	 	WMC 268776	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	10	 
	SD-19
	 	WMC 268777	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	11	 
	SD-20
	 	WMC 268778	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	12	 
	SD-21
	 	WMC 268779	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	13	 
	SD-22
	 	WMC 268780	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	14	 
	SD-23
	 	WMC 268781	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	15	 
	SD-24
	 	WMC 268782	 	 	600	 	 	 	1,370	 	 	 	822,000	 	 	 	18.87	 	 	 	16	 
	SD-25
	 	WMC 268783	 	 	400	 	 	 	1,320	 	 	 	528,000	 	 	 	12.12	 	 	 	17	 
	SD-26
	 	WMC 268784	 	 	400	 	 	 	1,370	 	 	 	548,000	 	 	 	12.58	 	 	 	18	 
	SD-27
	 	WMC 268785	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	19	 
	SD-28
	 	WMC 268786	 	 	600	 	 	 	1,320	 	 	 	792,000	 	 	 	18.18	 	 	 	20	 
	SD-29
	 	WMC 268787	 	 	220	 	 	 	1,320	 	 	 	290,400	 	 	 	6.67	 	 	 	21	 
	SD-30
	 	WMC 268788	 	 	150	 	 	 	1,500	 	 	 	225,000	 	 	 	5.17	 	 	 	22	 

EXHIBIT A

Page 3 of 9

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BLM	 	 	 	 	 	 	 	 	 	 	 	 
	CLAIMS	 	WMC #	 	WIDTH	 	LENGTH	 	AREA	 	ACRES	 	 	 	 
	SD-31
	 	WMC 268789	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	23	 
	SD-32
	 	WMC 268790	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	24	 
	SD-33
	 	WMC 268791	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	25	 
	SD-34
	 	WMC 268792	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	26	 
	SD-35
	 	WMC 268793	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	27	 
	SD-36
	 	WMC 268794	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	28	 
	SD-37
	 	WMC 268795	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	29	 
	SD-38
	 	WMC 268796	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	30	 
	SD-39
	 	WMC 268797	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	31	 
	SD-40
	 	WMC 268798	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	32	 
	SD-41
	 	WMC 268799	 	 	350	 	 	 	1,500	 	 	 	525,000	 	 	 	12.05	 	 	 	33	 
	SD-42
	 	WMC 268800	 	 	350	 	 	 	1,500	 	 	 	525,000	 	 	 	12.05	 	 	 	34	 
	SD-45
	 	WMC 268801	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	35	 
	SD-46
	 	WMC 268802	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	36	 
	SD-47
	 	WMC 268803	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	37	 
	SD-48
	 	WMC 268804	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	38	 
	SD-49
	 	WMC 268805	 	 	300	 	 	 	1,500	 	 	 	450,000	 	 	 	10.33	 	 	 	39	 
	SD-57
	 	WMC 268806	 	 	600	 	 	 	1,445	 	 	 	867,000	 	 	 	19.90	 	 	 	40	 
	SD-59
	 	WMC 268807	 	 	600	 	 	 	1,445	 	 	 	867,000	 	 	 	19.90	 	 	 	41	 
	SD-60
	 	WMC 268808	 	 	600	 	 	 	1,200	 	 	 	720,000	 	 	 	16.53	 	 	 	42	 
	SD-62
	 	WMC 268809	 	 	600	 	 	 	1,200	 	 	 	720,000	 	 	 	16.53	 	 	 	43	 
	SD-100
	 	WMC 268810	 	 	600	 	 	 	1,395	 	 	 	837,000	 	 	 	19.21	 	 	 	44	 
	SD-101
	 	WMC 268811	 	 	600	 	 	 	1,395	 	 	 	837,000	 	 	 	19.21	 	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Acres   	 	 	 	804.30	 	 	 	 	 
	Shawnee Area	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SH-1
	 	WMC 268668	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	1	 
	SH-2
	 	WMC 268669	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	2	 
	SH-3
	 	WMC 268670	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	3	 
	SH-4
	 	WMC 268671	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	4	 
	SH-5
	 	WMC 268672	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	5	 
	SH-6
	 	WMC 268673	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	6	 
	SH-7
	 	WMC 268674	 	 	460	 	 	 	1,400	 	 	 	644,000	 	 	 	14.78	 	 	 	7	 
	SH-8
	 	WMC 268675	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	8	 
	SH-9
	 	WMC 268676	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	9	 
	SH-10
	 	WMC 268677	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	10	 
	SH-11
	 	WMC 268678	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	11	 
	SH-12
	 	WMC 268679	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	12	 
	SH-13
	 	WMC 268680	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	13	 
	SH-14
	 	WMC 268681	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	14	 
	SH-15
	 	WMC 268682	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	15	 
	SH-16
	 	WMC 268683	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	16	 
	SH-17
	 	WMC 268684	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	17	 
	SH-18
	 	WMC 268685	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	18	 
	SH-19
	 	WMC 268686	 	 	600	 	 	 	1,400	 	 	 	840,000	 	 	 	19.28	 	 	 	19	 
	SH-20
	 	WMC 268687	 	 	460	 	 	 	1,400	 	 	 	644,000	 	 	 	14.78	 	 	 	20	 
	SH-21
	 	WMC 268688	 	 	460	 	 	 	1,400	 	 	 	644,000	 	 	 	14.78	 	 	 	21	 

EXHIBIT A

Page 4 of 9

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BLM	 	 	 	 	 	 	 	 	 	 	 	 
	CLAIMS	 	WMC #	 	WIDTH	 	LENGTH	 	AREA	 	ACRES	 	 	 	 
	SH-25
	 	WMC 268689	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	22	 
	SH-26
	 	WMC 268690	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	23	 
	SH-27
	 	WMC 268691	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	24	 
	SH-28
	 	WMC 268692	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	25	 
	SH-29
	 	WMC 268693	 	 	440	 	 	 	1,500	 	 	 	660,000	 	 	 	15.15	 	 	 	26	 
	SH-30
	 	WMC 268694	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	27	 
	SH-31
	 	WMC 268695	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	28	 
	SH-32
	 	WMC 268696	 	 	270	 	 	 	1,500	 	 	 	405,000	 	 	 	9.30	 	 	 	29	 
	SH-33
	 	WMC 268697	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	30	 
	SH-34
	 	WMC 268698	 	 	600	 	 	 	1,500	 	 	 	900,000	 	 	 	20.66	 	 	 	31	 
	SH-35
	 	WMC 268699	 	 	300	 	 	 	1,500	 	 	 	450,000	 	 	 	10.33	 	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Acres	 	 	 	591.53	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,051.0	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	TOTAL ACRES	 	 	1	 	 	 	 	 

AGREEMENTS

South Douglas Prospect

	 	1.	 	Surface Use Agreement dated 7/7/2005 with Fellows, Tim & Lori for 72.66 acres in
Township 32N, Range 71W, Sections 19 and 20.
	 
	 	2.	 	Surface Use Agreement dated 7/8/2005 with Arnbrister, Tom & Mary E. for 19.35 acres in Township 32N, Range 71W, Section 19.
	 
	 	3.	 	Surface Use Agreement dated 7/15/2005 with Philbrick Ranch, L.L.C. for 350.14 acres in Township 32N, Range 71W, Sections 31 and 32.

Scott Ranch Prospect

	 	1.	 	Surface Use Agreement dated 7/13/2005 with Johnson, Sam & Robin for 36 acres in
Township 32N, Range 70W, Section 19.
	 
	 	2.	 	Surface Use Agreement dated 7/27/2005 with Markwardt, David & Lois for 55.92 in Township 32N, Range 70W, Section 19.
	 
	 	3.	 	Surface Use Agreement dated 10/11/2005 with Scott Ranches, L.L.C. for
1,280 acres in Township 32N, Range 70W, Sections 19-21 and 30.

	1.2	 	PERSONAL PROPERTY

Index of Converse Project Files

Canyon Resources Corporation

Converse County,Wyoming

Prepared November 18, 2005 by Steven R. Davis

REPORTS/PUBLICATIONS

Bauer, J. et. al., 1982, Shawnee Project, Converse County, Wyoming — Results of the 1981 Drilling
Campaign (Elf Aquitaine), Cross-Sections. Binder w/o index contains plate 8 through 16 (9)

EXHIBIT A

Page 5 of 9

 

 

of cross-sections on program drill holes.

Bauer J. et. al., 1982, Shawnee Project, Converse County, Wyoming — Results of the 1981 Drilling
Campaign (Elf Aquitaine), Maps. Binder w/o index contains six folded maps (plates 1-6) of geology,
land status, drill hole locations and structural contour maps on geologic horizons (3).

Bauer, J., Marcus, Donald L., 1982, Results of 1982 Shawnee Exploration Program (Elf Aquitaine), 30
pages text, four section Appendix (A – D), and “Plates and
Figures” — including Figures 1-8 and
Plates Ia, II through VII (Roman) and Plate 7.

Bauer, J., 1981, Greater Shawnee Project (Morton Ranch Area), Converse County, Wyoming; Results of
the 1981 Drilling Campaign (Elf Aquitaine Mining Corporation — Canyon Resources Joint Venture).
Includes 4 figures and two plates, plus a number of drill hole radiometric logs (oil/gas and
uranium drill holes). Two Copies.

Canyon Resources, et. al., March 1981, Shawnee Uranium Project, Southern Powder River Basin,
Wyoming. 39 pages, includes 12 figures and 3 appendices (5 copies).

Canyon Resources, et. al., October 1983, Shawnee Uranium Project Summary Report, Converse County,
Wyoming, 18 pages (includes14figures).

Collings, Stephen P., Knode, Ralph H., 1982, Crow Butte Uranium Project (Deposit), Wyoming Fuel
Company. 10 pages, including 3 figures. (kept inside First Exploration Company 1982 Annual Report.)

Denson, N.M., Horn, G.H., 1976, Geologic and Structure Map of the Southern Part of the Powder River
Basin, Converse, Niobrara and Natrona Counties, Wyoming. 1:125,000, USGS Miscellaneous
Investigations Series Map I-877 (2 sheets).

First Exploration Company, 1982 Annual Report, 9 pages plus Appendix of NUEXCO Monthly Report on
the Nuclear Fuel Market #175, March 1983.

Mueller, Joseph W., 1976, Geology and Ore Controls of Uranium Deposits in Oligocene and Miocene
Sediments, Northern Hartville Uplift, Wyoming, Masters Thesis, Colorado School of Mines

Love, J.D., Christiansen, Ann Coe, Sever, C.K., 1978, Preliminary Geological Map of the Torrington
1o x 2o Quadrangle, 1:250,000, USGS Open File Report 78-535

EXHIBIT A

Page 6 of 9

 

 

Love, J.D., Christiansen, Ann Coe, Sever, C.K., 1980, The Torrington 1o x 2o Quadrangle,
Southeastern Wyoming and Western Nebraska, 1:250,000, USGS Miscellaneous Field Studies Map MF-1184.

Mueller, Joseph W., 1976, Geology and Ore Controls of Uranium Deposits in Oligocene and Miocene
Sediments, Northern Hartville Uplift, Wyoming, Masters Thesis, Colorado School of Mines.

MAP FILES

Sabine GT Map File, 1978-1981, Land Status Map, Correspondence, Joint Venture Proposal and three GT
maps for the A, B &C Sands (horizons) at 1” = 1,000’.

Oil Well Data, Converse Project map file. Has five (?) oil well logs (copies), two maps and eight
pages of hand written research notes regarding oil/gas wells in the project area.

Aquitaine Mining, Converse Project map file (some correspondence included). Isopach map of Shawnee
Project Tertiary sediments (1” = 2mi ±), Thickness (Isopach) main basal sand interval (Chadron
Sand), White River fm, Shawnee Project 1” = 2,000’. Table of Shawnee Project 1981 drilling, 5 pages,
and map of greater project area (Shawnee) with the area of properties held/subject to the
agreement. Five pages handwritten notes.

Analytical Results, Converse Project (not a map file). Bondar-Clegg results on what appears to be
water samples only (results in ppb), two pages 35 sample results (three copies of the second page).

High Plains Uranium, Converse Project (file). A three-page summary of the company’s management and
directors with a “Strategy Statement.” A 19 page Power
Point presentation w/cover letter — sent to
Gary Huber by Ted Wilton (May 18, 2005).

Shawnee Report 10/1983, Converse Project. A loose (unbound) copy of the Canyon Resources
Corporation Summary Report on the Shawnee Project, dated October, 1983.

BLM Land Maps, Converse Project. Folded 1:100,000 scale standard (feet) and metric maps of the
Douglas, Wyoming 30’ x 60’ quadrangle (std. 1995, metric 1981), one copy of each. Includes a four
piece Xerox mosaic of the project area of this map, and two 8 1/2” x 11” copies of immediate
Douglas (Sabine) and Shawnee areas.

Shawnee Report 03/01/1981, Converse Project. A clipped, but unbound copy of the Canyon Resources
Corporation report on the

EXHIBIT A

Page 7 of 9

 

 

Shawnee Uranium Project, dated March 1, 1981.

Topographic Maps file, Converse Project. Includes eight 7 1/2” USGS Topographic maps from in or near
the area of the Converse Project (two are partial/cutoff, individual names of maps not noted).

Miscellaneous Maps, Converse Project (Folder). Niobrara County Map, 1953, (1:63,360) w/oil/gas
well pre-Tertiary or TD rock type noted by stickers and hand notes; Niobrara County Map, 1953,
(1:63,360) w/hand drawn geology in area 2 to 13 miles south of the small village of Redbird;
Subcrop map of Northern Hartville Uplift, Converse and Niobrara Counties, Wyoming, 1/15/1975,
Geology by J. Mueller; Geology of Northern Hartville Uplift, Converse and Niobrara Counties,
Wyoming, 01/15/1975, Modified after Denson (1972) by J. Mueller.
Plate 10A. — Contours on the Base
of the Pre-Oligocene Surface and Pre-Oligocene Geologic Map, Compiled by David L. Macke and Norman
M. Denson, USGS.

Sabine Maps, Converse Project (Folder), Eight detailed maps and a number of drill logs (examined
very briefly, no details).

Converse Project Map File, Earth Sciences Corporation, Several varied maps from early Earth
Sciences work in the area — not examined in detail (time).

Drill hole logs, Converse Project, full size probe logs and a few “mini-logs” from the early 1980’s
drilling programs — not examined in detail (time).

1.3 AREA OF INTEREST

The Plat on the next page identifies the Converse Project Boundary, encompassing lands in both
Converse and Niobrara Counties, Wyoming.

EXHIBIT A

Page 8 of 9

 

 

EXHIBIT A — Page 9 of 9

Converse Uranium Project, Area of Interest

 

 

EXHIBIT B

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

ACCOUNTING PROCEDURES

     The financing and accounting procedures to be followed by the Manager and the Participants
under the Agreement are set forth below. All capitalized terms in these Accounting Procedures
shall have the definition attributed to them in the Agreement, unless defined otherwise herein.

     The purpose of these Accounting Procedures is to establish equitable methods for determining
charges and credits applicable to Operations. It is the intent of the Participants that neither of
them shall lose or profit by reason of the designation of one of them to exercise the duties and
responsibilities of the Manager. The Participants shall meet and in good faith endeavor to agree
upon changes deemed necessary to correct any unfairness or inequity. In the event of a conflict
between the provisions of these Accounting Procedures and those of the Agreement, the provisions of
the Agreement shall control.

ARTICLE I

GENERAL PROVISIONS 

     1. General Accounting Records. The Manager shall maintain detailed and comprehensive
cost accounting records in accordance with generally accepted accounting principles used by
companies based in the United States (“US GAAP”). For purposes of this Agreement, US GAAP shall
mean the written opinions, standards, interpretations, and bulletins developed by the Financial
Accounting Standards Board (“FASB”), the accounting profession (“AICP”), and the Security and
Exchange Commission (“SEC”). Cost accounting records maintained under these Accounting
Procedures, shall including general ledgers, supporting and subsidiary journals, invoices, checks
and other customary documentation, sufficient to provide a record of revenues and expenditures and
periodic statements of financial position and the results of Operations for managerial, tax,
regulatory or other financial, regulatory, or legal reporting purposes related to the Business.
Such records shall be retained for the duration of the period allowed the Participants for audit or
the period necessary to comply with tax or other

EXHIBIT B

Page 1 of 9

 

 

regulatory requirements. The records shall reflect all obligations, advances and credits of the
Participants.

     2. Cash Management Accounts. The Manager shall maintain one or more separate cash
management accounts for the payment of all expenses and the deposit of all cash receipts for the
Business.

     3. Statements and Billings. The Manager shall prepare statements and bill the
Participants as provided in Article X of the Agreement. Payment of any such billings by either
Participant, including the Manager, shall not prejudice such Participant’s right to protest or
question the correctness thereof for a period not to exceed twenty-four (24) months following the
calendar year during which such billings were received by such Participant. All written exceptions
to and claims upon the Manager for incorrect charges, billings or statements shall be made upon the
Manager within such twenty-four (24) month
period. The time period permitted for adjustments hereunder shall not apply to adjustments
resulting from periodic inventories as provided in Paragraphs 5.1 and 5.2.

ARTICLE II

CHARGES TO BUSINESS ACCOUNT 

     Subject to the limitations hereinafter set forth, the Manager shall charge the Business
Account with the following:

     2.1 Property Acquisition Costs, Rentals, Royalties and Other Payments. All property
acquisition and holding costs, including Governmental Fees, filing fees, license fees, costs of
permits and assessment work, delay rentals, production royalties, including any required advances,
and all other payments made by the Manager which are necessary to acquire or maintain title to the
Assets.

     2.2 Labor and Employee Benefits 

          2.2.1 Salaries and wages of the Manager’s employees directly engaged in Operations, including
salaries or wages of employees who are temporarily assigned to and directly employed by same.

          2.2.2 The Manager’s cost of holiday, vacation, sickness and disability benefits, and other
customary allowances applicable to the salaries and wages chargeable under Subparagraph 2.2.1 and
Paragraph 2.12. Such costs may be charged on a “when and as paid basis” or by “percentage
assessment” on the amount of salaries and wages. If percentage assessment is used, the rate shall
be applied to wages or salaries excluding overtime and bonuses. Such rate shall be based on the
Manager’s cost experience consistent with the current range of rates within the industry and it
shall be periodically

EXHIBIT B

Page 2 of 9

 

 

reviewed, and adjusted if needed, at least annually to ensure that the total of such charges does
not exceed the actual cost thereof to the Manager.

          2.2.3 The Manager’s actual cost of established plans for employees’ group life insurance,
hospitalization, pension, retirement, stock purchase, thrift, bonus (except production or incentive
bonus plans under a union contract based on actual rates of production, cost savings and other
production factors, and similar non-union bonus plans customary in the industry
or necessary to attract competent employees, which bonus payments shall be considered salaries and
wages under Subparagraph 2.2.1 or Paragraph 2.12 rather than employees’ benefit plans) and other
benefit plans of a like nature applicable to salaries and wages chargeable under Subparagraphs
2.2.1 or Paragraph 2.12, provided that the plans are limited to the extent feasible to those
customary in the industry.

          2.2.4 Cost of assessments imposed by governmental authority that are applicable to salaries
and wages chargeable under Subparagraph 2.2(a) and Paragraph 2.12, including all penalties except
those resulting from the willful misconduct or gross negligence of the Manager.

     2.3 Materials, Equipment and Supplies. The cost of materials, equipment and supplies
(herein called “Material”) purchased from unaffiliated third parties or furnished by either
Participant as provided in Paragraph 3.1. The Manager shall purchase or furnish only so much
Material as may be required for immediate use in efficient and economical Operations. The Manager
shall also maintain inventory levels of Material at reasonable levels to avoid unnecessary
accumulation of surplus stock or disruption of Operations.

     2.4 Equipment and Facilities Furnished by Manager. The cost of machinery, equipment
and facilities owned by the Manager and used in Operations or used to provide support or utility
services to Operations charged at rates commensurate with the actual costs of ownership and
operation of such machinery, equipment and facilities. Such rates shall include costs of
maintenance, repairs, other operating expenses, insurance, taxes, depreciation and interest at a
rate not to exceed Prime Rate plus three percent (3%) per annum. Such rates shall not exceed the
average commercial rates currently prevailing in the vicinity of the Operations.

     2.5 Transportation. Reasonable transportation costs incurred in connection with the
transportation of employees and material necessary for Operations.

     2.6 Contract Services and Utilities. The cost of contract services and utilities
procured from outside sources, other than services described in Paragraphs 2.9 and 2.13. If
contract services are performed by the Manager or an Affiliate thereof, the cost charged to the
Business Account shall not be greater than that for which comparable services and utilities are
available in the open market within the vicinity of Operations.

EXHIBIT B

Page 3 of 9

 

 

The cost of professional consultant services procured from outside sources in excess of Twenty-Five
Thousand Dollars ($25,000.00) per annum per contract shall not be charged to the Business Account
unless approved by the Management Committee.

     2.7 Insurance Premiums. Net premiums paid for insurance required to be carried for
Operations for the protection of the Participants. When Operations are conducted in an area where
the Manager may self-insure for Worker’s Compensation and/or Employer’s Liability under state law,
the Manager may elect to include such risks in its self-insurance program and shall charge its
costs of self-insuring such risks to the Business Account provided that such charges shall not
exceed published manual rates.

     2.8 Damages and Losses. All costs in excess of insurance proceeds necessary to repair
or replace damage or losses to any Assets resulting from any cause other than the willful
misconduct or gross negligence of the Manager. The Manager shall furnish the Management Committee
with written notice of damages or losses as soon as practicable after a report thereof has been
received by the Manager.

     2.9 Legal and Regulatory Expense. Except as otherwise provided in Paragraph 2.13, all
legal and regulatory costs and expenses incurred in or resulting from Operations or necessary to
protect or recover the Assets of the Business, including costs of title investigation and title
curative services. All attorneys fees and other legal costs to handle, investigate and settle
litigation or claims, and amounts paid in settlement of such litigation or claims in excess of
Twenty-Five Thousand Dollars ($25,000.00) per annum shall not be charged to the Business Account
unless approved by the Management Committee.

     2.10 Audit. Cost of annual audits under Subsection 10.6(a).

     2.11 Taxes. All taxes, assessments and like charges on Operations and Assets which
have been paid by the Manager for the benefit of the Participants. Each Participant is separately
responsible for taxes determined or measured by a Participant’s sales revenue or net income.

     2.12
District and Camp Expense (Field Supervision and Camp
Expenses). A pro rata
portion of: (i) the salaries and expenses of the Manager’s superintendent and other employees
serving Operations whose time is not allocated directly to such Operations, and (ii) the costs of
maintaining and operating an office and any necessary suboffice, and (iii) all necessary camps,
including housing facilities for employees, used for Operations. The expense of those facilities,
less any revenue therefrom, shall include depreciation or a fair monthly rental in lieu of
depreciation of the investment. The total of such charges for all Properties served by the
Manager’s employees and facilities shall
be apportioned to the Business Account on the basis of a ratio to be approved by the Management
Committee.

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     2.13 Administrative Charge.

          2.13.1 Each month, the Manager shall charge the Business Account a sum for each phase of
Operations as provided below, which shall be a liquidated amount to reimburse the Manager for its
home office overhead and general and administrative expenses to conduct each phase of Operations,
and which shall be in lieu of any management fee and for taxes based on production of Products:

               2.13.1.1
Exploration Phase — Five percent (5%) of Allowable Costs up to and including
Five Thousand Dollars ($5000), and two percent (2%) of Allowable Costs over Five Thousand Dollars
($5000).

               2.13.1.2
Development Phase — Five percent (5%) of Allowable Costs up to and including
Ten Thousand Dollars ($10,000), and two percent (2%) of Allowable Costs over Ten Thousand Dollars
($10,000).

               2.13.1.3
Major Construction Phase — Ten percent (10%) of Allowable Costs up to and
including Twenty-Five Thousand Dollars ($25,000), and two percent (2%) of Allowable Costs over
Twenty-Five Thousand Dollars ($25,000).

               2.13.1.4
Mining Phase — One and one half percent (1.5%) of Allowable Costs.

          2.13.2 The term “Allowable Costs” as used in this Paragraph for a particular phase of
Operations shall mean all charges to the Business Account excluding: (i) the administrative charge
referred to herein; (ii) depreciation, depletion or amortization of tangible or intangible Assets;
(iii) amounts charged in accordance with Paragraphs 2.1 and 2.9, and (iv) marketing costs. The
Manager shall attribute such Allowable Costs to a particular phase of Operations by applying the
following guidelines:

               (A) The Exploration Phase shall cover those Operations conducted to ascertain the existence,
location, extent or quantity of any deposit of ore or mineral.

               (B) The Development Phase shall cover those Operations, including Pre-Feasibility and
Feasibility Study Operations,
conducted to assess a commercially feasible ore body or to extend production of an existing ore
body, and to construct or install related fixed Assets.

               (C) The Major Construction Phase shall include all Operations involved in the construction of
treatment or processing facilities.

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               (D) The Mining Phase shall include all other Operations activities not otherwise covered
above, including activities conducted after Mining Operations have ceased.

          (c) Various phases of Operations may be conducted concurrently, in which event the
administrative charge shall be calculated separately for Allowable Costs attributable to each
phase.

          (d) The monthly administration charge determined for each phase of Operations shall be a
liquidated amount to reimburse Manager for its home office overhead and general and administrative
expenses for its conduct of Operations, and shall be equitably apportioned among all of the
properties served during such monthly period on the basis of a ratio approved by the Management
Committee.

          (e) The following is a representative list of items that constitute the Manager’s principal
business office expenses that are expressly covered by the administrative charge provided in this
Paragraph, except to the extent that such items are directly chargeable to the Business Account
under other provisions of this Article II:

               2.13.2.1 Administrative supervision, which includes all services rendered by managers,
department supervisors, officers and directors of the Manager for Operations.

               2.13.2.2 Accounting, data processing, personnel administration, billing and record keeping in
accordance with governmental regulations and the provisions of the Agreement, and preparation of
reports;

               2.13.2.3 The services of tax counsel and tax administration employees for all tax matters,
including any protests, except any outside professional fees which the Management Committee may
approve as a direct charge to the Business Account;

               2.13.2.4 Routine legal services rendered by outside sources and the Manager’s legal staff not
otherwise charged to the Business Account under Paragraph 2.9, including property acquisition,
attorney management and oversight, and support services provided by Manager’s legal staff
concerning any litigation; and

               2.13.2.5 Rentals and other charges for office and records storage space, telephone service,
office equipment and supplies.

          (f) The Management Committee shall annually review the administrative charges and shall amend
the methodology or rates used to determine such charges if they are found to be insufficient or
excessive based on the principles that the

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Manager shall not make a profit or suffer a loss and that it should be fairly and adequately
compensated for its costs and expenses.

     2.14 Environmental Compliance Fund. Costs of reasonably anticipated Environmental
Compliance which, on a Program basis, shall be determined by the Management Committee and shall be
based on proportionate contributions in an amount sufficient to establish an Environmental
Compliance Fund, which through successive proportionate contributions during the life of the
Business, will pay for ongoing Environmental Compliance conducted during Operations and which will
aggregate the reasonably anticipated costs of mine closure, post-Operations Environmental
Compliance and Continuing Obligations. The Manager shall invest such amounts on behalf of the
Participants as provided in Subsection 8.2(r).

     2.15 Other Expenditures. Any reasonable direct expenditure, other than expenditures
which are covered by the foregoing provisions, incurred by the Manager for the necessary and proper
conduct of Operations.

ARTICLE III

BASIS OF CHARGES TO BUSINESS ACCOUNT 

     3.1 Purchases. Material purchased and services procured from third parties shall be
charged to the Business Account by the Manager at invoiced cost, including applicable transfer
taxes, less all discounts taken. If any Material is determined to be defective or is returned to a
vendor for any other reason, the Manager shall credit the Business Account when an adjustment is
received from the vendor.

     3.2 Material Furnished by a Participant for Use in the Business. Any Material
furnished by either Participant for use in the Business or distributed to either Participant by the
Manager shall be priced on the following basis:

          (a) New Material: New Material furnished by either Participant shall be priced F.O.B.
the nearest reputable supply store or railway receiving point, where like Material is available, at
the current replacement cost of the same kind of Material, exclusive of any available cash
discounts, at the time it is furnished (herein called “New Price”).

          (b) Used Material.

               (i) Used Material in sound and serviceable condition and suitable for reuse without
reconditioning shall be priced as follows:

                    (a) Used Material furnished by either Participant shall be priced at seventy-five percent
(75%) of the New Price;

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                    (b) Used Material distributed to either Participant shall be priced (i) at seventy-five
percent (75%) of the New Price if such Material was originally charged to the Business Account as
new Material, or (ii) at sixty-five percent (65%) of the New Price if such Material was originally
charged to the Business Account as good used Material at seventy-five percent (75%) of the New
Price.

               (ii) Other used Material that, after reconditioning, will be further serviceable for original
function as good secondhand Material, or that is serviceable for original function but not
substantially suitable for reconditioning, shall be priced at fifty percent (50%) of New Price.
The cost of any reconditioning shall be borne by the transferee.

               (iii) Bad-Order Material which is no longer usable for its original purpose without excessive
repair cost but further usable for some other purpose shall be priced on a basis comparable with
items normally used for that purpose.

               (iv) All other Material, including junk, shall be priced at a value commensurate with its use
or at prevailing prices.

          (c) Obsolete Material. Any Material that is serviceable and usable for its original
function, but its condition is not equivalent to that which would justify a price as provided
above, shall be priced by the Management Committee. Such price shall be set at a level that will
result in a charge to the Business Account equal to the value of the service to be rendered by such
Material.

     3.3 Premium Prices. Whenever Material is not readily obtainable at published or
listed prices because of national emergencies, strikes or other unusual circumstances over which
the Manager has no control, the Manager may charge the Business Account for the required Material
on the basis of the Manager’s direct cost and expenses incurred in procuring such Material and
making it suitable for use. The Manager shall give written notice of the proposed charge to the
Participants prior to the time when such charge is to be billed, whereupon either Participant shall
have the right, by notifying the Manager within ten (10) days of the delivery of the notice from
the Manager, to furnish at the usual receiving point all or part of its share of Material suitable
for use and acceptable to the Manager.

     3.4 Warranty of Material Furnished by the Manager or Participants. Neither
Participant warrants any Material furnished beyond any dealer’s or manufacturer’s warranty and no
credits shall be made to the Business Account for defective Material until adjustments are received
by the Manager from the dealer, manufacturer or their respective agents.

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ARTICLE IV

DISPOSAL OF MATERIAL

          4.1 Disposition Generally. The Manager shall have no obligation to
purchase either Participant’s interest in Material. The Management Committee shall
determine the disposition of major items of surplus Material, provided the Manager shall
have the right to dispose of normal accumulations of junk and scrap Material either by sale
or by transfer to the Participants as provided in Paragraph 4.2.

          4.2 Distribution to Participants. Any Material to be distributed to the
Participants shall be made in proportion to their respective Participating Interests, and
corresponding credits shall be made to the Business Account on the basis provided in
Paragraph 3.2.

          4.3 Sales. Sales of Material to third parties shall be credited to the
Business Account at the net amount received. Any damages or claims by the Purchaser
shall be charged back to the Business Account if and when paid.

ARTICLE V

INVENTORIES

          5.1 Periodic Inventories, Notice and Representations. At reasonable
intervals, inventories shall be taken by the Manager, which shall include all such Material
as is ordinarily considered controllable by operators of mining properties, and the expense
of conducting such periodic inventories shall be charged to the Business Account. The
Manager shall give written notice to the Participants of its intent to take any inventory at
least thirty (30) days before such inventory is scheduled to take place. A Participant shall
be deemed to have accepted the results of any inventory taken by the Manager if the
Participant fails to be represented at such inventory.

          5.2 Reconciliation and Adjustment of Inventories. Reconciliation of
inventory with charges to the Business Account shall be made, and a list of overages and
shortages shall be furnished to the Management Committee within six (6) months after the
inventory is taken. Inventory adjustments shall be made by the Manager to the Business
Account for overages and shortages, but the Manager shall be held accountable to the
Business only for shortages due to lack of reasonable diligence.

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EXHIBIT C

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

TAX MATTERS

ARTICLE I

EFFECT OF THIS EXHIBIT

          This Exhibit shall govern the relationship of the Participants with respect to
tax matters and the other matters addressed herein. Except as otherwise indicated,
capitalized terms used in this Exhibit shall have the meanings given to them in the
Agreement. In the event of a conflict between this Exhibit and the other provisions of the
Agreement, the terms of this Exhibit shall control.

ARTICLE II

TAX MATTERS PARTNER

          2.1 Designation of Tax Matters Partner. The Manager is hereby
designated the tax matters partner (hereinafter “TMP”) as defined in Section 6231(a)(7) of
the Internal Revenue Code of 1986 (“the Code”) and shall be responsible for, make elections
for, and prepare and file any federal and state tax returns or other required tax forms
following approval of the Management Committee. In the event of any change in
Manager, the Participant serving as Manager at the end of a taxable year shall continue as
TMP with respect to all matters concerning such year unless the TMP for that year is
required to be changed pursuant to applicable Treasury Regulations. The TMP and the
other Participant shall use reasonable best efforts to comply with the responsibilities
outlined in this Article II and in Sections 6221 through 6233 of the Code (including any
Treasury regulations promulgated thereunder) and in doing so shall incur no liability to
any other party.

          2.2 Notice. Each Participant shall furnish the TMP with such information
(including information specified in Section 6230(e) of the Code) as it may reasonably
request to permit it to provide the Internal Revenue Service with sufficient information to
allow proper notice to the Participants in accordance with Section 6223 of the Code. The
TMP shall keep each Participant informed of all administrative and judicial proceedings

EXHIBIT C

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for the adjustment at the partnership level of partnership items in accordance with Section
6223(g) of the Code.

          2.3 Inconsistent Treatment of Partnership Item. If an administrative
proceeding contemplated under Section 6223 of the Code has begun, and the TMP so
requests, each Participant shall notify the TMP of its treatment of any partnership item on
its federal income tax return that is inconsistent with the treatment of that item on the
partnership return.

          2.4 Extensions of Limitation Periods. The TMP shall not enter into any
extension of the period of limitations as provided under Section 6229 of the Code without
first giving reasonable advance notice to the other Participant of such intended action.

          2.5 Requests for Administrative Adjustments. Neither Participant shall
file, pursuant to Section 6227 of the Code, a request for an administrative adjustment of
partnership items for any partnership taxable year without first notifying the other
Participant. If the other Participant agrees with the requested adjustment, the TMP shall
file the request for administrative adjustment on behalf of the partnership. If consent is not
obtained within thirty (30) days after notice from the proposing Participant, or within the
period required to timely file the request for administrative adjustment, if shorter, either
Participant, including the TMP, may file that request for administrative adjustment on its
own behalf.

          2.6 Judicial Proceedings. Either Participant intending to file a petition
under Section 6226, 6228 or other sections of the Code with respect to any partnership item,
or other tax matters involving the tax partnership, shall notify the other Participant of such
intention and the nature of the contemplated proceeding. If the TMP is the Participant
intending to file such petition, such notice shall be given within a reasonable time to allow
the other Participant to participate in the choosing of the forum in which such petition will
be filed. If both Participants do not agree on the appropriate forum, then the appropriate
forum shall be decided in accordance with Section 7.2. If a deadlock results, the TMP shall
choose the forum. If either Participant intends to seek review of any court decision
rendered as a result of a proceeding instituted under the preceding part of this Paragraph,
such Participant shall notify the other Participant of such intended action.

          2.7 Settlements. The TMP shall not bind the other Participant to a
settlement agreement without first obtaining the written consent of any such Participant.
Either Participant who enters into a settlement agreement for its own account with respect
to any partnership items, as defined by Section 6231(a)(3) of the Code, shall notify the other
Participant of such settlement agreement and its terms within ninety (90) days from the
date of settlement.

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          2.8 Fees and Expenses. The TMP shall not engage legal counsel, certified
public accountants, or others without the prior consent of the Management Committee.
Either Participant may engage legal counsel, certified public accountants, or others in its
own behalf and at its sole cost and expense. Any reasonable item of expense, including but
not limited to fees and expenses for legal counsel, certified public accountants, and others
which the TMP incurs (after proper consent by the Management Committee as provided
above) in connection with any audit, assessment, litigation, or other proceeding regarding
any partnership item, shall constitute proper charges to the Business Account and shall be
borne by the Participants as any other item which constitutes a direct charge to the
Business Account pursuant to the Agreement.

          2.9 Survival. The provisions of the foregoing paragraphs, including but
not limited to the obligation to pay fees and expenses contained in Paragraph 2.8, shall
survive the termination of the tax partnership or the termination of either Participant’s
interest in the tax partnership and shall remain binding on the Participants for a period of
time necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the tax partnership
for the applicable tax year(s).

ARTICLE III

TAX ELECTIONS AND ALLOCATIONS

          3.1 Tax Partnership Election. It is understood and agreed that the
Participants intend to create a partnership for United States federal and state income tax
purposes, and, unless otherwise agreed to hereafter by both Participants, neither
Participant shall make an election to be, or have the arrangement evidenced hereby,
excluded from the application of any provisions of Subchapter K of the Code, or any
equivalent state income tax provision. It is understood and agreed that the Participants
intend to create a partnership for federal and state income tax purposes only (a “tax
partnership”). The Manager shall file with the appropriate office of the Internal Revenue
Service a partnership income tax return covering the Operations. The Participants
recognize that this Agreement may be subject to state income tax statutes. The Manager
shall file with the appropriate offices of the state agencies any required partnership state
income tax returns. Each Participant agrees to furnish to the Manager any information it
may have relating to Operations as shall be required for proper preparation of such
returns. The Manager shall furnish to the other Participant for its review a copy of each
proposed income tax return at least two weeks prior to the date the return is filed.

          3.2 Tax Elections. The tax partnership shall make the following elections
for purposes of all partnership income tax returns:

               (a) To use the accrual method of accounting.

EXHIBIT C

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               (b) Pursuant to the provisions at Section 706(b)(1) of the Code, to
use as its taxable year the year ended December 31. In this connection, Canyon represents
that its taxable year is the year ending December 31 and Horizon represents that its taxable
year is the year ending December 31.

               (c) To deduct currently all development expenses to the extent
possible under Section 616 of the Code.

               (d) Unless the Participants unanimously agree otherwise, to
compute the allowance for depreciation in respect of all depreciable Assets using the
maximum accelerated tax depreciation method and the shortest life permissible or, at the
election of the Manager, using the units of production method of depreciation.

               (e) To treat advance royalties as deductions from gross income for
the year paid or accrued to the extent permitted by law.

               (f) To adjust the basis of tax partnership property under Section
754 of the Code at the request of either Participant;

               (g) To amortize over the shortest permissible period all
organizational expenditures and business start-up expenses under Sections 195 and 709 of
the Code;

          Any other election required or permitted to be made by the tax partnership
under the Code or any state tax law shall be made as determined by the Management
Committee.

          Each Participant shall elect under Section 617(a) of the Code to deduct
currently all exploration expenses. Each Participant reserves the right to capitalize its share
of development and/or exploration expenses of the tax partnership in accordance with
Section 59(e) of the Code, provided that a Participant’s election to capitalize all or any
portion of such expenses shall not affect the Participant’s Capital Account.

          3.3 Allocations to Participants. Allocations for Capital Account purposes
shall be in accordance with the following:

               (a) The Participants recognize the provision for taking production
in kind, as provided elsewhere in the Agreement, as each Participant’s right to determine a
market for the sale of a proportionate share of production subject to Subparagraph 3.3(h)
below. All items of income, gain, deduction, loss, credit or tax attribute arising from the
sale and marketing of such production shall be allocated to the Participant who designated
such market.

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               (b) Exploration expenses and development cost deductions shall
be allocated among the Participants in accordance with their respective contributions to
such expenses and costs.

               (c) Depreciation and amortization deductions with respect to a
depreciable Asset shall be allocated among the Participants in accordance with their
respective contributions to the adjusted basis of the Asset which gives rise to the
depreciation, amortization or loss deduction.

               (d) Production and operating cost deductions shall be allocated
among the Participants in accordance with their respective contributions to such costs.

               (e) Deductions for depletion (to the extent of the amount of such
deductions that would have been determined for Capital Account purposes if only cost
depletion were allowable for federal income tax purposes) shall be allocated to the
Participants in accordance with their respective contributions to the adjusted basis of the
depletable property. Any remaining depletion deductions shall be allocated to the
Participants so that, to the extent possible, the Participants receive the same total amounts
of percentage depletion as they would have received if percentage depletion were
allocated to the Participants in proportion to their respective shares of the gross income
used as the basis for calculating the federal income tax deduction for percentage depletion.

               (f) Subject to Subparagraph 3.3(h) below, gross income on the sale
of production shall be allocated in accordance with the Participants’ rights to share in the
proceeds of such sale.

               (g) Except as provided in Subparagraph 3.3(h) below, gain or loss
on the sale of a depreciable or depletable asset shall be allocated so that, to the extent
possible, the net amount reflected in the Participants’ Capital Account with respect to such
property (taking into account the cost of such property, depreciation, amortization,
depletion or other cost recovery deductions and gain or loss) most closely reflects the
Participants’ Participating Interests.

               (h) Gains and losses on the sale of all or substantially all the Assets
of the tax partnership shall be allocated so that, to the extent possible, the Participants’
resulting Capital Account balances are in the same ratio as their Participating Interests at
the time of such sale.

               (i) {Intentionally Omitted.]

               (j) All deductions and losses that are not otherwise allocated in
this Paragraph shall be allocated among the Participants in accordance with their

EXHIBIT C

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respective contributions to the costs producing each such deduction or to the adjusted
basis of the Asset producing each such loss.

               (k) Any recapture of exploration expenses under Section
617(b)(1)(A) of the Code, and any disallowance of depletion under Section 617(b)(1)(B) of
the Code, shall be borne by the Participants in the same manner as the related exploration
expenses were allocated to, or claimed by, them.

               (l) All other items of income and gain shall be allocated to the
Participants in accordance with their Participating Interests.

               (m) If a reduced Participating Interest is restored pursuant to
Section 9.6, the Manager shall endeavor to allocate items of income, gain, loss, and
deduction (in the same year as the restoration of such Participating Interest or, if necessary,
in subsequent years) so as to cause the Capital Account balances of the Participants to be
the same as they would have been if the restored Participating Interest had never been
reduced.

               (n) If the Participants’ Participating Interests change during any
taxable year of the tax partnership, the distributive share of items of income, gain, loss and
deduction of each Participant shall be determined in any manner (1) permitted by Section
706 of the Code, and (2) agreed on by both Participants. If the Participants cannot agree on
a method, the method shall be determined by the Manager in consultation with the tax
partnership’s tax advisers, with preference given to the interim closing-of-the-books
method except where application of that method would result in undue administrative
expense in relationship to the amount of the items to be allocated.

               (o) “Nonrecourse deductions,” as defined by Treas. Reg.
Section 1.704-2(b)(1) shall be allocated between the Participants in proportion to their
Participating Interests.

          3.4 Regulatory Allocations. Notwithstanding the provisions of
Paragraph 3.3 to the contrary, the following special allocations shall be given effect for
purposes of maintaining the Participants’ Capital Accounts.

               (a) If either Participant unexpectedly receives any adjustments,
allocations, or distributions described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), which result in a deficit Capital Account balance,
items of income and gain shall be specially allocated to each such Participant in an amount
and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the
Capital Account deficit of such Participant as quickly as possible. For the purposes of this
Paragraph, each Participant’s Capital Account balances shall be increased by the sum of
(i) the amount such Participant is obligated to restore pursuant to any provision of the

EXHIBIT C

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Agreement, and (ii) the amount such Participant is deemed to be obligated to restore
pursuant to the penultimate sentences of Treas. Reg. Sections 1.704-2(g)(1) and 1.704-2(i)(5).

               (b) The “minimum gain chargeback” and “partner minimum gain
chargeback” provisions of Treas. Reg. Sections 1.704-2(f) and 1.704-2(i)(4), respectively, are
incorporated herein by reference and shall be given effect. In accordance with Treas. Reg.
Section 1.704-2(i)(1), deductions attributable to a “partner nonrecourse liability” shall be
allocated to the Participant that bears the economic risk of loss for such liability.

               (c) If the allocation of deductions to either Participant would
cause such Participant to have a deficit Capital Account balance at the end of any taxable
year of the tax partnership (after all other allocations provided for in this Article III have
been made and after giving effect to the adjustments described in Subparagraph 3.4(a)),
such deductions shall instead be allocated to the other Participant.

          3.5 Curative Allocations. The allocations set forth in Paragraph 3.4 (the
“Regulatory Allocations”) are intended to comply with certain requirements of the
Treasury Regulations. It is the intent of the Participants that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of income, gain, loss or deduction pursuant to this
Paragraph. Therefore, notwithstanding any other provisions of this Article III (other than
the Regulatory Allocations), the Manager shall make such offsetting special allocations of
income, gain, loss or deduction in whatever manner it determines appropriate so that, after
such offsetting allocations are made, each Participant’s Capital Account balance is, to the
extent possible, equal to the Capital Account balance such Participant would have had if
the Regulatory Allocations were not part of this Agreement and all items were allocated
pursuant to Paragraph 3.3 without regard to Paragraph 3.4.

          3.6 Tax Allocations. Except as otherwise provided in this Paragraph,
items of taxable income, deduction, gain and loss shall be allocated in the same manner as
the corresponding item is allocated for book purposes under Paragraphs 3.3, 3.4 and 3.5 of
the corresponding item determined for Capital Account purposes.

               (a) Recapture of tax deductions arising out of a disposition of
property shall, to the extent consistent with the allocations for tax purposes of the gain or
amount realized giving rise to such recapture, be allocated to the Participants in the same
proportions as the recaptured deductions were originally allocated or claimed.

               (b) To the extent required by Section 704(c) of the Code, income,
gain, loss, and deduction with respect to property contributed to the tax partnership by a
Participant shall be shared among both Participants so as to take account of the variation
between the basis of the property to the tax partnership and its fair market value at the
time of contribution. The Participants intend that Section 704(c) shall effect no allocations

EXHIBIT C

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of tax items that are different from the allocations under Paragraphs 3.3, 3.4 and 3.5 of the
corresponding items for Capital Account purposes. However, to the extent that allocations
of tax items are required pursuant to Section 704(c) of the Code to be made other than in
accordance with the allocations under Paragraphs 3.3, 3.4 and 3.5 of the corresponding
items for Capital Account purposes, Section 704(c) shall be applied in accordance with the
“traditional method without curative allocations” under Treas. Reg. Section 1.704-3(b).

               (c) Depletion deductions with respect to contributed property
shall be determined without regard to any portion of the property’s basis that is
attributable to precontribution expenditures by Canyon that were capitalized under Code
Sections 616(b), 59(e) and 291(b). Deductions attributable to precontribution expenditures
by Canyon shall be calculated under such Code Sections as if Canyon continued to own the
depletable property to which such deductions are attributable, and such deductions shall
be reported by the tax partnership and shall be allocated solely to Canyon.

               (d) The Participants understand the allocations of tax items set
forth in this Paragraph, and agree to report consistently with such allocations for federal
and state tax purposes.

ARTICLE IV

CAPITAL ACCOUNTS; LIQUIDATION

          4.1 Capital Accounts.

               (a) A separate Capital Account shall be established and
maintained by the TMP for each Participant. Such Capital Account shall be increased by
(i) the amount of money contributed by the Participant to the tax partnership, (ii) the fair
market value of property contributed by the Participant to the tax partnership (net of
liabilities secured by such contributed property that the partnership is considered to
assume or take subject to under Code Section 752) and (iii) allocations to the Participant
under Paragraphs 3.3, 3.4 and 3.5 of tax partnership income and gain (or items thereof),
including income and gain exempt from tax; and shall be decreased by (iv) the amount of
money distributed to the Participant by the tax partnership, (v) the fair market value of
property distributed to the Participant by the tax partnership (net of liabilities secured by
such distributed property and that the Participant is considered to assume or take subject
to under Code Section 752), (vi) allocations to the Participant under Paragraphs 3.3, 3.4 and
3.5 of expenditures of the tax partnership not deductible in computing its taxable income
and not properly chargeable to a Capital Account, and (vii) allocations of tax partnership
loss and deduction (or items thereof), excluding items described in (vi) above and
percentage depletion to the extent it exceeds the adjusted tax basis of the depletable
property to which it is attributable. The Participants agree that the net fair market value of
the property contributed by Canyon to the tax partnership pursuant to Section 5.1(a) of the
Agreement is Two Million Dollars ($2,000,000).

EXHIBIT C

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               (b) In the event that the Capital Accounts of the Participants are
computed with reference to the book value of any Asset which differs from the adjusted
tax basis of such Asset, then the Capital Accounts shall be adjusted for depreciation,
depletion, amortization and gain or loss as computed for book purposes with respect to
such Asset in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

               (c) In the event any interest in the tax partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred interest, except as
provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(1).

               (d) In the event property, other than money, is distributed to a
Participant, the Capital Accounts of the Participants shall be adjusted to reflect the manner
in which the unrealized income, gain, loss and deduction inherent in such property (that
has not been reflected in the Capital Accounts previously) would be allocated among the
Participants if there was a taxable disposition of such property for the fair market value of
such property (taking Section 7701(g) of the Code into account) on the date of distribution.
For this purpose the fair market value of the property shall be determined as set forth in
Paragraph 4.2(a) below.

               (e) In the event the Management Committee designates a
Supplemental Business Agreement area within the Area of Interest as described in Article
XV of the Agreement, the Management Committee shall appropriately segregate Capital
Accounts to reflect that designation and shall make such other modifications to the
Agreement as are appropriate to reflect the manner of administering Capital Accounts in
accordance with the terms of this Exhibit C.

               (f) Canyon is contributing to the Agreement certain depletable
properties with respect to which Canyon currently has an adjusted tax basis which may
consist in part of depletable expenditures and in part of expenditures capitalized under
Code Sections 616(b), 291(b) and/or 59(e). For purposes of maintaining the Capital
Accounts, the tax partnership’s deductions with respect to contributed property in each
year for (i) depletion, (ii) deferred development expenditures under Section 616(b)
attributable to pre-contribution expenditures, (iii) amortization under Section 291(b)
attributable to pre-contribution expenditures, and (iv) amortization under Section 59(e)
attributable to pre-contribution expenditures shall be the amount of the corresponding
item determined for tax purposes pursuant to Subparagraph 3.6(c) multiplied by the ratio
of (A) the book value at which the contributed property is recorded in the Capital
Accounts to (B) the adjusted tax basis of the contributed property (including basis resulting
from capitalization of pre-contribution development expenditures under Sections 616(b),
291(b), and 59(e)).

EXHIBIT C

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               (g) The foregoing provisions, and the other provisions of the
Agreement relating to the maintenance of Capital Accounts and the allocations of income,
gain, loss, deduction and credit, are intended to comply with Treasury Regulations Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with such
Regulations. In the event the Management Committee shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such Regulations, the Management Committee may
make such modification, provided that it is not likely to have a material effect on the
amount distributable to either Participant upon liquidation of the tax partnership pursuant
to Paragraph 4.2.

               (h) If the Participants so agree, upon the occurrence of an event
described in Treas. Reg. Section 1.704-1(b)(2)(iv)(5), the Capital Accounts shall be restated
in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(f) to reflect the manner in which
unrealized income, gain, loss or deduction inherent in the assets of the tax partnership (that
has not been reflected in the Capital Accounts previously) would be allocated among the
Participants if there were a taxable disposition of such assets for their fair market values, as
determined in accordance with Section 4.2(a). For purposes of Paragraph 3.3, a Participant
shall be treated as contributing the portion of the book value of any property that is
credited to the Participant’s Capital Account pursuant to the preceding sentence.
Following a revaluation pursuant to this Subparagraph 4.1(h), the Participants’ shares of
depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with
respect to property that has been revalued pursuant to this Subparagraph 4.1(h) shall be
determined in accordance with the principles of Code Section 704(c) as applied pursuant to
the final sentence of Subparagraph 3.6(b).

          4.2 Liquidation. In the event the partnership is “liquidated” within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g) then, notwithstanding any
other provision of the Agreement to the contrary, the following steps shall be taken (after
taking into account any transfers of Capital Accounts pursuant to Sections 5.2(a), 6.3(a) or
12.3 of the Agreement):

               (a) The Capital Accounts of the Participants shall be adjusted to
reflect any gain or loss which would be realized by the partnership and allocated to the
Participants pursuant to the provisions of Article III of this Exhibit C if the Assets had been
sold at their fair market value at the time of liquidation. The fair market value of the
Assets shall be determined by agreement of both Participants; provided, however, that in
the event that the Participants fail to agree on the fair market value of any Asset, its fair
market value shall be determined by a nationally recognized independent engineering firm
or other qualified independent party approved by both Participants.

               (b) After making the foregoing adjustments and/or contributions,
all remaining Assets shall be distributed to the Participants in accordance with the balances

EXHIBIT C

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in their Capital Accounts (after taking into account all allocations under Article III,
including Subparagraph 3.3(h)). Unless otherwise expressly agreed on by both
Participants, each Participant shall receive an undivided interest in each and every Asset
determined by the ratio of the amount in each Participant’s Capital Account to the total of
both of the Participants’ Capital Accounts. Assets distributed to the Participants shall be
deemed to have a fair market value equal to the value assigned to them pursuant to
Subparagraph 4.2(a) above.

               (c) All distributions to the Participants in respect of their Capital
Accounts shall be made in accordance with the time requirements of Treasury Regulation
Sections 1.704-1(b)(2)(ii)(b)(2) and (3).

          4.3 Deemed Terminations. Notwithstanding the provisions of Paragraph
4.2, if the “liquidation” of the tax partnership results from a deemed termination under
Section 708(b)(1)(B) of the Code, then (i) Subparagraphs 4.2(a) and (b) shall not apply, (ii)
the tax partnership shall be deemed to have distributed its Assets in accordance with the
relative Capital Account balances of the Participants as adjusted pursuant to Subparagraph
4.2(a), (iii) the Participants shall be deemed for tax purposes to have contributed those
Assets to a new partnership pursuant to the terms of this Exhibit, and (iv) the new tax
partnership shall continue pursuant to the terms of this Agreement and this Exhibit.

EXHIBIT C

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EXHIBIT D

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

DEFINITIONS

     “Affiliate” means any person, partnership, limited liability company, joint venture,
corporation, or other form of enterprise which Controls, is Controlled by, or is under common
Control with a Participant.

     “Agreement” means this Converse Uranium Project Exploration, Development and Mine Operating
Agreement, including all amendments and modifications, and all schedules and exhibits, all of which
are incorporated by this reference.

     “Approved Alternative” means a Development and Mining alternative selected by the Management
Committee from various Development and Mining alternatives analyzed in the Pre-Feasibility Studies.

     “Area of Interest” means the area described in Paragraph 1.3 of Exhibit A.

     “Assets” means the Properties, Products, Business Information, and all other real and personal
property, tangible and intangible, including existing or after-acquired properties and all contract
rights held for the benefit of the Participants hereunder.

     “Budget” means a detailed estimate of all costs to be incurred and a schedule of cash advances
to be made by the Participants with respect to a Program.

     “Business” means the contractual relationship of the Participants under this Agreement.

     “Business Account” means the account maintained by the Manager for the Business in accordance
with Exhibit B.

     “Business Information” means the terms of this Agreement, and any other agreement relating to
the Business, the Existing Data, and all information, data, knowledge

EXHIBIT D

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and know-how, in whatever form and however communicated (including, without limitation,
Confidential Information), developed, conceived, originated or obtained by either Participant in
performing its obligations under this Agreement. The term “Business Information” shall not include
any improvements, enhancements, refinements or incremental additions to Participant Information
that are developed, conceived, originated or obtained by either Participant in performing its
obligations under this Agreement.

     “Capital Account” means the account maintained for each Participant in accordance with Exhibit
C.

     “Confidential Information” means all information, data, knowledge and know-how (including, but
not limited to, formulas, patterns, compilations, programs, devices, methods, techniques and
processes) that derives independent economic value, actual or potential, as a result of not being
generally known to, or readily ascertainable by, third parties and which is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy, including without limitation
all analyses, interpretations, compilations, studies and evaluations of such information, data,
knowledge and know-how generated or prepared by or on behalf of either Participant. Confidential
Information does not include information within the public domain through no fault or action taken
of any party after the Effective Date of this Agreement.

     “Continuing Obligations” mean obligations or responsibilities that are reasonably expected to
continue or arise after Operations on a particular area of the Properties have ceased or are
suspended, such as future monitoring, stabilization, or Environmental Compliance.

     “Control” used as a verb means, when used with respect to an entity, the ability, directly or
indirectly through one or more intermediaries, to direct or cause the direction of the management
and policies of such entity through (i) the legal or beneficial ownership of voting securities or
membership interests; (ii) the right to appoint managers, directors or corporate management; (iii)
contract; (iv) operating agreement; (v) voting trust; or otherwise; and, when used with respect to
a person, means the actual or legal ability to control the actions of another, through family
relationship, agency, contract or otherwise; and “Control” used as a noun means an interest which
gives the holder the ability to exercise any of the foregoing powers.

     “Cover Payment” shall have the meaning as set forth in Section 10.4 of the Agreement.

     “Development” means all preparation (other than Exploration) for the removal and recovery of
Products, including pilot or test projects and installation or construction of improvements to be
used for Mining, and all related Environmental Compliance.

EXHIBIT D

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     “Effective Date” means the date set forth in the preamble to this Agreement.

     “Encumbrance” or “Encumbrances” means mortgages, deeds of trust, security interests, pledges,
liens, net profits interests, royalties or overriding royalty interests, other payments out of
production, or other burdens of any nature.

     “Environmental Compliance” means actions performed during or after Operations to comply with
the requirements of all Environmental Laws or contractual commitments related to reclamation of the
Properties or other compliance with Environmental Laws.

     “Environmental Laws” means Laws aimed at reclamation or restoration of the Properties;
abatement of pollution; protection of the environment; protection of wildlife, including endangered
species; ensuring public safety from environmental hazards; protection of cultural or historic
resources; management, storage or control of hazardous materials and substances; releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances as wastes into the environment, including without limitation, ambient air, surface water
and groundwater; and all other Laws relating to the manufacturing, processing, distribution, use,
treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes.

     “Environmental Liabilities” means any and all claims, actions, causes of action, damages,
losses, liabilities, obligations, penalties, judgments, amounts paid in settlement, assessments,
costs, disbursements, or expenses (including, without limitation, attorneys’ fees and costs,
experts’ fees and costs, and consultants’ fees and costs) of any kind or of any nature whatsoever
that are asserted against either Participant, by any person or entity other than the other
Participant, alleging liability (including, without limitation, liability for studies, testing or
investigatory costs, cleanup costs, response costs, removal costs, remediation costs, containment
costs, restoration costs, corrective action costs, closure costs, reclamation costs, natural
resource damages, property damages, business losses, personal injuries, penalties or fines) arising
out of, based on or resulting from (i) the presence, release, threatened release, discharge or
emission into the environment of any hazardous materials or substances existing or arising on,
beneath or above the Properties and/or emanating or migrating and/or threatening to emanate or
migrate from the Properties to off-site properties; (ii) physical disturbance of the environment;
or (iii) the violation or alleged violation of any Environmental Laws.

     “Equity Account” means the account maintained for each Participant by the Manager in
accordance with Subsection 8.2(n) of the Agreement.

EXHIBIT D

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     “Existing Data” means maps, drill logs and other drilling data, core tests, pulps, reports,
surveys, assays, analyses, production reports, operations, technical, accounting and financial
records, and other material information developed in operations on the Properties prior to the
Effective Date.

     “Expansion” or “Modification” means (i) a material increase in mining or production capacity;
(ii) a material change in the recovery process; or (iii) a material change in waste or tailings
disposal methods. An increase or change shall be deemed “material” if it is anticipated to cost
more than ten percent (10%) of original capital costs attributable to the Development of the mining
or production capacity, recovery process or waste or tailings disposal facility to be expanded or
modified.

     “Exploration” means all activities directed toward ascertaining the existence, location,
magnitude and extent, quantity, quality or commercial value of deposits of Products, including but
not limited to additional drilling required after to evaluate potentially commercial
mineralization, and including related Environmental Compliance.

     “Feasibility Contractors” means one or more engineering firms approved by the Management
Committee for purposes of preparing or auditing any Pre-Feasibility Study or Feasibility Study.

     “Feasibility Study” means a report to be prepared following selection by the Management
Committee of one or more Approved Alternatives. The Feasibility Study shall include a review of
information presented in any Pre-Feasibility Studies concerning the Approved Alternative(s). The
Feasibility Study shall be in a form, of a scope, and at a level of accuracy generally acceptable
to reputable financial institutions that provide financing to the mining industry.

     “Governmental Fees” means all location fees, mining claim rental fees, mining claim
maintenance payments and similar payments required by Law to locate and hold mining claims or
leases.

     “Initial Contribution” means that contribution each Participant has made or agrees to make
pursuant to Section 5.1 of the Agreement.

     “Law” or “Laws” means all applicable federal, state and local laws (statutory or common),
rules, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives,
judgments, decrees, and other governmental restrictions, including permits and other similar
requirements, whether legislative, municipal, administrative or judicial in nature.

     “Management Committee” means the committee established under Article VII of the Agreement.

EXHIBIT D

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     “Manager” means the Participant appointed under Article VIII of the Agreement to manage
Operations, or any successor Manager.

     “Mining” means the mining whether by surface, underground, or in-situ methods, extracting,
producing, treating, handling, processing, removal and stockpiling of Products.

     “Operations” means the activities carried out under this Agreement.

     “Participant” means Canyon or Horizon, or any permitted successor or assign of Canyon or
Horizon under the Agreement.

     “Participant Information” means all information, data, knowledge and know-how, in whatever
form and however communicated (including, without limitation, Confidential Information but
excluding the Existing Data), which, as shown by written records, was developed, conceived,
originated or obtained by a Participant: (a) prior to entering into this Agreement, or (b)
independent of its performance under the terms of this Agreement.

     “Participating Interest” means the percentage interest representing the ownership interest of
a Participant in the Assets, and all other rights and obligations arising under this Agreement, as
such interest may from time to time be adjusted hereunder. Participating Interests shall be
calculated to three decimal places and rounded to two decimal places as follows: Decimals of .005
or more shall be rounded up (e.g., 1.519% rounded to 1.52%); decimals of less than .005 shall be
rounded down (e.g., 1.514% rounded to 1.51%). The initial Participating Interests of the
Participants are set forth in Section 6.1 of the Agreement.

     “Payout” means the date on which the Equity Account balance of each of the Participants has
become zero or a negative number, regardless of whether the Equity Account balance of either or
both Participants subsequently becomes a positive number. If one Participant’s Equity Account
balance becomes zero or a negative number before the other Participant’s, Payout shall not occur
until the date that the other Participant’s Equity Account balance first becomes zero or a negative
number.

     “Pre-Feasibility Studies” means one or more studies prepared to analyze whether economically
viable Mining Operations may be possible on the Properties, as described in Section 9.8.

     “Prime Rate” means the interest rate quoted and published as “Prime” as published in The Wall
Street Journal, under the heading “Money Rate,” as the rate may change from day to day.

EXHIBIT D

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     “Products” means all ores, minerals and mineral resources produced from the Properties,
including but not limited to all uranium, vanadium, other fissionable source materials, other
spatially associated minerals, and all forms of U3O8 in resins, solutions,
concentrates, or yellowcake, but shall not include any oil, gas, associated liquid hydrocarbons or
coal.

     “Program” means a description in reasonable detail of Operations to be conducted and
objectives to be accomplished by the Manager for a period determined by the Management Committee.

     “Program Period” means the time period covered by an adopted Program and Budget.

     “Project Financing” means any financing approved by the Management Committee and obtained by
the Participants for the purpose of placing a mineral deposit situated on the Properties into
commercial production, but shall not include any such financing obtained individually by either
Participant to finance payment or performance of its obligations under the Agreement.

     “Properties” means those interests in real property described in Paragraph 1.1 of Exhibit A
and all other interests in real property within the Area of Interest that are acquired and held
subject to the Agreement.

     “Recalculated Participating Interest” means the reduced Participating Interest of a
Participant as recalculated under Sections 9.5, 9.6 or 10.5 of the Agreement.

     “Reduced Participant” means a Participant whose Participating Interest is reduced under
Sections 9.5 or 10.5 of the Agreement.

     “Transfer” means, when used as a verb, to sell, grant, assign, create an Encumbrance, pledge
or otherwise convey, or dispose of or commit to do any of the foregoing, or to arrange for
substitute performance by an Affiliate or third party (except as permitted under Subsection 8.2(j)
and Section 8.6 of the Agreement), either directly or indirectly; and, when used as a noun, means
such a sale, grant, assignment, Encumbrance, pledge or other conveyance or disposition, or such an
arrangement.

EXHIBIT D

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EXHIBIT E

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

PRODUCTION ROYALTY

Production Royalty, as defined in Section 6.3(a) of the Agreement to which this Exhibit E is
attached, shall be determined and paid in accordance with the following terms and conditions, which
terms and conditions shall be set forth in any royalty deed delivered pursuant to Section 6.3(a).
For purposes of this Exhibit E: (a) the term “Grantor” shall mean the Participant that is
responsible for paying Production Royalty; (b) the term “Grantee” shall mean the person or entity
to whom the Production Royalty is granted and paid; and (c) all other defined terms shall have the
meaning given to them in the Agreement or in Exhibit D attached to the Agreement.

     1. Reservation of Production Royalty. Upon Grantee’s conversion to a Production Royalty and
Grantee’s conveyance of all of its right, title and interest in the Assets to Grantor in accordance
with Section 6.3(a), Grantee shall reserve a royalty in the amount of three percent (3%) of the Net
Returns from the sale or other disposition of all Products mined or produced from the Properties.

     2. Computation of Production Royalty. Grantor shall calculate the Net Returns realized on the
sale of all Products mined or produced from the Properties and sold or otherwise disposed of (with
or without sale) by or for Grantor by subtracting Allowable Deductions from Gross Sales Revenue.
The Production Royalty payable to Grantee shall be the amount of the Net Returns so calculated
multiplied by three percent (3%). Grantee shall have no right whatsoever to take Products “in
kind.”

     3. Definitions. For purposes of this Exhibit E:

	 	a.	 	“Allowable Deductions” has the meaning given to it in
Paragraph 4, below;
	 
	 	b.	 	“Gross Sales Revenue” shall mean the gross revenue received by or on behalf of
Grantor from the sale or other disposition (with or without sale) of Products.
Gross Sales Revenue shall be determined on a weighted average basis when Grantor
receives more than one

EXHIBIT E

Page 1 of 5

 

 

	 	 	 	price for Products sold or otherwise disposed of during the period for
which Production Royalty is payable;
	 
	 	c.	 	“Net Returns” means an amount determined by subtracting
Allowable Deductions from Gross Sales Revenue; and
	 
	 	d.	 	“Products” means all ores, minerals and mineral resources produced from the
Properties, including but not limited to all uranium, vanadium, other fissionable
source materials, other spatially associated minerals, and all forms of
U3O8 in resins, solutions, concentrates, or yellowcake, but shall
not include any oil, gas, associated liquid hydrocarbons or coal.

     4. Allowable Deductions.

          a. For Products that are uranium-bearing, “Allowable Deductions” shall mean and include all of
the following:

     i. all costs, expenses and charges of any nature whatsoever that are paid or
incurred by Grantor for or in connection with the transportation of Products away
from the Properties to the point of treatment, recovery, processing, storage or
sale;

     ii. all deductions made by the purchaser or processor for moisture,
impurities, sampling, assaying, penalties, and treatment or tolling charges or
fees;

     iii. all costs, expenses and charges of any nature whatsoever that are paid or
incurred by Grantor for or in connection with insurance, storage, representation at
a treatment, recovery, processing plant, or for consignment sale or sales brokerage
costs or fees;

     iv. all rentals and royalties of any kind payable to surface or mineral
interest owners or to the United States; and

     v. all federal, state and local sales, use, severance, net proceeds of mine,
excise, privilege and any other taxes, except income tax paid or incurred by
Grantor, which is levied on, measured by, or applicable to mineral production or
the value of Products produced from the Properties.

          b. For Products that are not uranium-bearing, “Allowable Deductions” shall mean and include
all of the following:

EXHIBIT E

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     i. all costs, expenses and charges of any nature whatsoever that are paid or
incurred by Grantor for or in connection with the transportation of Products away
from the Properties to a mill, smelter, refinery, recovery plant or other point of
treatment, recover, processing, storage or sale;

     ii. all costs, expenses and charges of any nature whatsoever that are paid or
incurred by Grantor for or in connection with mineral concentration, treatment,
smelting, refining or other beneficiation processes or procedures (whether or not
currently known) which are undertaken off of the Properties, including without
limitation costs, expenses and charges paid or incurred for or in connection with
moisture, impurities, sampling, assaying, penalties, umpire services and other
processor deductions;

     iii. all costs, expenses and charges of any nature whatsoever that are paid or
incurred by Grantor for or in connection with insurance, storage, representation at
a mill, smelter, refinery, recovery or treatment plant, or for consignment sale or
sales brokerage costs or fees;

     iv. all rentals and royalties of any kind payable to surface or mineral
interest owners or to the United States; and

     v. all federal, state and local sales, use, severance, net proceeds of mine,
excise, privilege and any other taxes, except income tax paid or incurred by
Grantor, which is levied on, measured by, or applicable to mineral production or
the value of Products produced from the Properties.

     5. Treatment and Sale. Grantor shall have the right to concentrate, mill, smelt, refine,
upgrade or otherwise recover, treat, process or beneficiate Products mined from the Properties at
locations on or off the Properties. In the event that Products are concentrated, milled, smelted,
refined, upgraded or otherwise recovered, treated, processed or beneficiated in facilities owned or
controlled by Grantor (whether on or off the Properties), then Allowable Deductions shall not
exceed Allowable Deductions that would have been paid or incurred by Grantor if the facilities were
owned or controlled by an independent party. No Production Royalty shall be payable to Grantee for
or with respect to reasonable quantities of Products that are not sold by Grantor but are used by
Grantor for assaying, treatment amenability, metallurgical or other analytical processes or
procedures.

     6. Statements and Payments. (a) Payment of Production Royalty shall be made by wire transfer
within thirty (30) calendar days after the calendar quarter in which Gross Sales Revenue is
received by or on behalf of Grantor. Payment shall be

EXHIBIT E

Page 3 of 5

 

 

made to an account for the credit of Grantee at a bank designated from time to time in writing by
Grantee. At the time of each payment of Production Royalty, Grantor shall deliver to Grantee a
statement setting forth in detail all pertinent facts and figures relevant to and supporting the
calculation and payment of Production Royalty, including without limitation: (i) the form, weight
and analysis of all Products for which Gross Sales Revenue was received during the period for which
payment of Production Royalty is made; (ii) the price received for all Products from all purchasers
thereof during such period; and (iii) an itemized statement of all Allowable Deductions, such that
Grantee may verify the accuracy of the amount of the payment.

          (b) All statements provided to Grantee by Grantor shall be conclusively presumed to be true
and correct after twenty-four (24) months following the calendar year during which such statement
was received by Grantee, unless Grantee submits a written exception to Grantor within such
twenty-four (24) month period. All written exceptions and claims upon Grantor for incorrect
payments of Production Royalty shall be made within such twenty-four (24) month period or shall be
deemed waived.

     7. Audits. Grantee shall have the right to an independent audit of all books, records and
accounts relating to the calculation and payment of Production Royalty. Such audit shall review all
issues raised by Grantee in any notice given by Grantee pursuant to Paragraph 7(a) above. All costs
of such audit shall be borne by Grantee. Grantee shall give Grantor thirty (30) days prior notice
of such audit. Any audit conducted on behalf of Grantee shall be made during Grantor’s normal
business hours and shall not interfere with the business and operations of Grantor. Grantee shall
not have the right to audit the books, records and accounts of Grantor relating to the calculation
and payment of Production Royalty more than twenty-four (24) months after the calendar year during
which the payment of Production Royalty (or the statement provided by Grantor in connection with
such payment) was received. All written exceptions to and claims upon Grantor for discrepancies
disclosed by such audit shall be made by Grantee not more than three (3) months after completion
and delivery of such audit, or they shall be deemed waived.

     8. Adjustments. The amounts of any charges, costs or expenses or any adjustments which are
actually made and given to Grantor by a purchaser, shipper, processor or other creditor that were
not taken into account in a statement to Grantee which accompanied a preceding payment of
Production Royalty shall be taken into account in determining the amount of the next Production
Royalty payment, but no such charges or adjustments shall otherwise affect the conclusiveness of
preceding statements or payments.

     9. Lesser Interest. If it is finally determined that Grantor owns an interest in the
Properties which is less than the entire and undivided mineral estate therein,

EXHIBIT E

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whether or not such lesser interest is referred to herein, then the Production Royalty provided for
herein shall be paid to Grantee only in the proportion to which Grantor’s interest bears to the
whole and undivided mineral estate. Grantee shall be entitled to retain only that portion of the
Production Royalty previously paid to Grantee hereunder as Grantor’s actual interest in the mineral
estate bears to the whole and undivided mineral estate. In no case shall Grantee be required to
refund or return any Production Royalty previously paid to it which exceeds the amount of
Production Royalty to which Grantee was actually entitled. Instead, Grantor’s sole remedy shall be
to offset all moneys previously paid Grantee that exceeded the actual amounts due Grantee against
future Production Royalty which later becomes due and payable to Grantee, if any. With respect to
any portion of the Properties in which Grantee owns no right, title, or interest in the Products,
Grantor is under no obligation to pay, and Grantee has no right to receive, any Production Royalty.

EXHIBIT E

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EXHIBIT F

To

CONVERSE URANIUM PROJECT

EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

By And Between

Canyon Resources Corporation

And

New Horizon Uranium Corporation

INITIAL PROGRAM AND BUDGET

	 	 	 	 	 
	2006	 	 	 
	Item	 	$     	 
	Initial 43-101 Property Report
	 	 	10,000	 
	Landman, acquisition of private fee land
	 	 	20,000	 
	Environmental Assessment
	 	 	15,000	 
	Exploration permit including reclamation bonding
	 	 	25,000	 
	Environmental Compliance Fund
	 	 	25,000	 
	Drilling — 30 holes to 750 ft avg. – total 22,500 ft
	 	 	225,000	 
	Drilling results analysis
	 	 	10,000	 
	Drilling Report (43-101 compliant by 3rd party)
	 	 	25,000	 
	 	 	 	 	 
	 
	 	 	 	 
	2006 Total
	 	 	355,000	 
	 	 	 	 	 

 

		
	* 	All rotary drilling @$10.00 per ft.

EXHIBIT F

Page 1 of 1Exhibit 4.13

 

DIAGEO

 

	
   

  	
  THE COMPANIES ACTS 1985 TO 1989

  

  COMPANY LIMITED BY SHARES

   

   

  Diageo plc

   

   

  (REGISTERED 21ST OCTOBER 1886)

  Company No. 23307

   

  	
   

  

 

Memorandum
and Articles of Association

(Incorporating amendments up to and including
these made at the

Annual General meeting held on 18th October 2005)

 

 

Company
No. 23307

 

THE COMPANIES ACTS
1985 TO 1989

 

COMPANY LIMITED BY
SHARES

 

Memorandum of
Association

OF

Diageo plc

 

(As amended
by Special Resolutions passed on
16th May, 1996 and 28th January, 1998)

 

1.                    The name of the Company is “Diageo plc”.*

 

2.                    The Company is to be a public company.**

 

3.                    The Registered Office of the Company will be
situated in England and Wales.

 

4.                    The objects of the Company are:

a)                (i)             To carry on business as a general commercial company and to carry on any trade or business whatsoever; and

 

(ii)             Without prejudice to the generality of the
foregoing:

 

(1)             To act or carry on business as a holding company and to control and co-ordinate the administration and operation of any companies for the time being directly or indirectly controlled by
the Company; and

 

(2)             To act or carry on
business as producers, distributors and marketers of branded drinks and
branded food products, as operators of
fast food restaurant chains and as brewers, distillers and manufacturers of wine, spirits and mineral or other types of water; and

 

(3)             To carry on any
other business, undertaking, transaction or operation
commonly carried on or undertaken by producers, distributors and marketers
(both wholesale and retail) in all or any articles of commercial and personal use and consumption, importers, exporters, shipowners, bankers, factors, capitalists, promoters,
financiers, real property dealers
and investors, concessionaires,
brokers, contractors, mercantile and general agents, advertising agents,
publishers in any medium, hoteliers,
carriers and transporters of all kinds
and to carry on all or any of the said businesses (including those in sub-paragraphs (1) and
(2) of this paragraph) either
together

 

*            The name of the Company was changed to Diageo plc with effect
from 17th December, 1997.

**     The name of the Company was changed to Arthur Guinness and Sons PLC and
the Company re-registered as a Public
Company with effect from 1st March, 1982.

 

 

as one business or as separate distinct businesses in any part of the world.

 

b)               To
purchase, take on lease or in exchange, hire or otherwise acquire and hold, for
any estate or interest, and manage any lands, buildings, servitudes, easements, rights, privileges, concessions,
machinery, plant, stock-in-trade, railways, docks, wharves, warehouses, piers,
barges, vessels, aircraft and any heritable or moveable real or personal
property of any kind.

 

c)                To
purchase or otherwise acquire, dispose of, protect, extend and renew any
patents, registered designs, trademarks and service marks (whether registered
or not), copyright, design right or any similar property rights, including
those subsisting in inventions, designs,
drawings, performances, computer programmes, semi-conductor topographies,
confidential information, business names, goodwill and the style of
presentation of goods or services including brands and the right to use brand
names and applications for protection thereof, which may seem to the
Company capable of being used for any of the purposes of the Company, or the
acquisition of which may seem calculated directly or indirectly to benefit
the Company, and to use, exercise, develop, receive or grant licences in
respect of or otherwise turn to account any of the same for any purpose
whatsoever, whether manufacturing or otherwise, which the Company may think
calculated directly or indirectly to achieve these objects.

 

d)               To form,
promote, subsidise and assist companies, syndicates or other bodies of all
kinds and to issue on commission or otherwise underwrite, subscribe for and
take or guarantee the payment of any dividend or interest on any shares,
stocks, debentures or other capital or securities or obligations of any such
companies, syndicates or other bodies, and to pay or provide for brokerage
commission and underwriting in respect of any such issue.

 

e)                To
enter into partnerships or into any arrangements for sharing profits, union of
interests, co-operation or otherwise with any person or company for the purpose of carrying on business within
any of the objects of the Company.

 

f)                  To
carry on any other business, which
may seem to the Company capable of being conveniently carried on in
connection with the above or calculated directly or indirectly to enhance the
value of or render profitable any of the Company’s property or rights.

 

g)               To
purchase or otherwise acquire and undertake
all or any part of the business, property, liabilities and transactions of
any person, body or company carrying on any business which this Company is
authorised to carry on, or possessed of property, assets or rights suitable for
any of the objects of the Company.

 

h)               To
develop, work, improve, manage, lease, mortgage, charge, pledge, turn to
account or otherwise deal with all or any part of the property, assets or
rights of the Company; to surrender or accept surrender of any lease or tenancy
or rights; and to sell or deal with the property,
assets, business, rights or undertaking of the Company, or any part thereof,
and for such consideration and on such terms as the Company may think fit,
and including for cash or shares, debentures or securities of any other company.

 

i)                   To
build, construct, erect, maintain, alter, replace or remove any buildings,
works, offices, erections, plant, machinery, tools, equipment or otherwise as may seem desirable for any of the
businesses or in the interests of the Company; and to manufacture, buy, sell,
lease or otherwise acquire and generally deal in any plant, tools, machinery,
goods or things of any

 

ii

 

description which may be
conveniently dealt with in connector with any of the Company’s objects.

 

j)                   To manage and conduct the
affairs of any companies, firms, bodies and persons carrying on business of any
kind whatsoever, and in any part of the world.

 

k)                To enter into, carry on and participate in
financial transactions and dealings and operations of all kinds; and to take
any steps which may be considered expedient for carrying into effect such transactions, dealings and operations
including, without prejudice to the generality of the foregoing, borrowing
and lending money and entering into contracts and arrangements of all kinds.

 

l)                   To borrow or raise money in such manner as
the Company shall think fit and in particular by the issue (whether at par or
at a premium or discount and for such consideration as the Company may think
fit) of bonds, debentures or debenture stock (payable to
bearer or otherwise), mortgages
or charges, shares or other securities, perpetual or otherwise, and, if the
Company thinks fit, charged on all or any of the Company’s property (both
present and future) and undertaking, including its uncalled capital, and
further, if so thought fit, convertible into any stock or shares or securities
of the Company or any other company, and collaterally or further to secure any
obligations of the Company by a trust deed or other assurance or pledge.

 

m)             To guarantee or otherwise support or secure,
either with or without the Company receiving any consideration or advantage and
whether by personal covenant or by mortgaging or charging all or part of
the undertaking, property, assets and rights, present and future, and uncalled capital of the Company or by both such methods or by any
other means whatsoever, the liabilities and obligations of and the payment of
any moneys whatsoever (including but not limited to capital, principal,
premiums, interest, dividends, costs and expenses on any stocks, shares or
securities) by any person, firm or company whatsoever, including but not
limited to any company which is for the time being the holding company or a subsidiary (both as
defined by section 736 of the Companies Act 1985) or a subsidiary
undertaking (as defined by section 258 of the Companies Act 1985) of the
Company or of the Company's holding company or is controlled by the same person
or persons as control the Company or is otherwise associated with the Company
in its business.

 

n)               To enter into, carry on and participate in financial transactions and operations of all kinds
including (without limitation) interest rate swaps, options (including traded
options), swap option contracts, forward exchange contracts, futures contracts,
forward rate agreements, contracts for differences, caps, collars, floors or other
financial instruments including hedging agreements of any kind all or any of
which may be on a fixed and/or floating rate basis and/or in respect of
Sterling and/or any other currencies or basket of currencies (including but not
limited to European Currency Units (as the same may from time to time be
designated or constituted)) or commodities of any kind and in the case of such
swaps, options, swap option contracts, forward exchange contracts, futures
contracts or other financial instruments including hedging agreements of any
kind that may be undertaken by the Company on a speculative basis or in
connection with the management of financial risks relating to the Company or any
other company, firm or person on such terms as may be thought fit and with
or without security, and to undertake, carry on and execute all kinds of
financial, commercial trading and other operations:

 

o)               To grant indemnities of every description and
to undertake obligations of every description.

 

iii

 

p)               To
make, draw, accept, exchange, endorse, negotiate, execute and issue promissory
notes, bills of exchange or other negotiable instruments or payment orders and to
receive money on deposit or loan.

 

q)               To
pay commission to and remunerate
any person or company for services rendered in underwriting or placing, or
assisting to underwrite or place, any of the shares in the Company’s capital or
any debentures or other securities of the Company, or in or about the formation
or promotion of the Company or the
conduct of its business.

 

r)                  To
carry on any other business which
may seem to the Company capable of being conveniently carried on in
connection with the above or calculated directly or indirectly to enhance the
value of or render profitable any of the Company’s property or rights.

 

s)                To
pay for any property or rights
acquired by the Company in such manner as the Company may think fit,
including payment either in cash or in fully or partly paid-up shares with or
without preferred or deferred rights in respect of dividend or repayment of
capital or otherwise, or by any securities which the Company has power to
issue, or partly in one mode and partly in another, and generally on such terms
as the Company may determine.

 

t)                  To
accept payment of any property or rights sold or otherwise disposed of or dealt
with by the Company in such manner as the Company may think fit, including
payment either in cash, by instalments or otherwise, or in fully or partly
paid-up shares of any company or corporation, with or without deferred or preferred rights in respect of
dividend or repayment of capital otherwise or in debentures or mortgage
debentures or debenture stock, mortgages or other securities of any company or
corporation, or partly in one mode and partly in another, and generally on such
terms as the Company may determine.

 

u)               To
make loans or donations, either of cash or of other assets whatsoever, to or
enter into any arrangements whatsoever for the benefit of such persons and in
such cases as the Company may think directly or indirectly conducive to
any of its objects or otherwise expedient.

 

v)               To distribute among the members in specie any property of the Company or any proceeds of sale,
disposal or realisation of any property of the Company but so that no distribution amounting to a
reduction of capital be made except with the sanction (if any) for the time being required by law.

 

w)             To
subscribe for, purchase or otherwise acquire, take hold, or sell any shares or
stock, bonds, debentures or debenture stock, or other securities or obligations
of any person, firm, government or other authority or issuer (including any
subsidiary of the Company) and to invest, deal with or lend any of the moneys
of the Company in such manner, with or without security and on such terms as
the Company may think fit, and to buy and sell foreign exchange.

 

x)                 To
amalgamate with any other company
either the objects of which are or include objects similar to those of the Company or which is possessed of property,
assets or rights suitable for any of the purposes of the Company, and on any
terms whatsoever.

 

y)               To
procure the Company or any branch
or representative of the Company to be registered or recognised in any country
or place abroad or with any applicable regulatory authority in any part of the world.

 

iv

 

z)                 To
obtain any provisional or other
order or Act of Parliament of the United Kingdom or of the legislature of any
other state or jurisdiction for enabling the Company to carry any of its
objects into effect, or for effecting any modifications to the Company’s
constitution, or for any other purpose which may seem expedient, and to
oppose or make representations in connection with any proceeding, proposal or
application which may seem calculated, directly or indirectly, to
prejudice the Company’s interest.

 

aa)          To appoint any person or persons, firm or firms, company or companies to
be the attorney or agents of the Company and to act as agents, managers, secretaries,
contractors, or in similar capacity.

 

ab)         To insure the life of any person who may, in the opinion of the Company,
be of value to the Company as having or holding for the Company interests, goodwill
or influence or other assets and to pay the premiums on such insurance.

 

ac)   To establish and maintain or procure the establishment and
maintenance of contributory or non-contributory pension or superannuation funds
for the benefit of the persons referred to below, to grant emoluments, pensions,
allowances, donations, gratuities, loans and bonuses to such persons and to make
payments for or towards insurance on the life or lives of such persons; to
establish, subsidise, subscribe to or otherwise support any institution, association,
society, club, trust, other establishment, or fund, the support of which may,
in the opinion of the Company, be calculated directly or indirectly to benefit
the Company or any such person, or may be connected with any place where
the Company carries on business; to institute and maintain any institution,
association, society, club, trust or other establishment or profit-sharing
scheme, share incentive scheme or employees’ share scheme calculated to advance
the interests of the Company or to benefit such persons; to institute and
maintain or assist in the institution or maintenance of any scheme calculated
to promote the purchase or holding of shares of or securities in the Company by
the public, any section thereof or such persons; and, subject to the
provisions of the Companies Acts 1985 and 1989, to lend money or make payments
to, or guarantee or give an indemnity in respect of, or give any financial or
other assistance to, any such person, or trustees on their behalf or any other
person, for the purposes of, or to facilitate the institution or maintenance of,
any such scheme; to join, participate in and subsidise or assist any
association of employers or employees or any trade association; and to
subscribe or guarantee money for charitable or benevolent objects or for any
public, general or useful object or for any exhibition; the said persons are any
persons who are or were at any time in the employment or service of the Company
or any of its businesses or of any company which was or is for the time being
the holding company or a subsidiary (both as defined by section 736
Companies Act 1985) or a subsidiary undertaking (as defined by section 258
Companies Act 1985) of the Company or of the Company’s holding company or are
or were otherwise associated with the Company or any of its businesses or who
are or were at any time directors or officers of the Company or of such other
company as aforesaid, or holding or who hold or has held any salaried
employment or office in the Company or such other company, and the families (including
former spouses) of them or any person who is or was dependant on them.

 

ad)         To purchase and maintain insurance for the benefit of any persons who
are or were at any time directors, officers or employees of the Company or any
other company which is a subsidiary or subsidiary undertaking of the Company or
in which the Company has any interest, whether direct or indirect, or who are
or were at any time trustees of any pension fund in which any employee of the
Company or of any other such company or subsidiary undertaking are or have been
interested indemnifying such persons against

 

v

 

liability for negligence, default, breach of duty or breach of trust or any
other liabilities which may be lawfully insured against.

 

ae)          To take, make, execute, enter into, commence, carry on, prosecute or defend all steps, claims,
demands, contracts, agreements, negotiations, legal and other proceedings,
compromises, arrangements and schemes, and to do all other acts, matters and
things which shall at any time
appear conducive or expedient for
the advantage or protection of the Company.

 

af)            To do all or any of the above things in any part of
the world and either as principals, agents, attorneys, contractors, trustees, or otherwise and
either alone or in conjunction
with others.

 

ag)         To carry on business as a general commercial company.

 

ah)         To do all such acts or things as are incidental or conducive to the
attainment of the above objects or
any of them.

 

It
is hereby declared that:

 

a)                   the word “company” in this clause 4, except
where used in reference to the Company, shall be deemed to include any
partnership or other body of person, whether incorporated or not incorporated, and whether domiciled in
the United Kingdom or elsewhere, and whether now existing or
hereafter to be formed; and

 

b)                  the
objects set forth in each sub-clause of this clause 4 shall not be
restrictively construed but the widest interpretation shall be given
thereto and they shall not, except
where the context expressly so requires, be in any way limited or restricted by
application of the ejusdem generis
rule or by reference to or inference from any other object or objects set forth
in such sub-clause or form the terms of any other sub-clause or by the
name of the Company; none of such sub-clauses or the object or objects therein
specified or the powers thereby
conferred shall be deemed
subsidiary or ancillary to the objects or powers mentioned in any other sub-clause, but the Company shall have
full power to excercise all or any of the objects conferred by and provided in
each of the said sub clauses as if each sub-clause contained the objects of a
separate company.

 

5.                    The liability of the Members
is limited.

 

6.                    The Capital of the Company is £4,500,000,
divided into 450,000 shares of £10
each, with power to increase. The shares forming the capital (original or
increased) of the Company may be divided into such classes, with such
preferences and other special incidents, and be held on such terms as may be
provided by the Articles and Regulations
of the Company for the time being, or
otherwise.

 

Notes:

 

(1)                                  By Special Resolution passed on 15th
August, 1908, and confirmed on 31th August, 1908, the Authorised
Capital was increased to £7,000,000 by the creation of 2,500,000 additional Ordinary Shares of £1 and each of the
existing Shares of £10 each was subdivided
into 10 Ordinary Shares of £1.

 

(2)                                  By Special Resolution passed on 12th
May, 1923, and confirmed on 28th May, 1923, the Authorised Capital
was further increased to £9,500,000 by the creation of 2,500,000 additional
Ordinary Shares of £1.

 

(3)                                  By Ordinary Resolution passed on 5th
May, 1952, the Authorised Capital was further increased to £14,500,000 by the
creation of 5,000,000 new Ordinary Shares of £1.

 

vi

 

(4)                                  By Special Resolution passed on 12th
January, 1961, the Authorised Capital was further increased to £19,500,000 by
the creation of 5,000,000 new Ordinary Shares of £1.

 

(5)                                  By Special Resolution passed on 16th
January, 1964, the Authorised Capital was further increased to £26,500,000 by
the creation of 3,500,000 6 per cent. Cumulative Preference Shares of £1 each
and 7,000,000 new Ordinary Shares of 10s each.

 

(6)                                  By further Special Resolution passed on 16th January, 1964, it was resolved that as from 27th January, 1964, the
Ordinary Stock of the Company should be transferable in units of five shillings
or multiples thereof.

 

(7)                                  By Special Resolutions passed an 9th February, 1971, the Authorised Capital
was reduced to £21,000,000. Following a Court Order of 22nd March, 1971, the £5,500,000 6 per cent
Cumulative Preference Stock was extinguished, and the Capital forthwith increased
to £26,500,000 and divided into £21,000,000 Ordinary
Stock and 22,000,000 Ordinary shares of 25p each.

 

(8)                                  By Ordinary Resolutions passed on 10th
February, 1977, the Capital was reorganised and at 28th February,
1977, consisted of £21,552,871.75 Ordinary Stock and 19,788,513 Ordinary Shares of 25p each.

 

(9)           Between 28th
March, 1979 and 6th August, 1979, the
issued capital of the Company was increased by 1,763,560 Ordinary Shares of 25p
each, the Capital then being £21,993,761.75 (87,975,047 stock units of 25p each)
issued, and £4,506,238.25 (18,024,953 shares of 25p each) un-issued.

 

(10)                            By Ordinary Resolutions passed on 7th
February, 1980, the Authorised Capital was increased to £53,000,000 by the
creation of 106,000,000 Ordinary Shares of 25p each and, pursuant to a
resolution capitalising reserves, the issued capital was increased by 87, 975,047
Ordinary stock units of 25p each.

 

(11)                            By Ordinary Resolution passed on 28th
February, 1985, the Authorised Capital was increase to £65,000,000 by the
creation of 48,000,000 Ordinary Shares of
25p each.

 

(12)                            By Ordinary Resolution passed on 17th
July, 1985, the Authorised Capital was increased to £112,000,000 by the creation of 188,000,000 Ordinary Shares
of 25p each.

 

(13)                            By Ordinary Resolution passed on 26th March, 1986, the
Authorised Capital was increased
to £314,000,000 by the creation of
808,000,000 Ordinary Shares of 25p each, and by Special Resolution passed on 26th
March, 1986, the Authorised Capital was further increased to £644,000,000 by
the creation of 330,000,000 53/4 per cent. Convertible
Cumulative Redeemable Preference Shares of £1 each.

 

(14)                            Under the authority conferred by the Special Resolution passed on the 26th March,
1986, the Board of the Company
resolved to effect conversion of 38,698,876 of the 53/4 per
cent. Convertible Cumulative Redeemable Preference Shares of £1 each in the Company
on the 1st June, 1990, in accordance with paragraph 3.5 (ii) of the Schedule of
the Articles of Association of the Company. As a result of this, the Authorised
Capital on the 1st June, 1990, was £644,000,000 divided into 1,266,835,684 Ordinary Shares of 25p each, 291,301,124 53/4 per
cent. Convertible Cumulative Redeemable
Preference Shares of £1 each, and 143,959,820 Unclassified Shares of 25p each.

 

(15)                            Under the authority conferred by the Special
Resolution passed on 16th May, 1991, the 143,959,820 Unclassified
Shares of 25p each in the capital of the Company were redesignated as 143,959,820
Ordinary Shares of 25p each. As a result of this, the Authorised Capital on 16th May, 1991, was £644,000,000
divided into 1,410,795,504 Ordinary Shares of

 

vii

 

25p
each and 291,301,124 53/4 per cent Convertible Cumulative
Redeemable Preference Shares of £1 each.

 

(16)                            By Ordinary Resolutions passed on 17th
October, 1991, the Authorised Capital was increased to £955,000,000 by the
creation of 1,244,000,000 Ordinary Shares of 25p each. As a result of this, the
Authorised Capital on 17th October, 1991, was £955,000,000 divided
into 2,654,795,504 Ordinary Shares of 25p each, 291,301,124 53/4
per cent. Convertible Cumulative redeemable Preference Shares of £1 each.

 

(17)         By a Special
Resolution passed on 16th May, 1996, the 291,301,124 53/4
per cent. Convertible Cumulative Redeemable Preference Shares of £1 each were
redesignated by Ordinary Shares of 25p each. As a result of this, the
authorised capital on 16th May, 1996, was £955,000,000 divided into
3,820,000,000 Ordinary Shares of 25p each.

 

(18)                            By an
Ordinary Resolution passed on 26th November, 1997, the Authorised
Capital was increased to £1,455,000,000 by the
creation of 2,000,000,000 Ordinary Shares of 25p each.

 

(19)                            By a Special Resolution passed on 28th
January 1998 the Authorised Capital was increased to £4,355,367,647 by the
creation of 563,500,000 B Shares of 514 12/17p each and
the Ordinary Share capital of the Company was subdivided and consolidated into Ordinary
Shares of 28 101/108p each.
Following the cancellation of certain fractions of such Ordinary Shares, the
Company’s Authorised Capital on 2nd February, 1998, was £4,355,367,647,
made up of 5,028,480,000 Ordinary Shares of 28 101/108p each and B Shares of 514 12/17p
each.

 

(20)                            By a Special
Resolution passed on 22nd December, 1997, and a resolution of a duly
appointed committee of the Board of the Company, on 1st August,
1998, 17,599,679 B Shares of 514 12/17p each
were consolidated and subdivided into 12,494,701 Ordinary Shares of 28 101/108p each, 8,697,121,817 Deferred Shares of 1p
each and 1 Deferred Shares of 4.63p. Under the terms of the Deferred Shares, on
7th August, 1998, 8,697,121,817 Deferred Shares of 1p each and
1 Deferred Share of 4.63p were redeemed by the Company for a total aggregate
consideration of 1 p. By a Special Resolution passed on 22nd
December, 1997 and a resolution of a duly appointed committee of the Board of
the Company, on 7th August, 1998, 8,697,121,817 Deferred Shares of
1p each and 1 Deferred Share of 4.63p were consolidated and subdivided into
300,572,530 Ordinary Shares of 28 101/108p, each 4 Deferred Share of 1 p each and 1
Deferred Share of 0.499p.

 

(21)                            By an Ordinary Resolution passed on 11th
August, 1998, the Authorised Capital was reduced to £1,541,971,209 by the
cancellation of 30 Ordinary Shares of 28 101/108p each, 4
Deferred Shares of 1p each, 1 Deferred Share of 0.499p, and all the B Shares of
514 12/17p
each. As a result of this, the Authorised Capital on 11th August, 1998,
was £1,541,971,209 divided into 5,329,052,500 Ordinary Shares of 28 101/108p each.

 

viii

 

WE, the several persons
whose names and addresses are subscribed, are desirous of being formed into a
Company in pursuance of this Memorandum of Association, and we respectively
agree to take the number of shares in the capital of the Company set opposite
to our respective names.

 

	
   

  	
   

  	
  Number
  of Shares

  
	
   

  	
   

  	
  taken by
  each

  
	
  NAMES, ADDRESSES AND
  DESCRIPTIONS OF SUBSCRIBERS

  	
   

  	
  Subscriber

  
	
   

  	
   

  	
   

  
	
  REVELSTOKE

  	
   

  	
  One

  
	
  8,
  Bishopsgate Street Within,

  	
   

  	
   

  
	
  Kingsway,

  	
   

  	
   

  
	
  London,
  E.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  H. HOSKIER,

  	
   

  	
  One

  
	
  Coney
  Hill,

  	
   

  	
   

  
	
  Hayes,

  	
   

  	
   

  
	
  Kent.

  	
   

  	
   

  
	
  Esquire

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CASTLEROSSE,

  	
   

  	
  One

  
	
  Killarney House,

  	
   

  	
   

  
	
  Ireland.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HENRY R. GLYN,

  	
   

  	
  One

  
	
  67, Lombard
  Street,

  	
   

  	
   

  
	
  London, E.C.

  	
   

  	
   

  
	
  Banker

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CLAUDE GUINNESS,

  	
   

  	
  One

  
	
  18, Kildare
  Street,

  	
   

  	
   

  
	
  Dublin.

  	
   

  	
   

  
	
  Brewer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wm. J. WALPOLE,

  	
   

  	
  One

  
	
  8 Bishopsgate
  Street Within,

  	
   

  	
   

  
	
  London, E.C.

  	
   

  	
   

  
	
  Clerk

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EDWARD C. GUINNESS

  	
   

  	
  One

  
	
  St. James’ Gate,

  	
   

  	
   

  
	
  Dublin.

  	
   

  	
   

  
	
  Baronet

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  
	
  Dated the 21st day of
  October, 1886.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CHARLES STEWART,

  	
   

  	
   

  
	
  57, Coleman
  Street,

  	
   

  	
   

  
	
  London, E.C.,

  	
   

  	
   

  

 

ix

 

Company Number: 23307

 

THE COMPANIES ACTS
1985 TO 1989

 

COMPANY LIMITED BY
SHARES

 

ORDINARY AND
SPECIAL RESOLUTIONS

 

of

 

Diageo
plc

 

Passed on 18 October 2005

 

At the ANNUAL GENERAL
MEETING of the above-named Company duly convened and held at The Queen
Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London, SW1P 3EE
on Tuesday, 18 October 2005, the following Resolutions were duly passed:

 

ORDINARY RESOLUTION

 

On the proposal of the
Chairman, IT WAS RESOLVED as an ORDINARY RESOLUTION THAT in substitution for
all other such authorities but without prejudice to any issue of relevant
securities made (or offered or agreed to be made) pursuant to such authorities,
the authority conferred on the directors by paragraph 4.2 of article 4 of
the Company’s articles of association be renewed for a period expiring at the
conclusion of the next Annual General Meeting of the company or on 17 January 2007,
whichever is the sooner, and for such period the maximum amount of relevant
securities which the directors may so allot (the ‘section 80 prescribed
amount’ referred to in Article 4.2) shall be £291,272,000.

 

SPECIAL RESOLUTION

 

On the proposal of the
Chairman, IT WAS RESOLVED as a SPECIAL RESOLUTION THAT for the purposes of
paragraph 4.3 of article 4 of the company’s articles of association the
directors be hereby authorised, pursuant to section 95 of the Companies
Act 1985 (as amended) to allot equity securities (within the meaning of section 94
of that Act) for cash pursuant to the authority conferred by the previous
resolution and/or where such allotment constitutes an allotment of equity
securities by virtue of section 94(3A) of that Act, as if section 89(1) of
that Act did not apply to any such allotment, for a period expiring at the
conclusion of the next Annual General Meeting of the company or on 17 January 2007,
whichever is the sooner, and for such period the maximum amount of equity
securities which the directors may so allot in accordance with paragraph
4.4(c) of article 4 (the ‘section 95 prescribed amount’ referred
to in paragraph 4.4(c) of article 4) shall be £44,132,121.

 

SPECIAL RESOLUTION

 

On the proposal of the
Chairman, IT WAS RESOLVED as a SPECIAL RESOLUTION THAT the company be hereby
generally and unconditionally authorised to make market purchases (within the
meaning of Section 163 of the Companies Act 1985 (as amended)) of its
ordinary shares of 28 101/108 pence each subject to the following restrictions
and provisions:

 

 

(a)               the maximum number of ordinary shares
hereby authorised to be purchased is 305,041,222;

 

(b)              the minimum price which may be paid for
an ordinary share is 28 101/108 pence and the maximum price which may be
paid is an amount equal to 105 per cent of the average of the
middle market quotations for an ordinary share as derived from the London Stock
Exchange Daily Official List for the five business days immediately preceding
the day on which the ordinary share is contracted to be purchased; and

 

(c)               unless previously revoked or varied, this
authority shall expire at the conclusion of the next Annual General Meeting, or
on 17 January 2007, whichever is the sooner, but the company may enter
into a contract to purchase ordinary shares under this authority before the
expiry of such authority which will or may be executed wholly or partly
after the expiry of such authority, and may make a purchase of ordinary
shares pursuant to any such contract.

 

SPECIAL RESOLUTION

 

On
the proposal of the Chairman, IT WAS RESOLVED as a SPECIAL RESOLUTION THAT the
proposed new articles of association produced to the meeting and initialled by
the Chairman for the purpose of identification be hereby adopted as the
articles of association of the company in substitution for and to the exclusion
of the company’s existing articles of association.

 

	
   

  	
   

  
	
  Susanne
  Bunn

  
	
  Company
  Secretary

  
	
  21
  October 2005

  

 

 

 

 

ARTICLES OF ASSOCIATION

 

of

 

DIAGEO PLC 

 

(adopted by special resolution on 18 October 2005)

 

Interpretation

 

1.                                      Exclusion of Table A

 

No
regulations set out in any statute,
or in any statutory instrument or other subordinate legislation made under any
statute, concerning companies shall apply as the regulations or articles of the
company.

 

2.                                      Definitions

 

In
these articles unless the context otherwise requires:-

 

“address”, in relation to electronic communications, includes any number or
address used for the purposes of such communications;

 

“approved depositary” means any custodian or other person (or a nominee for such custodian or
other person) who holds or is interested in shares of the company (or rights or
interests in shares of the company) and issues securities, documents of title
or documents otherwise evidencing the entitlement of the holder thereof to or
to receive such shares, rights or interests, provided and to the extent that
such arrangements have been contractually agreed with the company or otherwise
approved by the board, in each case for the purpose of these articles, and
including (without limitation):

 

(i)                  the trustees (acting in their capacity as
such) of any employees’ share scheme established by the company or any other
scheme or arrangement principally for the benefit of employees of the company
and/or any of its subsidiary undertakings, which has been approved by the
company in general meeting;

 

(ii)               the managers (acting in their capacity as
such) of any investment or savings
plan which the board has approved; and

 

(iii)            members holding shares of the company within
CREST on behalf of the beneficial owners of such shares;

 

“these articles” means these articles of association as altered from time to time and
the expression “this article” shall be
construed accordingly;

 

 

“the auditors” means the auditors from time to time of the company or. in the case of
joint auditors, any one of them;

 

“the board” means the board of directors from time to time of the company or the
directors present at a meeting of the directors at which a quorum is present;

 

“certificated share” means a share which is not an uncertificated share and references in
these articles to a share being held in certificated form shall be
construed accordingly;

 

“clear days” in relation to the period of a notice means that period excluding the
day when the notice is served or deemed to be served and the day for which it
is given or on which it is to take effect;

 

“the Companies Acts” means every statute (including any orders, regulations or other
subordinate legislation made under it) from time to time in force concerning
companies in so far as it applies to the company;

 

“electronic signature” means anything in electronic form which the board requires to be incorporated
into or otherwise associated with an electronic communication for the purpose
of establishing the authenticity or integrity of the communication;

 

“the holder” in relation to any shares means the member whose name is entered in the
register as the holder of those shares;

 

“the Listing Rules” means the rules which are made from time to time by the relevant
competent authority for the purposes of the regulation of the official listing
of the company’s securities;

 

“member”
means a member of the company;

 

“the office” means the registered office from time to time of the company;

 

“paid up”
means paid up or credited as paid up;

 

“participating class” means a class of shares title to which is permitted by an operator
to be transferred by means of a relevant system;

 

“person entitled by transmission” means a person whose entitlement to a share
in consequence of the death or bankruptcy of a member or of any
other event giving rise to its transmission by operation of law has been noted
in the register;

 

“the register” means the register of members of the company;

 

“seal”
means any common or official seal that the company may be permitted to have
under the Companies Acts;

 

2

 

“the secretary” means the secretary, or (if there are joint secretaries) any one of the
joint secretaries, of the company and includes an assistant or deputy secretary
and any person appointed by the board to perform any of the duties of the
secretary;

 

“uncertificated share” means a share of a class which is at the relevant time a participating
class title to which is recorded on the register as being held in
uncertificated form and references in these articles to a share being held
in uncertificated form shall be construed accordingly;

 

“the Uncertificated Securities Regulations” means the Uncertificated Securities
Regulations 2001 as amended from time to time and any provisions of or under
the Companies Acts which supplement or replace such Regulations;

 

“United Kingdom” means Great Britain and Northern Ireland;

 

references to a document being “executed”
include references to its being executed under hand or under seal or by any
other method except by means of an electronic signature;

 

references to a document being “signed”
or to “signature” include references
to its being executed under hand or under seal or by any other method and, in
the case of an electronic communication, such references are to its bearing an
electronic signature;

 

references to “writing”
include references to any method of representing or reproducing words in a
legible and non-transitory form including by way of electronic
communications where specifically provided in a particular article or
where permitted by the board in its absolute discretion;

 

words or expressions to which a particular meaning is given by the
Companies Acts in force when these articles or any part of these articles
are adopted bear (if not inconsistent with the subject matter or context) the
same meaning in these articles or that part (as the case may be) save
that:

 

(i)                                     the word “company”
shall include any body corporate; and

 

(ii)                                  the expression “electronic
communication” shall have the meaning given by the Company Acts
as amended from time to time; and

 

references to a “meeting”
shall not be taken as requiring more than one person to be present if any
quorum requirement can be satisfied by one person.

 

Headings are included only for convenience and shall not affect meaning.

 

3.                                      Form of Resolution

 

(A)                              Where for any purpose an ordinary resolution
of the company is required, a special or extraordinary resolution shall also be
effective and where for any

 

3

 

purpose an extraordinary resolution is required a special resolution
shall also be effective.

 

(B)                                Subject to the Companies Acts, a resolution in
writing signed by or on behalf of each member who would have been entitled to
vote upon it if it had been proposed at a general meeting at which he was
present shall be as effectual as if it had been passed at a general meeting
properly convened and held and may consist of several instruments in the
like form each signed by or on behalf of one or more of the members. In
this paragraph of this article references to in writing include the use of
electronic communications subject to such terms and conditions as the board may decide.

 

Share Capital

 

4.                                      Authorised Share Capital

 

The
authorised share capital of the company at the date of adoption of this article is
£1,541,971,209.00 divided into 5,329,052,500 ordinary shares of 28 101/108
pence each.

 

5.                                      Rights Attached to Shares

 

Subject
to the provisions of the Companies Acts and to any rights attached to existing
shares, any share may be issued with or have attached to it such rights
and restrictions as the company may by ordinary resolution decide or, if
no such resolution has been passed or so far as the resolution does not make
specific provision, as the board may decide.

 

6.                                      Redeemable Shares

 

Subject
to the provisions of the Companies Acts and to any rights attached to existing
shares, any share may be issued which is to be redeemed, or is liable to
be redeemed at the option of the company or the holder.

 

7.                                      Purchase of Own Shares

 

Subject
to the provisions of the Companies Acts and to any rights attached to existing
shares, the company may purchase or may enter into a contract under
which it will or may purchase all or any of its shares of any class,
including any redeemable shares. Neither the company nor the board shall be
required to select the shares to be purchased rateably or in any other
particular manner as between the holders of shares of the same class or as
between them and the holders of shares of any other class or in accordance
with the rights as to dividends or capital conferred by any class of
shares.

 

8.                                      Variation of Rights

 

Subject
to the provisions of the Companies Acts, all or any of the rights attached to
any existing class of shares may from time to time (whether or not
the company is being wound up) be varied either with the consent in writing of
the holders of not less than three-fourths in nominal value of the issued
shares of that class (excluding any shares of that class held as
treasury

 

4

 

shares)
or with the sanction of an extraordinary resolution passed at a separate
general meeting of the holders of those shares. All the provisions of these
articles as to general meetings of the company shall, with any necessary
modifications, apply to any such separate general meeting, but so that the
necessary quorum shall be two persons entitled to vote and holding or
representing by proxy not less than one-third in nominal value of the issued
shares of the class (excluding any shares of that class held as
treasury shares), (but so that at any adjourned meeting one holder entitled to
vote and present in person or by proxy (whatever the number of shares held by
him) shall be a quorum), that every holder of shares of the class present
in person or by proxy and entitled to vote shall be entitled on a poll to one
vote for every share of the class held by him (subject to any rights or
restrictions attached to any class of shares) and that any holder of
shares of the class present in person or by proxy and entitled to vote may demand
a poll. The foregoing provisions of this article shall apply to the
variation of the special rights attached to some only of the shares of any class as
if each group of shares of the class differently treated formed a separate
class and their special rights were to be varied.

 

9.                                      Pari Passu Issues

 

The
rights conferred upon the holders of any shares shall not, unless otherwise
expressly provided in the rights attaching to those shares, be deemed to be
varied by the creation or issue of further shares ranking pari passu with them.

 

10.                               Unissued Shares

 

(A)                              Subject to the provisions of the Companies
Acts and these articles and to any resolution passed by the company and without
prejudice to any rights attached to existing shares, the unissued shares of the
company (whether forming part of the original or any increased capital)
shall be at the disposal of the board which may offer, allot, grant
options over or otherwise deal with or dispose of them to such persons, at such
times and for such consideration and upon such terms as the board may decide,
provided that the shares of the company shall not be allotted at a discount and
shall not be allotted except as paid up at least as to one quarter of their
nominal value and the whole of any premium thereon.

 

(B)           (i)                                     The company may, with the sanction of a
resolution of the company expressed to be made pursuant to this article 10(B) (a
“section 80 resolution”)
generally and unconditionally authorise the board (in substitution for all
subsisting authorities, unless otherwise expressed in the section 80 resolution) to exercise
all the powers of the company to allot relevant securities up to an aggregate
nominal amount specified in the resolution as the “section 80 prescribed amount”.

 

(ii)                                  Each section 80 resolution shall specify
the date on which the authority granted thereby shall expire, such date being
not more than five years after the date of such section 80 resolution.

 

(iii)                               The company, before the expiry of the
authority granted in a section 80 resolution, may make an offer or
agreement which would or might require relevant securities to be allotted after
such expiry. The board

 

5

 

may allot relevant securities in pursuance of such an offer or
agreement as if the authority had not expired.

 

(C)                                The board may be empowered, with the
sanction of a special resolution of the company passed pursuant to section 95
of the Companies Act 1985 (a “section 95 resolution”),
to allot equity securities for cash pursuant to the authority conferred by a section 80
resolution, and/or where such allotment constitutes an allotment of equity
securities by virtue of section 94{3A) of the Companies Act 1985, as if
sub-section (1) of section 89 of that Act did not apply to any
such allotment, provided that this power shall (unless otherwise specified by
the section 95 resolution) be limited to:

 

(i)                                     the allotment of equity securities in
connection with a rights issue, open offer, or any other issue in favour of
holders of ordinary shares (excluding any shareholders holding shares as treasury
shares) where the equity securities respectively attributable to the interests
of all such persons on a fixed record date are proportionate (as nearly as may be)
to the respective number of ordinary shares held by them or are otherwise
allotted in accordance with the rights attaching to such securities (but
subject to such exclusions and other arrangements as the board may deem
necessary or expedient in relation to fractional entitlements or legal or
practical problems arising by virtue of equity securities being represented by
American Depositary Receipts or under the laws of, or the requirements of, any
regulatory body or any stock exchange in any territory or any other matter
whatsoever);

 

(ii)                                  the allotment of equity securities pursuant to
options granted under the company’s share option schemes for employees of joint
ventures in which the company and/or any of its subsidiary undertakings
participates; and

 

(iii)                               the allotment (otherwise than pursuant to
sub-paragraph (i) above) of equity securities up to an aggregate nominal
value equal to the amount specified in the section 95 resolution as the “section 95
prescribed amount”.

 

(D)                               The power granted by a section 95
resolution shall expire on the earlier of:

 

(i)                                     the conclusion of the next annual general
meeting of the company, or

 

(ii)                                  the date falling 15 months after the date of
the passing of the section 95 resolution,

 

save that the company may before the expiry of such power make an
offer or agreement which would or might require equity securities to be
allotted in pursuance of such offer or agreement as if that power had not
expired.

 

6

 

11.                               Payment of Commission

 

The
company may in connection with the issue of any shares exercise all powers
of paying commission and brokerage conferred or permitted by the Companies
Acts. Subject to the provisions of the Companies Acts, any such commission or
brokerage may be satisfied by the payment of cash, or by the allotment of
fully or partly-paid shares or by the grant of an option to call for an allotment
of shares or by any combination of these.

 

12.                               Trusts Not Recognised

 

Except
as ordered by a court of competent jurisdiction or as required by law, no
person shall be recognised by the company as holding any share upon any trust
and the company shall not be bound by or required in any way to recognise (even
when having notice of it) any interest in any share or (except only as by these
articles or by law otherwise provided) any other right in respect of any share
other than an absolute right to the whole of the share in the holder.

 

13.                               Suspension of Rights Where
Non-Disclosure of Interest

 

(A)                              Where the holder of any shares in the company,
or any other person appearing to be interested in those shares, fails to comply
within the relevant period with any statutory notice in respect of those shares
or, in purported compliance with such a notice, has made a statement which
is false or inadequate in a material particular, the company may give the
holder of those shares a further notice (a “restriction
notice”) to the effect that from the service of the restriction
notice those shares will be subject to some or all of the relevant
restrictions, and from service of the restriction notice those shares shall,
notwithstanding any other provision of these articles, be subject to those
relevant restrictions accordingly. For the purpose of enforcing the relevant restriction
referred to in sub-paragraph (iii) of the definition of “relevant
restrictions”, the board may give notice to the relevant member requiring
the member to change the relevant shares held in uncertificated form to
certificated form by the time stated in the notice. The notice may also
state that the member may not change any of the relevant shares held in
certificated form to uncertificated form. If the member does not comply
with the notice, the board may authorise any person to instruct the
operator to change the relevant shares held in uncertificated form to certificated
form.

 

(B)                                If after the service of a restriction notice
in respect of any shares the board is satisfied that all information required
by any statutory notice relating to those shares or any of them from their
holder or any other person appearing to be interested in the shares the subject
of the restriction notice has been supplied, the company shall, within seven
days, cancel the restriction notice. The company may at any time at its
discretion cancel any restriction notice or exclude any shares from it. The
company shall cancel a restriction notice within seven
days after receipt of a notice in writing that the relevant shares have been transferred
pursuant to an arm’s length sale.

 

7

 

(C)                                Where any restriction notice is cancelled or
ceases to have effect in relation to any shares, any moneys relating to those
shares which were withheld by reason of that notice shall be paid without
interest to the person who would but for the notice have been entitled to them
or as he may direct.

 

(D)                               Any new shares in the company issued in right
of any shares subject to a restriction notice shall also be subject to the
restriction notice, and the board may make any right to an allotment of
the new shares subject to restrictions corresponding to those which will apply
to those shares by reason of the restriction notice when such shares are
issued.

 

(E)                                 Any holder of shares on whom a restriction
notice has been served may at any time request the company to give in
writing the reason why the restriction notice has been served, or why it
remains uncancelled, and within 14 days of receipt of such a notice the company
shall give that information accordingly.

 

(F)                                 If a statutory notice is given by the company
to a person appearing to be interested in any share, a copy shall at the same
time be given to the holder, but the failure or omission to do so or the
non-receipt of the copy by the holder shall not invalidate such notice.

 

(G)                                Where shares subject to a restriction notice,
in which a person appears to be interested, are held by an
approved depository, the provisions of this article 13 shall be treated as
applying only to those shares held by the approved depository in which such
person appears to be interested and not to any other shares held by the
approved depository.

 

(H)                               Where the member on which a statutory notice
is served is an approved depository acting in its capacity as such, the
disclosure obligations of the approved depository as a member of the company
for the purposes of that statutory notice shall be limited to disclosing to the
company such information relating to any person appearing to be interested in
the shares held by the approved depository as has been recorded by the approved
depository pursuant to arrangements entered into with the company or approved
by the board and pursuant to which the approved depository was appointed.

 

(I)                                    This article is in addition to, and shall
not in any way prejudice or affect, the statutory rights of the company arising
from any failure by any person to give any information required by a statutory
notice within the time specified in it. For the purpose of this article a
statutory notice need not specify the relevant period, and may require any
information to be given before the expiry of the relevant period.

 

(J)                                   In this article:-

 

a sale is an “arm’s length sale”
if the board is satisfied that it is a bona fide sale of the whole of the
beneficial ownership of the shares to a party unconnected with the holder or
with any person appearing to be

 

8

 

interested in such shares and shall include a sale made by way of or in
pursuance of acceptance of a takeover offer and a sale made through a
recognised investment exchange or any other stock exchange outside the United
Kingdom. For this purpose an associate (within the definition of that
expression in any statute relating to insolvency in force at the date of
adoption of this article) shall be included amongst the persons who are
connected with the holder or any person appearing to be interested in such
shares;

 

“person appearing to be interested”
in any shares shall mean any person named in a response to a statutory notice
or otherwise notified to the company by a member as being so interested or
shown in any register or record kept by the company under the Companies Acts as
so interested or, taking into account a response or failure to respond in the
light of the response to any other statutory notice and any other relevant
information in the possession of the company, any person whom the company knows
or has reasonable cause to believe is or may be so interested;

 

“person with a 0.25 per cent. interest”
means a person who holds, or is shown in any register or record kept by the
company under the Companies Acts as having an interest in, shares in the
company which comprise in total at least 0.25 per cent. in number or nominal value of the shares of the company
(calculated exclusive of any shares held as treasury shares), or of any class of
such shares (calculated exclusive of any shares of that class held as
treasury shares), in issue at the date of service of the restriction notice;

 

“relevant period” means a
period of 14 days following service of a statutory notice;

 

“relevant restrictions” mean in
the case of a restriction notice served on a person with a 0.25 per cent.
interest that:-

 

(i)                  the shares shall not confer on the holder any
right to attend or vote either personally or by proxy at any general meeting of
the company or at any separate general meeting of the holders of any class of
shares in the company or to exercise any other right conferred by membership in
relation to general meetings;

 

(ii)               the board may withhold payment of all or
any part of any dividends or other moneys payable in respect of the shares
and the holder shall not be entitled to receive shares in lieu of dividend;

 

(iii)            the board may decline to register a
transfer of any of the shares which are certificated shares, unless such a
transfer is pursuant to an arm’s length sale.

 

9

 

and in any other case mean only the restriction specified in sub-paragraph
(i) of this definition; and

 

“statutory notice” means a
notice served by the company under the Companies Acts requiring particulars of
interests in shares or of the identity of persons interested in shares.

 

14. Uncertificated Shares

 

(A)                              Pursuant and subject to the Uncertificated
Securities Regulations, the board may permit title to shares of any class to
be evidenced otherwise than by a certificate and title to shares of such a class to
be transferred by means of a relevant system and may make arrangements for
a class of shares (if all shares of that class are in all respects
identical) to become a participating class. Title to shares of a particular class may only
be evidenced otherwise than by a certificate where that class of shares is
at the relevant time a participating class. The board may also, subject to
compliance with the Uncertificated Securities Regulations and the rules of
any relevant system, determine at any time that title to any class of
shares may from a date specified by the board no longer be evidenced
otherwise than by a certificate or that title to such a class shall cease to
be transferred by means of any particular relevant system. For the avoidance of
doubt, shares which are uncertificated shares shall not be treated as forming a
class which is separate from certificated shares with the same rights.

 

(B)                                In relation to a class of shares which is
a participating class and for so long as it remains a participating class,
no provision of these articles shall apply or have effect to the extent that it
is inconsistent in any respect with:-

 

(i)                  the holding of shares of that class in
uncertificated form;

 

(ii)               the transfer of title to shares of that class by
means of a relevant system; and

 

(iii)            any provision of the Uncertificated Securities
Regulations,

 

and, without prejudice to the generality of this article, no provision
of these articles shall apply or have effect to the extent that it is in any
respect inconsistent with the maintenance, keeping or entering up by the
operator, so long as that is permitted or required by the Uncertificated
Securities Regulations, of an operator register of securities in respect of
that class of shares in uncertificated form.

 

(C)                                Shares of a class which is at the
relevant time a participating class may be changed from
uncertificated to certificated form, and from certificated to uncertificated form,
in accordance with and subject as provided in the Uncertificated Securities
Regulations and the rules of any relevant system, and

 

10

 

the board shall record on the register of members that the shares are
held in certificated or uncertificated form as appropriate.

 

(D)                               Unless the board otherwise determines or the
Uncertificated Securities Regulations or the rules of the relevant system
concerned otherwise require, any shares issued or created out of or in respect
of any uncertificated shares shall be uncertificated shares and any shares
issued or created out of or in respect of any certificated
shares shall be certificated shares.

 

(E)                                 The company shall be entitled to assume that
the entries on any record of securities maintained by it in accordance with the
Uncertificated Securities Regulations and regularly reconciled with the
relevant operator register of securities are a complete and accurate
reproduction of the particulars entered in the operator register of securities
and shall accordingly not be liable in respect of any act or thing done or
omitted to be done by or on behalf of the company in reliance on such
assumption; in particular, any provision of these articles which requires or
envisages that action will be taken in reliance on information contained in the
register shall be construed to permit that action to be taken in reliance on
information contained in any relevant record of securities (as so maintained
and reconciled).

 

15.                               Right to Share Certificates

 

Every
person (except a person to whom the company is not by law required to issue a
certificate) whose name is entered in the register as a holder of any
certificated shares shall be entitled, without payment, to receive within the
time limits prescribed by the Companies Acts (or, if earlier, within any
prescribed time limit or within a time specified when the shares were issued)
one certificate for all those shares of any one class. In the case of a
certificated share held jointly by several persons, the company shall not be
bound to issue more than one certificate and delivery of a certificate to one
of several joint holders shall be sufficient delivery to all. A member who
transfers some but not all of the shares comprised in a certificate shall be
entitled to a certificate for the balance without charge. If a member requires
additional certificates he shall pay for each additional certificate (other
than a certificate issued pursuant to article 16) such reasonable sum (if
any) as the board may determine.

 

16.                               Replacement of Share Certificates

 

If
a share certificate is defaced, worn out, lost or destroyed, it may be
replaced on such terms (if any) as to evidence and indemnity as the board may decide
and, where it is defaced or worn out, after delivery of the old certificate to
the company. Any two or more certificates representing shares of any one class held
by any member shall at his request be cancelled and a single new certificate
for such shares issued in lieu. Any certificate representing shares of any one class held
by any member may at his request be cancelled and two or more certificates
for such shares may be issued instead. The board may require the
payment of any exceptional out-of-pocket expenses of the company incurred in
connection with the issue of any certificates under this article (Including,
without limiting the generality of the foregoing, any expenses incurred in the
investigation of such request and in the preparation and execution of any such

 

11

 

indemnity).
Any one of two or more joint holders may request replacement certificates
under this article.

 

17.                               Execution of Share
Certificates

 

Every
share certificate shall be executed under a seal or in such other manner as the
board, having regard to the terms of issue and any listing requirements, may authorise
and shall specify the number and class of the shares to which it relates
and the amount or respective amounts paid up on the shares. The board may by
resolution decide, either generally or in any particular case or cases, that
any signatures on any share certificates need not be autographic but may be
applied to the certificates by some mechanical or other means or may be
printed on them or that the certificates need not be signed by any person.

 

Lien

 

18.                               Company’s Lien on Shares Not
Fully Paid

 

The
company shall have a first and paramount lien on every share (not being a fully
paid share) for all amounts payable to the company (whether presently or not)
in respect of that share. The company’s lien on a share shall extend to every
amount payable in respect of it. The board may at any time either
generally or in any particular case waive any lien that has arisen or declare
any share to be wholly or in part exempt from the provisions of this
article.

 

19.                               Enforcing Lien by Sale

 

The
company may sell, in such manner as the board may decide, any share
on which the company has a lien if a sum
in respect of which the lien exists is presently payable and is not paid within
14 clear days after a notice has been served on the holder of the share or the
person who is entitled by transmission to the share, demanding payment and
stating that if the notice is not complied with the share may be sold. For
giving effect to the sale the board may authorise some person to execute
an instrument of transfer of the share sold to or in accordance with the
directions of the purchaser. The transferee shall not be bound to see to the
application of the purchase money, nor shall his title to the share be affected
by any irregularity or invalidity in relation to the sale.

 

20.                               Application of Proceeds of
Sale

 

The
net proceeds, after payment of the costs, of the sale by the company of any
share on which it has a lien shall be applied in or towards payment or
discharge of the debt or liability in respect of which the lien exists so far
as it is presently payable, and any residue shall (subject to a like lien for
debts or liabilities not presently payable as existed upon the share prior to
the sale and upon surrender, if required by the company, for cancellation of
the certificate for the share sold) be paid to the person who was entitled to
the share at the time of the sale.

 

12

 

Calls on Shares

 

21.          Calls

 

Subject
to the terms of issue, the board may from time to time make calls upon the
members in respect of any moneys unpaid on their shares (whether on account of
the nominal amount of the shares or by way of premium) and not payable on a
date fixed by or in accordance with the terms of issue, and each member shall
(subject to the company serving upon him at least 14 clear days’ notice
specifying when and where payment is to be made) pay to the company as required
by the notice the amount called on his shares. A call may be made payable
by instalments. A call may be revoked or postponed, in whole or in part,
as the board may decide. A person upon whom a call is made shall remain
liable jointly and severally with the successors in title to his shares for all
calls made upon him notwithstanding the subsequent transfer of the shares in
respect of which the call was made.

 

22.                               Timing of Calls

 

A
call shall be deemed to have been made at the time when the resolution of the
board authorising the call was passed.

 

23.                               Liability of Joint Holders

 

The
joint holders of a share shall be jointly and severally liable to pay all calls
in respect of the share.

 

24.                               Interest Due on Non-Payment

 

If
a call remains unpaid after it has become due and payable, the person from whom it is due and payable shall
pay all costs, charges and expenses that the company may have incurred by
reason of such non-payment together with interest on the amount unpaid from the
day it is due and payable to the time of actual payment at the rate fixed by
the terms of the allotment of the share or in the notice of the call or, if no
rate is so fixed, at such rate, not exceeding 20 per cent. per annum
(compounded on a six-monthly basis), as the board may decide, but the
board shall be at liberty in any case or cases to waive payment of any sum due
under this article, wholly or in part.

 

25.                               Sums Due on Allotment Treated
as Calls

 

Any
amount which becomes payable in respect of a share on allotment or on any other
date fixed by or in accordance with the terms of issue, whether in respect of
the nominal amount of the share or by way of premium or as an instalment of a
call, shall be deemed to be a call and, if it is not paid, all the provisions
of these articles shall apply as if the sum had become due and payable by
virtue of a call.

 

26.                               Power to Differentiate

 

The
board may on or before the issue of shares differentiate between the
allottees or holders as to the amount of calls to be paid and the times of
payment.

 

13

 

27.                               Payment of Calls in Advance

 

The
board may, if it thinks fit, receive from any member who is willing to advance
them all or any part of the moneys uncalled and unpaid upon any shares
held by him and on all or any of the moneys so advanced may (until they
would, but for the advance, become presently payable) pay interest at such
rate, not exceeding (unless the company by ordinary resolution shall otherwise
direct) 20 per cent. per annum, as the board may decide. The board may at
any time repay the amount so advanced on giving such member not less than three
months’ notice in writing of its intention to do so, unless before the
expiration of such notice the amount so advanced shall have been called up on
the shares in respect of which it was advanced.

 

Forfeiture of Shares

 

28.                               Notice if Call or Instalment
Not Paid

 

If
any call or instalment of a call remains unpaid on any share after the day
appointed for payment, the board may at any time serve a notice on the
holder requiring payment of so much of the call or instalment as is unpaid,
together with any interest which may have accrued and any expenses
incurred by the company by reason of such non-payment.

 

29.                               Form of Notice

 

The
notice shall name a further day (not being less than 14 clear days from the
date of the notice) on or before which, and the place where, the payment
required by the notice is to be made and shall state that in the event of
non-payment on or before the day and at the place appointed, the shares in
respect of which the call has been made or instalment is payable will be liable
to be forfeited.

 

30.                               Forfeiture for Non-Compliance
with Notice

 

If
the notice is not complied with, any share in respect of which it was given
may, at any time before payment of all calls or instalments and interest and
expenses due in respect of it has been made, be forfeited by (and with effect
from the passing of) a resolution of the board to that
effect and the forfeiture shall include all dividends declared and other moneys
payable in respect of the forfeited shares and not paid before the forfeiture.
Unless the board otherwise decides, no holder of such a share is entitled to be
present or vote (whether in person or by proxy) at any meeting, on a show of
hands or on a poll, or to demand a poll
or exercise any other right as a member. The board may accept the
surrender of any share liable to be forfeited and, in that event, references in
these articles to forfeiture shall include surrender.

 

31.                               Notice after Forfeiture

 

When
any share has been forfeited, notice of the forfeiture shall be served upon the
person who was before forfeiture the holder of the share (or on any person
entitled to the share by transmission) and an entry of the forfeiture or
surrender, with the date thereof, shall forthwith be made in the register, but
no forfeiture shall be invalidated by any omission or neglect to give such
notice or make such entry.

 

14

 

32.                               Sale of Forfeited Shares

 

Until
cancelled in accordance with the requirements of the Companies Acts, a
forfeited share shall be deemed to be the property of the company and may be
sold or otherwise disposed of either to the person who was, before forfeiture,
the holder or to any other person upon such terms and in such manner as the
board shall decide. The board may for the purposes of the disposal
authorise some person to execute an instrument of transfer to the designated
transferee. The company may receive the consideration (if any) given for
the share on its disposal. At any time before a sale or disposition the
forfeiture may be cancelled by the board on such terms as the board may decide.

 

33.                               Arrears to be Paid
Notwithstanding Forfeiture

 

A
person whose shares have been forfeited shall cease to be a member in respect
of them and shall surrender to the company for cancellation the certificate for
the forfeited shares but shall remain liable to pay to the company all moneys
which at the date of the forfeiture were payable by him to the company in
respect of those shares with interest thereon at the rate of 20 per cent. per annum
(or such lower rate as the board may decide) from the date of forfeiture
until payment, and the company may enforce payment without being under any
obligation to make any allowance for the value of the shares forfeited or for
any consideration received on their disposal.

 

34.                               Effect of Forfeiture

 

The
forfeiture of a share shall (subject to the Companies Acts and unless otherwise
provided by these articles) involve the extinction from the time of forfeiture
of all interest in and all claims and demands against the company in respect
of, the share and all other rights and liabilities incidental to the share as
between the holder and the company.

 

35.                               Statutory Declaration as to
Forfeiture

 

A
statutory declaration that the declarant is a director of the company or the
secretary and that a share has been forfeited (or sold to satisfy a lien of the
company) on a specified date shall be conclusive evidence of the facts stated
in it as against all persons claiming to be entitled to the share. The
declaration shall (subject to the execution of an instrument of transfer if
necessary) constitute a good
title to the share and the person to whom the share is sold or otherwise
disposed of shall not be bound to see to the application of the purchase money
(if any) nor shall his title to the share be affected by any irregularity or
invalidity in the proceedings relating to the forfeiture, sale or disposal.

 

Transfer of Shares

 

36.                               Transfer

 

(A)                              Subject to such of the restrictions of these
articles as may be applicable:-

 

(i)                  any member may transfer all or any of his
uncertificated shares by means of a relevant system in such manner provided
for, and subject as

 

15

 

provided in, the Uncertificated Securities
Regulations and the rules of any relevant system, and accordingly no
provision of these articles shall apply in respect of an uncertificated share
to the extent that it requires or contemplates the effecting of a transfer by
an instrument in writing or the production of a certificate for the share to be
transferred; and

 

(ii)               any member may transfer all or any of his
certificated shares by an instrument of transfer in any usual form or in
any other form which the board may approve.

 

(B)           The transferor of a share shall be deemed to remain the
holder of the share concerned until the name of the transferee is entered in
the register in respect of it.

 

37.                               Execution of Transfer

 

The
instrument of transfer of a certificated share shall be executed by or on
behalf of the transferor and (in the case of a partly paid share) the
transferee. All instruments of transfer, when registered, may be retained
by the company.

 

38.                               Rights to Decline
Registration of Partly Paid Shares

 

The
board may, in its absolute discretion and without giving any reason for so
doing, decline to register any transfer of any share which is not a fully paid
share.

 

39.                               Other Rights to Decline
Registration

 

(A)                              Registration of a transfer of an uncertificated
share may be refused in the circumstances set out in the Uncertificated
Securities Regulations, and where, in the case of a transfer to joint holders,
the number of joint holders to whom the Uncertificated share is to be
transferred exceeds four.

 

(B)                                The board may decline to register any
transfer of a certificated share unless:-

 

(i)                  the Instrument of transfer is duly stamped or
duly certified or otherwise shown to the satisfaction of the board to be exempt
from stamp duty and is left at the office or such other place as the board may from
time to time determine accompanied (save in the case of a transfer by a person
to whom the company is not required by law to issue a certificate and to whom a
certificate has not been issued) by the certificate for the share to which it
relates and such other evidence as the board may reasonably require to
show the right of the person executing the instrument of transfer to make the
transfer and, if the instrument of transfer is executed by some other person on
his behalf, the authority of that person so to do;

 

(ii)               the instrument of transfer is in respect of
only one class of share; and

 

16

 

(iii)            in the case of a transfer to
joint holders, the number of joint holders to whom the share is to be
transferred does not exceed four.

 

(C)                                For all purposes of these articles relating to
the registration of transfers of shares, the renunciation of the allotment of
any shares by the allottee in favour of some other person shall be deemed to be
a transfer and the board shall have the same powers of refusing to give effect
to such a renunciation as if it were a transfer.

 

40.                               No Fee for Registration

 

No
fee shall be charged by the company for registering any transfer, document or
instruction relating to or affecting the title to any share or for making any
other entry in the register.

 

41.                               Renunciation of Allotment

 

The
board may, at any time after the allotment of any share but before any person
has been entered in the register as the holder, recognise a renunciation
thereof by the allottee in favour of some other person and may accord to
any allottee of a share a right to effect such renunciation upon and subject to
such terms and conditions as the board may decide.

 

42.                               Untraced Shareholders

 

The
company may sell any certificated shares in the company on behalf of the
holder of, or person entitled by transmission to, the shares at the best price
reasonably obtainable at the time of sale if:-

 

(i)                  the shares have been in issue either in
certificated or uncertificated form throughout the qualifying period and
at least three cash dividends have become payable on the shares during the
qualifying period:

 

(ii)               no cash dividend payable on the shares has
either been claimed by presentation to the paying bank of the relevant cheque
or warrant or been satisfied by the transfer of funds to a bank account
designated by the holder of, or person entitled by transmission to, the shares
or by the transfer of funds by means of a relevant system at any time during
the relevant period;

 

(iii)            so far as any director of the company at the
end of the relevant period is then aware, the company has not at any time
during the relevant period received any communication from the holder of, or
person entitled by transmission to, the shares; and

 

(iv)           the company has caused two advertisements to be published, in at least
two newspapers with a national daily circulation in the UK (or, in the case of
a member in the Republic of Ireland Branch Register, a leading national daily
newspaper published in the Republic of Ireland) and in a newspaper circulating
in the area in which the last known postal address of the holder of, or person
entitled by transmission to, the shares or the postal address at which service
of

 

17

 

notices may be effected under these articles is located, giving
notice of its intention to sell the shares, and a period of three months has
elapsed from the date of publication of the advertisements (or of the last of
the advertisements to be published if they are published on different dates).
The advertisements referred to in this article need not refer to the name
of the relevant holder or person or identify the relevant shares concerned.

 

For
the purpose of this article:-

 

“the qualifying period” means the period of 12 years immediately preceding the date of
publication of the advertisements referred to in sub-paragraph  (iv) above
or of the first of the advertisements to be published if they are published on
different dates; and

 

“the relevant period” means the period beginning at the commencement of the qualifying period
and ending on the date when all the requirements of sub-paragraphs  (i) to
(iv) above have been satisfied.

 

To
give effect to any sale of shares pursuant to this article the board may authorise
some person to transfer the shares in question
and an instrument of transfer executed by that person shall be as effective as
if it had been executed by the holder of, or person entitled by transmission
to, the shares. The purchaser shall not be bound to see to the application of
the purchase moneys nor shall his title to the shares be affected by any
irregularity or invalidity in the proceedings relating to the sale. The net
proceeds of sale shall belong to the company and, upon their receipt, the
company shall become indebted to the former holder of, or person entitled by
transmission to, the shares for an amount equal to the net proceeds. No trust
shall be created in respect of the debt and no interest shall be payable in
respect of it and the company shall not be required to account for any moneys
earned from the net proceeds which may be employed in the business of the
company or as it thinks fit.

 

Transmission of Shares

 

43.                               Transmission on Death

 

If
a member dies, the survivor or survivors, where he was a joint holder, and his
personal representatives, where he was a sole holder or the only survivor of
joint holders, shall be the only persons recognised by the company as having
any title to his shares; but nothing contained in these articles shall release
the estate of a deceased holder from any liability in respect of any share held
by him solely or jointly with other persons.

 

44.                               Entry of Transmission in
Register

 

Where
the entitlement of a person to a certificated share in consequence of the death
or bankruptcy of a member or of any other event giving rise to its transmission
by operation of law is proved to the satisfaction of the board, the board shall
within two months after proof cause the entitlement of that person to be noted
in the register.

 

18

 

45.                               Election of Person Entitled
by Transmission

 

Any
person entitled by transmission to a share may, subject as provided elsewhere
in these articles, elect either to become the holder of the share or to have some
person nominated by him registered as the holder. If he elects to be registered
himself he shall give notice to the company to that effect. If he elects to
have another person registered and the share is a certificated share, he shall
execute an instrument of transfer of the share to that person. If he elects to
have himself or another person registered and the share is an uncertificated
share, he shall take any action the board may require (including, without
limitation, the execution of any document and the giving of any instruction by
means of relevant system) to enable himself or that person to be registered as
the holder of the share. The board may at any time require the person to
elect either to be registered himself or to transfer the share and if the
requirements are not complied with within 60 days of being issued the board may withhold
payment of all dividends and other moneys payable in respect of the share until
the requirements have been complied with. All the provisions of these articles
relating to the transfer of, and registration of transfers of, shares shall
apply to the notice or transfer as if the death or bankruptcy of the member or
other event giving rise to the transmission had not occurred and the notice or
transfer was given or executed by the member.

 

46.                               Rights of Person Entitled by
Transmission

 

Where
a person becomes entitled by transmission to a share, the rights of the holder
in relation to that share shall cease, but the person entitled by transmission
to the share may give a good discharge for any dividends or other moneys
payable in respect of it and shall have the same rights in relation to the
share as he would have had if he were the holder of it save that, until he
becomes the holder, he shall not be entitled in respect of the share (except
with the authority of the board) to receive notice of, or to attend or vote at,
any general meeting of the company or at any separate general meeting of the
holders of any class of shares in the company or to exercise any other
right conferred by membership in relation to general meetings.

 

Alteration of Share Capital

 

47.                               Increase, Consolidation,
Sub-Division and Cancellation

 

The
company may from time to time by ordinary resolution:-

 

(i)                                     increase its share capital by such sum to be divided
into shares of such amount as the resolution shall prescribe;

 

(ii)                                  consolidate, or consolidate and then
sub-divide, all or any of its share capital into shares of larger amount than
its existing shares;

 

(iii)                               subject to the Companies Acts, sub-divide its
shares or any of them into shares of smaller amount, provided that:

 

(a)                                  in the sub-division, the proportion between
the amount paid and the amount (if any) unpaid on each reduced share shall be
the same as it

 

19

 

was in the case of the share from which the reduced share is derived;
and

 

(b)                                 the resolution may determine that, as
between the shares resulting from the sub-division, any of them may have
any preference or advantage or be subject to any restriction as
compared with the others; and

 

(iv)                              cancel any shares which, at the date of the
passing of the resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount of the shares
so cancelled.

 

48.                               Fractions

 

(A)                              Whenever as a result of a consolidation,
consolidation and sub-division or sub-division of shares any members would
become entitled to fractions of a share, the board may deal with the
fractions as it thinks fit. In particular the board may sell the shares
representing the fractions for the best price reasonably obtainable (or at any
other price approved by the company by special resolution) to any person
(including, subject to the provisions of the Companies Acts, the company) and
distribute the net proceeds of sale (subject to the retention by the company of
any amounts so small that the cost of distribution would be disproportionate to
the amounts involved) in due proportion among those members and the board may authorise
some person to transfer or deliver the shares to, or in accordance with the
directions of, the purchaser. For the purposes of effecting the sale, the board
may arrange for the shares representing the fractions to be entered in the
register as certificated shares. The person to whom any shares are transferred
or delivered shall not be bound to see to the application of the purchase money
nor shall his title to the shares be affected by any irregularity in, or
invalidity of, the proceedings relating to the sale.

 

(B)                                Subject to the Companies Acts, when the board
consolidates or sub-divides shares, it can treat certificated and
uncertificated shares which a member holds as separate shareholdings.

 

49.                               Reduction of Capital

 

Subject
to the provisions of the Companies Acts, the company may by special
resolution reduce its share capital, any capital redemption reserve, any share
premium account or any other undistributable reserve in any way.

 

General
Meetings

 

50.                               Extraordinary General
Meetings

 

Any
general meeting of the company other than an annual general meeting shall be
called an extraordinary general meeting.

 

20

 

51.                               Annual General Meetings

 

The
board shall convene and the company shall hold general meetings as annual
general meetings in accordance with the requirements of the Companies Acts.

 

52.                               Convening of Extraordinary
General Meetings

 

The
board may convene an extraordinary general meeting whenever it thinks fit.

 

53.                               Separate General Meetings

 

The
provisions of these articles relating to general meetings shall apply, with any
necessary modifications, to any separate general meeting of the holders of
shares of a class convened otherwise than in connection with the variation
or abrogation of the rights attached to the shares of that class. For
this purpose, a general meeting at which no holder
of a share other than an ordinary share may, in his capacity as a member,
attend or vote shall also constitute a separate general meeting of the holders
of the ordinary shares.

 

Notice of General Meetings

 

54.                               Length of Notice

 

An
annual general meeting and an extraordinary general meeting convened for the
passing of a special resolution or (save as provided by the Companies Acts) a
resolution of which special notice has been given to the company shall be
convened by not less than 21 clear days’ notice in writing (or, subject to the
Companies Acts, by such shorter period of notice as the board may determine).
All other extraordinary general meetings shall be convened by not less than 14
clear days’ notice in writing. The notice shall specify the place, day and time
of the meeting, and the general nature of the business to be transacted. Notice
of every general meeting shall be given to all members other than any who,
under the provisions of these articles or the terms of issue of the shares they
hold, are not entitled to receive such notices from the company, and also to
the auditors or, if more than one, each of them. References in this article to
notice in writing include the use of electronic communications and publication
on a website in accordance with the Companies Acts.

 

55.                               Omission or Non-Receipt of
Notice

 

(A)                              The accidental omission to give any notice of
a meeting or the accidental omission to send any document relating to any
meeting to, or the non-receipt of any such notice or document by, any person
entitled to receive the notice or document shall not invalidate the proceedings
at that meeting.

 

(B)                                A member present in person or by proxy at a
meeting shall be deemed to have received proper notice of that meeting and,
where applicable, of the purpose of that meeting.

 

21

 

56.                               Postponement of General
Meetings

 

If
the board, in its absolute discretion, considers that it is impractical or
undesirable for any reason to hold a general meeting on the date or at the time
or place specified in the notice calling the general meeting, it may postpone
or move the general meeting to another date, time and/or place. The board shall
take reasonable steps to ensure that notice of the date, time and place of the
rearranged meeting is given to any member trying to attend the meeting at the
original time and place. Notice of the date, time and place of the rearranged
meeting shall, if practicable, also be placed in at least two national
newspapers in the United Kingdom and one national newspaper in the Republic of
Ireland. Notice of the business to be transacted at such rearranged meeting
shall not be required. If a meeting is rearranged in this way, the appointment
of a proxy will be valid if it is received as required by these
articles not less than 48 hours before the time appointed for holding the
rearranged meeting. The board may also postpone or move the rearranged
meeting under this article.

 

Proceedings at General Meetings

 

57.                               Quorum

 

No
business shall be transacted at any general meeting unless a quorum
is present when the meeting proceeds to business, but the absence of a quorum
shall not preclude the choice or appointment of a chairman of the meeting which
shall not be treated as part of the business of the meeting. Save as
otherwise provided by these articles, two members present in person or by proxy
and entitled to vote shall be a quorum for all purposes.

 

58.                               Procedure if Quorum Not
Present

 

If
within five minutes (or such longer time not exceeding one hour as the chairman
of the meeting may decide to wait) after the time appointed for the
commencement of the meeting a quorum
is not present, the meeting, if convened by or upon the requisition of members,
shall be dissolved. In any other case it shall stand adjourned to such other
day (being not less than three nor more than 28 days later) and at such other
time or place as may have
been specified for the purpose in the notice convening the meeting. Where no
such arrangements have been so specified, the meeting shall stand adjourned to
such other day (being not less than seven nor more than 28 days later) and at
such other time or place as the chairman of the meeting may decide and, in
this case, the company shall give not less than three clear days’ notice in
writing of the adjourned meeting. References in this article to notice in
writing include the use of electronic communications and publication on a
website in accordance with the Companies Acts.

 

59.                               Security Arrangements

 

(A)                              The board may, for the purpose of controlling
the level of attendance and ensuring the safety of those attending at any place
specified for the holding of a general meeting, from time to time make (and
vary) such arrangements as the board may in its absolute discretion
decide. The entitlement of any member or proxy to attend a general meeting at
such place shall be subject to any such arrangements.

 

22

 

(B)                                Without prejudice to the generality of (A) above,
the board may:

 

(i)                                     direct that the meeting shall be held at a
place specified in the notice at which the chairman of the meeting shall
preside (the “principal place”); and

 

(ii)                                  make arrangements for simultaneous attendance
and participation at other places by members otherwise entitled to attend the
general meeting but excluded from the principal place under the provisions of
this article (“excluded members”)
(or who wish to attend at any such other places) provided that, to the extent
required by law, persons attending at the principal place and at any such other
places shall (by any means) be able to see, and hear and be seen and heard by,
persons attending at the principal place and at such other places.

 

Such arrangements for simultaneous attendance may include
arrangements for controlling the level of attendance in any manner at any of
such other places, provided that they shall operate so that each excluded
member is able to attend at one of such other places. For the purposes of all
other provisions of these articles any such meeting shall be treated as being
held and taking place at the principal place.

 

(C)                                The board may also direct that persons
wishing to attend any general meeting should submit to such searches or other
security arrangements or restrictions as the board shall consider appropriate
in the circumstances and shall be entitled in its absolute discretion to (or to
authorise some one or more persons to) refuse entry to, or to eject from, such general
meeting any person who fails to submit to such searches or otherwise to comply
with such security arrangements or restrictions.

 

60.          Chairman of
General Meeting

 

(A)                              The chairman (if any) of the board or, in his
absence, the deputy chairman (if any) shall preside as chairman at every
general meeting. If more than one deputy chairman is present they shall agree
amongst themselves who is to take the chair or, if they cannot agree, the
deputy chairman who has been in office as a director longest shall take the
chair.

 

(B)                                lf:-

 

(i)                                     there is no chairman or deputy chairman; or

 

(ii)                                  at any meeting neither the chairman nor any
deputy chairman is present within 15 minutes after the time appointed for the
commencement of the meeting; or

 

(iii)                               neither the chairman nor any deputy chairman
is capable or willing to act as chairman,

 

23

 

then the senior non-executive director of the company shall act as
chairman of the meeting or (if the senior non-executive director is absent,
incapacitated or unwilling to act) the directors present shall choose one of
their number to act, or if one
director only is present he shall preside as chairman of the meeting if willing
to act.

 

(C)                                If no director is present at a general meeting,
or if each of the directors present declines to take the chair, the persons
present and entitled to vote shall appoint one of their number to be chairman
of the meeting.

 

(D)                               Nothing in these articles shall restrict or
exclude any of the powers or rights of a chairman of a meeting which are given
by law. A chairman selected pursuant to this article will remain chairman
for the duration of the relevant meeting.

 

(E)                                 If the board shall at any time have appointed
joint chairmen, each joint chairman shall preside as chairman at alternate
general meetings of the company, unless the joint chairmen shall otherwise
agree between them.

 

(F)                                 The chairman of a general meeting may nominate
any director present at the meeting to propose any resolution or otherwise facilitate
the conduct of any business concerning the chairman himself.

 

61.                               Orderly Conduct

 

The
chairman of the meeting shall take such action or give directions for such
action to be taken as he thinks fit to promote the orderly conduct of the
business of the meeting as laid down in the notice of the meeting. The chairman’s
decision on points of order, matters of procedure or matters arising
incidentally from the business of the meeting shall be final as shall be his
determination as to whether any point or matter is of such a nature.

 

62.                               Entitlement to Attend and
Speak

 

Each
director shall be entitled to attend and speak at any general meeting of the
company. Any proxy appointed by a member shall also be entitled to speak (and
to vote on a show of hands in accordance with article 67 below) at any
general meeting of the company. The chairman of the meeting may invite any
person to attend and speak at any general meeting of the company where he
considers that this will assist in the deliberations of the meeting.

 

63.                               Adjournments

 

The
chairman of the meeting may at any time without the consent of the meeting
adjourn any meeting (whether or not it has commenced or a quorum is present)
either sine die or to another time or place where it appears to him that (a) the
members entitled to vote and wishing to attend cannot be conveniently
accommodated in the place appointed for the meeting (b) the conduct of
persons present prevents or is likely to prevent the orderly continuation of
business or (c) an adjournment is otherwise necessary so that the business
of the meeting may be properly conducted. In addition, the chairman of the
meeting may at any time with the consent of any meeting at which a quorum
is present (and shall if so directed by the meeting) adjourn the

 

24

 

meeting
either sine die or to another time or place. When a meeting is adjourned sine
die the time and place for the adjourned meeting shall be fixed by the board.
No business shall be transacted at any adjourned meeting except business which
might properly have been transacted at the meeting had the adjournment not
taken place. Any meeting may be adjourned more than once.

 

64.                               Notice of Adjournment

 

When
a meeting is adjourned for:

 

(i)                                     three months or more, or sine die, notice of
the adjourned meeting shall be given as in the case of an original meeting;

 

(ii)                                  between one and three months, at least seven
clear days’ notice shall be given, specifying the day, time and place of the
adjourned meeting and the general nature of the business to be transacted.

 

Except
where these articles otherwise require. It shall not be necessary to give any
notice of an adjourned meeting or of the business to be transacted at an
adjourned meeting.

 

Amendments

 

65.                               Amendments to Resolutions

 

In
the case of a resolution duly proposed as a special or extraordinary resolution
no amendment thereto (other than an amendment to correct a patent error) may be
considered or voted upon and in the case of a resolution duly proposed as an
ordinary resolution no amendment thereto (other than an amendment to correct a
patent error) may be considered or voted upon unless either at least 48
hours prior to the time appointed for holding the meeting or adjourned meeting
at which such ordinary resolution is to be proposed notice in writing of the
terms of the amendment and intention to move the same has been lodged at the
office or the chairman of the meeting in his absolute discretion decides that
it may be considered or voted upon. With the consent of the chairman of
the meeting, an amendment may be withdrawn by its proposer before it is
put to the vote.

 

66.                               Amendments Ruled Out of Order

 

If
an amendment shall be proposed to any resolution under consideration but shall
be ruled out of order by the chairman of the meeting the proceedings on the
substantive resolution shall not be invalidated by any error in such ruling.

 

Voting

 

67.                               Votes of Members

 

Subject
to any special terms as to voting upon which any shares may be issued or may at
the relevant time be held and to any other provisions of these articles, on a
show of hands every member who is present in person at a general meeting of the
company shall have one vote and

 

25

 

every
proxy appointed by a member and present at a general meeting of the company
(other than the chairman of the meeting) shall have one vote. On a poll every
member who is present in person or by proxy shall, subject to any special terms
as to voting upon which any shares may be issued or may at the
relevant time be held and to any other provisions of these articles, have one
vote for every share of which he is the holder.

 

68.                               Method of Voting

 

At
any general meeting a resolution put to the vote of the meeting shall be decided
on a show of hands unless (before or on the declaration of the result of the
show of hands) a poll is demanded. Subject to the Companies Acts, a poll may be
demanded by:-

 

(i)                                     the chairman of the meeting; or

 

(ii)                                  at least three members present in person or by
proxy and entitled to vote; or

 

(iii)                               any member or members present in person or by
proxy and representing in the aggregate not less than one-tenth of the total
voting rights of all the members having the right to attend and vote at the
meeting; or

 

(iv)                              any member or members present in person or by
proxy and holding shares conferring a right to attend and vote at the meeting
on which there have been paid up sums in the aggregate equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right.

 

The
chairman of the meeting can also demand a
poll before a resolution is put to the vote on a show of hands.

 

Unless
a poll is so demanded and the demand is not withdrawn, a declaration by the
chairman of the meeting that a resolution on a show of hands has been carried
or carried unanimously or by a particular majority or not carried by a
particular majority or lost shall be conclusive evidence of the fact without
proof of the number or proportion of the votes recorded for or against the resolution.

 

69.                               Procedure if Poll Demanded

 

If
a poll is properly demanded it shall be taken in such manner as the chairman of
the meeting shall direct. The chairman may appoint scrutineers (who need
not be members) and fix a day, time and place for declaring the result of the
poll. The result of the poll shall be deemed to be the resolution of the
meeting at which the poll was demanded.

 

70.                               When Poll to be Taken

 

No
poll may be demanded on the election of the chairman of a meeting. On a
question of adjournment of any meeting, a poll may only be demanded by the
chairman of the meeting and it shall be taken immediately. A poll duly demanded
on any other question shall be taken in such manner and either forthwith or on
such date (being not later than 28 days after the date of the demand) and at
such time and place as the chairman of the meeting shall direct. It shall not

 

26

 

be
necessary (unless the chairman of the meeting otherwise directs) for notice to
be given of a poll.

 

71.                               Continuance of Other Business
after Poll Demand

 

The
demand for a poll (other than a demand
by the chairman on a question of adjournment) shall not prevent the continuance
of a meeting for the transaction of any business other than the question on
which the poll was demanded, and it may be withdrawn with the consent of
the chairman of the meeting at any time before the close of the meeting or the
taking of the poll, whichever is the earlier, and in that event shall not invalidate
the result of a show of hands declared before the demand was made.

 

72.                               Votes on a Poll

 

On
a poll votes may be given either personally or by proxy. A member may appoint
more than one proxy to attend on the same occasion and if he does he shall
specify the number of shares in respect of which each proxy is entitled to
exercise the related votes and shall ensure that no proxy is appointed to
exercise the votes which any other proxy has been appointed by that member to
exercise. On a poll a member entitled to more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.

 

73.                               Casting Vote of Chairman

 

In
the case of an equality of votes at a general meeting, whether on a show of
hands or on a poll, the chairman of the meeting shall be entitled to an
additional or casting vote.

 

74.                               Votes of Joint Holders

 

In
the case of joint holders of a share the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders and, for this purpose, seniority shall be determined
by the order in which the names stand in the register in respect of the joint
holding.

 

75.                               Voting on Behalf of Incapable
Member

 

A
member in respect of whom an order has been made by any competent court or
official on the ground that he is or may be suffering from mental disorder
or is otherwise incapable of managing his affairs may vote at any general
meeting of the company or at any separate general meeting of the holders of any
class of shares in the company and may exercise any other right
conferred by membership in relation to general meetings by or through any
person authorised in such circumstances to do so on his behalf (and that person
may vote on a poll by proxy), provided that evidence to the satisfaction
of the board of the authority of the person claiming to exercise the right to
vote or such other right has been received at the office (or at such other
place as may be specified in accordance with these articles for the
receipt of appointments of a proxy in writing which are not electronic
communications) not later than the last time at which such an appointment
should have been received in order to be valid for use at that meeting or on
the holding of that poll.

 

27

 

76.          No Right to Vote where Sums
Overdue on Shares

 

No member shall, unless the board otherwise decides, be entitled in
respect of any share held by him to attend or vote (either personally or by
proxy) at any general meeting of the company or at any separate general meeting
of the holders of any class of shares in the company or upon a poll or to
exercise any other right conferred by membership in relation to general
meetings or polls unless all calls or other sums presently payable by him in
respect of that share have been paid.

 

77.          Objections or Errors in
Voting

 

If:-

 

(i)            any objection shall be raised to the
qualification of any voter, or

 

(ii)           any votes have been counted which ought not to
have been counted or which might have been rejected, or

 

(iii)          any votes are not counted which ought to have
been counted,

 

the objection or error shall not vitiate the decision of the meeting or
adjourned meeting or poll on any resolution unless it is raised or pointed out
at the meeting or, as the case may be, the adjourned meeting or poll at which
the vote objected to is given or tendered or at which the error occurs. Any
objection or error shall be referred to the chairman of the meeting and shall
only vitiate the decision of the meeting on any resolution if the chairman
decides that the same may have affected the decision of the meeting. The
decision of the chairman on such matters shall be conclusive.

 

Proxies and Corporate Representatives

 

78.          Appointment and Receipt of
Proxies

 

(A)          The appointment of a proxy shall be in writing signed by the appointor or his duly
authorised attorney or, if the appointor is a corporation, shall either be executed
under its seal or signed by an officer, attorney or other person authorised to
sign it. The board may, but shall not be bound to, require evidence of the
authority of such officer, attorney or other person. In this article references
to in writing include the use of electronic communications subject to such
terms and conditions as the board may decide.

 

(B)           The appointment of a proxy must:-

 

(i)            in the case of an appointment which is not
contained in an electronic communication, be received at the office (or such
other place as may be specified in or by way of note to the notice convening
the meeting or in or by way of note to any notice of any adjournment or, in
either case, in any accompanying document) not less than 48 hours (or such
shorter time as the board may determine or as is specified in such notice or

 

28

 

instrument of proxy) before the time appointed
for holding the meeting or adjourned meeting at which the person named in the
appointment proposes to vote together with (if required by the board) any
authority under which it is made or a copy of the authority, certified
notarially or in accordance with the Powers of Attorney Act 1971 or in some
other manner approved by the board;

 

(ii)           in the case of an appointment contained in an
electronic communication, where an address has been specified for the purpose
of receiving electronic communications in or by way of note to the notice
convening the meeting or in or by way of note to any notice of any adjournment
or, in either case, in any accompanying document or in any electronic
communication issued by or on behalf of the company, be received at such
address not less than 48 hours (or such shorter time as the board may determine
or as is specified in such notice or instrument of proxy) before the time
appointed for holding the meeting or adjourned meeting at which the person
named in the appointment proposes to vote. Any authority pursuant to which an
appointment contained in an electronic communication is made or a copy of the
authority, certified notarially or in accordance with the Powers of Attorney
Act 1971 or in some other manner approved by the board, must, if required by
the board, be received at the office (or such other place as may be specified
in the notice convening the meeting or in any notice of any adjournment or, in
either case, in any accompanying document) not less than 48 hours (or such
shorter time as the board may determine or as is specified in such notice or
instrument of proxy) before the time appointed for holding the meeting or
adjourned meeting at which the person named in the appointment proposes to vote;
or

 

(iii)          in the case of a poll taken subsequently to
the date of the meeting or adjourned meeting, be received as aforesaid not less
than 24 hours (or such shorter time as the board may determine) before the time
appointed for the taking of the poll,

 

and an appointment of a proxy which is not, or in respect of which the
authority or copy thereof is
not, received in a manner so permitted shall be invalid, unless the board
waives compliance with this provision. When two or more valid but differing
appointments of a proxy are received in respect of the same share for use at
the same meeting or poll, the one which is last received (regardless of its
date or of the date of its signature) shall be treated as replacing and
revoking the others as regards that share; if the company is unable to
determine which was last received, none of them shall be treated as valid in
respect of that share. The appointment of a proxy shall not preclude a member
from attending and voting in person at the meeting or poll concerned. The
proceedings at a general meeting shall not be invalidated where an appointment
of a proxy in respect of that meeting is delivered in a manner permitted by these articles by electronic
communication, but because of a technical problem it cannot be read by the
recipient.

 

29

 

79.          Maximum Validity of Proxy

 

No appointment of a proxy shall be valid after 12 months have elapsed
from the date of its receipt save that, unless the contrary is stated in it, an
appointment of a proxy shall be valid for use at an adjourned meeting or a poll
after a meeting or an adjourned
meeting even after 12 months, if it was valid for the original meeting.

 

80.          Form of Proxy

 

The appointment of a proxy shall be in any usual form or in such other
form as the board may approve. The appointment of a proxy shall be deemed to
confer authority to demand or join in demanding a poll and to vote on any
amendment of a resolution put to, or any other business which may properly come
before, the meeting for which it is given as the proxy thinks fit. The
appointment of a proxy shall, unless the contrary is slated in it, be valid as
well for any adjournment of the meeting as for the meeting to which it relates.

 

81.          Cancellation of Proxy’s
Authority

 

A vote given or poll demanded by a proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the previous
determination of the authority of the person voting or demanding a poll, unless
notice in writing of the determination was received by the company at the
office (or such other place or address as was specified by the company for the
receipt of appointments of proxy in the notice convening the meeting or in any
notice of any adjournment or, in either case, in any accompanying document) not
later than the last time at which an appointment of a proxy should have been
received in order to be valid for use at the meeting or on the holding of the
poll at which the vote was given or the poll demanded. In this article
references to in writing include the use of electronic communications subject
to such terms and conditions as the board may decide.

 

82.          Board’s Power to Issue
Proxies

 

The board may at the expense of the company send instruments of proxy to
members by post or otherwise (with or without provision for their return
prepaid) for use at any general meeting or at any separate meeting of the
holders of any class of shares, either in blank or nominating in the
alternative any one or more of the board or any other person. If, for the
purpose of any meeting, invitations to appoint as proxy a person, or one of a number of persons specified in the
invitations, are issued at the company’s expense, they shall (without prejudice
to any other provision of these articles or of the Companies Acts permitting
the board to cease or suspend sending notices or other circulars to a member)
be issued to all the members entitled to be sent a notice of the meeting and to
vote at it. The accidental omission to send such an instrument or give such an
invitation to, or the non-receipt by, any member entitled to attend and vote at
a meeting shall not invalidate the proceedings at that meeting.

 

83.          Corporations Acting by
Representatives

 

A corporation (whether or not a company within the meaning of the
Companies Acts) which is a member may, by resolution of its directors or other
governing body, authorise such person (or if, but only if, such corporation is
an approved depositary voting in its capacity as such, persons)

 

30

 

as it thinks fit to act as its representative (or, as the case may be,
representatives) at any meeting of the company or at any separate meeting of
the holders of any class of shares. Any person so authorised shall be entitled
to exercise the same powers on behalf of a corporation (in respect of that part
of the corporation’s holdings to which the authority relates) as the
corporation could exercise if it were an individual member. The corporation
shall for the purposes of these articles be deemed to be present in person at
any such meeting if a person so authorised is present at it; and all references
to attendance and voting in person shall be construed accordingly. A director,
the secretary or some person authorised for the purpose by the secretary may
require the representative to produce a certified copy of the resolution so
authorising him or such other evidence of his authority reasonably satisfactory
to them before permitting him to exercise his powers.

 

Appointment, Retirement and Removal of Directors

 

84.          Number
of Directors

 

Unless otherwise determined by ordinary resolution of the company, the
directors (disregarding alternate directors) shall be not less than three nor
more than 25 in number.

 

85.          Age of Directors

 

No person shall be disqualified from being appointed or elected as a
director, and no director shall be required to vacate that office, by reason
only of the fact that he has attained the age of 70 years or any other age. It
shall not be necessary by reason of a person’s age to give special notice under
the Companies Acts of any resolution in connection with his election. However,
any director who is of the age of 70 or more shall retire in accordance with
these articles. Where the board convenes any general meeting of the company at
which (to the knowledge of the board) a director will be proposed for election
or re-election who at the date for which the meeting is convened will have
attained the age of 70 years or more, the board shall give notice of his age in
years in the notice convening the meeting or in any document accompanying the
notice, but the accidental omission to do so shall not invalidate any
proceedings, or any election or re-election of that director, at that meeting.

 

86.          Directors’ Shareholding
Qualification

 

No shareholding qualification for directors shall be required.

 

87.          Power of Company to Elect Directors

 

Subject to the provisions of these articles, the company may by ordinary
resolution elect any person who is willing to act to be a director, either to
fill a vacancy or as an addition to the existing board, but so that the total
number of directors shall not at any time exceed any maximum number fixed by or
in accordance with these articles.

 

88.          Power of Board to Appoint Directors

 

Subject to the provisions of these articles, the board may appoint any
person who is willing to act to be a director, either to fill a vacancy or as
an addition to the existing board, but so that the

 

31

 

total number of directors shall not at any time exceed any maximum
number fixed by or in accordance with these articles. Any director so appointed
shall retire at the next annual general meeting and shall then be eligible for
election but shall not be taken into account in determining the directors or
the number of directors who are to retire by rotation at that meeting.

 

89.          Directors to Retire by
Rotation

 

(A)          At every annual general meeting any director
who was in office at the time of the two previous annual general meetings and
who did not retire at either of them must retire by rotation.

 

(B)           Notwithstanding the provisions of (A), at
least one third of the current directors (the “minimum
number”) must retire as directors at every annual general
meeting. Where the number of current directors is not three or a number
divisible by three, the minimum number will be the number which is nearest to
and less than one third. If there are less than three current directors, they
will all retire.

 

(C)           If the number of directors retiring under (A)
is less than the minimum number, the additional directors to retire will be
those who have been directors longest since they were last elected to the
board. If there are directors who were last elected on the same date, they can
agree on who is to retire. If they do not agree, they must draw lots to decide.

 

(D)          A director who would not otherwise be required
to retire must also retire if:-

 

(i)            he is aged 70 or more at the date of the
meeting; or

 

(ii)           he has been in office, other than as a
director holding an executive position, for a continuous period of nine years
or more at the date of the meeting.

 

(E)           The minimum number and identity of directors
to retire by rotation on each occasion will be determined by reference to the
number and identity of the directors at the start of business on the date of
the notice which convenes the annual general meeting, ignoring for these
purposes:

 

(i)            any director appointed pursuant to article 88
who has not been elected by the company in general meeting;

 

(ii)           any director retiring pursuant to (D); and

 

(iii)          any director known to be retiring, but not
seeking re-election, at the meeting.

 

90.          Power of Removal by Special
Resolution

 

In addition to any power of removal conferred by the Companies Acts, the
company may by special resolution remove any director before the expiration of
his period of office and may (subject to these articles) by ordinary resolution
appoint another person who is willing to act to be a director in his place.

 

32

 

91.          Persons Eligible as Directors

 

No person other than a director retiring at the meeting (whether by
rotation or otherwise) shall be elected or re-elected a director at any general
meeting unless:-

 

(i)            he is recommended by the board; or

 

(ii)           not less than seven nor more than 40 clear
days before the day appointed for the meeting, notice in writing by a member
qualified to vote at the meeting (not being the person to be proposed) has been
given to the secretary at the office of the intention to propose that person
for election or re-election together with confirmation in writing by that
person of his willingness to be elected or re-elected; the notice shall give
the particulars of that person which would (if he were elected) be required to
be included in the company’s register of directors.

 

92.          Position of Retiring
Directors

 

A director who retires (whether by rotation or otherwise) at an annual
general meeting may, if willing to continue to act, be elected or re-elected.
If he is elected or re-elected he is treated as continuing in office
throughout. If he is not elected or re-elected, he shall retain office until
the end of the meeting or (if earlier) when a resolution is passed to elect
someone in his place or when a resolution to elect or re-elect the director is
put to the meeting and lost.

 

93.          Vacation of Office by
Directors

 

Without prejudice to the provisions for retirement by rotation or
otherwise contained in these articles, the office of a director shall be
vacated if:-

 

(i)            he resigns his office by notice in writing
delivered to or received at the office or tendered at a meeting of the board;
or

 

(ii)           by notice in writing delivered to or received
at the office or tendered at a meeting of the board he offers to resign and the
board resolves to accept such offer; or

 

(iii)          he is an executive director and his
appointment to the relevant office or employment is terminated or expires and
the board resolves that his office be vacated; or

 

(iv)          by notice in writing delivered to or received
at the office or tendered at a meeting of the board, his resignation is
requested by all of the other directors and all of the other directors are not
less than three in number; or

 

(v)           he is or has been suffering from mental ill
health or becomes a patient for the purpose of any statute relating to mental
health and the board resolves that his office is vacated; or

 

33

 

(vi)          he is absent without the permission of the
board from meetings of the board (whether or not an alternate director
appointed by him attends) for six consecutive months and the board resolves
that his office is vacated; or

 

(vii)         he becomes bankrupt or compounds with his
creditors generally; or

 

(viii)        he is prohibited by law from being a director;
or

 

(ix)           he ceases to be a director by virtue of the
Companies Acts or is removed from office pursuant to these articles.

 

If the office of a director is vacated for any
reason, he shall cease to be a member of any committee or sub-committee of the
board. In this article references to in writing include the use of electronic
communications subject to such terms and conditions as the board may decide.

 

94.          Alternate Directors

 

(A)          Each director may appoint any person to be his
alternate and may at his discretion remove an alternate director so appointed.
If the alternate director is not already a director, the appointment, unless
previously approved by the board, shall have effect only upon and subject to
its being so approved. Any appointment or removal of an alternate director
shall be effected by notice in writing signed by the appointor and delivered to
or received at the office or tendered at a meeting of the board, or in any
other manner approved by the board. An alternate director shall not be required
to hold any shares in the capital of the company and shall not be counted in
reckoning the maximum and minimum numbers of directors allowed or required by
article 84. An alternate director shall be entitled (subject to his giving to
the company an address within the United Kingdom at which notices may be served
upon him) to receive notice of all meetings of the board or of committees of
the board of which his appointor is a member. It shall not be necessary to give
notice of such a meeting to an alternate director who is absent from the United
Kingdom. He shall also be entitled to attend and vote as a director at any such
meeting at which the director appointing him is not personally present and at
such meeting to exercise and discharge all the functions, powers, rights and
duties of his appointor as a director and for the purposes of the proceedings
at such meeting the provisions of these articles shall apply as if he were a
director.

 

(B)           Every person acting as an alternate director
shall (except as regards power to appoint an alternate and remuneration) be
subject in all respects to the provisions of these articles relating to
directors and shall during his appointment be an officer of the company. An
alternate director shall alone be responsible to the company for his acts and
defaults and shall not be deemed to be the agent of or for the director
appointing him. An alternate director may be paid expenses and shall be
entitled to be indemnified by the company to the same extent as if he were a
director. An alternate director shall not be entitled to receive from the
company any fee in his capacity as an alternate director but

 

34

 

the company shall, if so requested in writing
by the appointor, pay to the alternate director any part of the fees or
remuneration otherwise due to the appointor.

 

(C)           A director or any other person may act as an
alternate director to represent more than one director. Every person acting as
an alternate director shall have one vote for each director for whom he acts as
alternate, in addition to his own vote if he is also a director but he shall
count as only one for the purposes of determining whether a quorum is present.
Signature by an alternate director of any resolution in writing of the board or
a committee of the board shall, unless the notice of his appointment provides
to the contrary, be as effective as signature by his appointor.

 

(D)          An alternate director shall cease to be an alternate
director:-

 

(i)            if his appointor ceases for any reason to be a
director except that, if at any meeting any director retires by rotation or
otherwise but is re-elected at the same meeting, any appointment made by him
pursuant to this article which was in force immediately before his retirement
shall remain in force as though he had not retired; or

 

(ii)           on the happening of any event which if he were
a director would cause him to vacate his office as director; or

 

(iii)          if he resigns his office by notice in writing
to the company.

 

(E)           In this article references to in writing include
the use of electronic communications subject to such terms and conditions as
the board may decide.

 

95.          Chief Executive, Managing and
Executive Directors

 

The board (or any committee authorised by the board) may:

 

(i)            appoint one or more of its body to the office
of chief executive, managing director or joint managing director, or to any
other office (except that of auditor) or employment in the company, for such
period (subject to the Companies Acts) and on such terms as it thinks fit, and
may revoke such appointment (but so that the revocation is without prejudice to
any rights or claims which the person whose appointment is revoked may have
against the company or the company may have against such person by reason of
(or connected with) the revocation);

 

(ii)           permit any person elected or appointed to be a
director to continue in any other office or employment held by the person
before he was so elected or appointed; and

 

(iii)          appoint any director or former director of the
company who, in its opinion, has rendered outstanding service to the company to
be president of the company.

 

35

 

The president shall not, by virtue of such
office, be deemed a director or be entitled to any remuneration.

 

Fees, Remuneration, Expenses and Pensions

 

96.          Directors’ Fees

 

The directors (other than alternate directors) shall be paid such
remuneration (by way of fee) for their services as directors as may from time
to time be determined by the board. Unless otherwise approved by ordinary
resolution of the company in general meeting, the aggregate of the remuneration
(by way of fee), but excluding special remuneration or other amounts paid under
article 97, of all the directors shall not exceed £1,000,000 for any financial
year of the company (and pro rata
for any shorter or longer period). Such sum (unless otherwise directed by the
resolution of the company by which it is approved) shall be divided among the
directors in such proportions and in such manner as the board may determine or,
in default of such determination, equally. Any fees payable pursuant to this article shall be distinct from
any salary, remuneration or other amounts payable to a director pursuant to any
other provisions of these articles and shall accrue from day to day.

 

97.          Additional Remuneration

 

Any director who by request of the board serves on a committee of the
board, performs special services, or goes or resides abroad for any purposes of
the company, may be paid extra remuneration by way of salary, commission,
percentage of profits or otherwise as the board decides.

 

98.          Expenses and Legal Costs

 

Each director shall be entitled to be repaid all reasonable travelling,
hotel and other expenses properly incurred by him in or about the performance
of his duties as a director, including any expenses incurred in attending
meetings of the board or any committee of the board or general meetings or
separate meetings of the holders of any class of shares or of debentures of the
company. The company may also fund a director’s expenditure on defending
proceedings and may do anything to enable a director to avoid incurring such
expenditure both as provided in the Companies Acts.

 

99.          Power to Pay Pensions and
Gratuities

 

(A)          The board may grant or make provision for
pensions, allowances, gratuities and life assurance, bonuses or other benefits
to or for the benefit of:

 

(i)            any director or former director or other
officer or former officer who holds or has held any executive office or place
of profit with the company or any other company in which the company is or was
interested, or any company or firm or concern whose business or any part
thereof (or control of whose business or any part thereof) has at any time been
acquired by the company or any of its subsidiary undertakings;

 

36

 

(ii)           the wife or widow, husband or widower, or
other dependant or relation of such director or former director or other
officer of former officer;

 

(iii)          any other employee or former employee of the
company or of any such other company, firm or concern as mentioned in article
99(A)(i);

 

(iv)          the wife or widow, husband or widower, or any
other dependant or relation of any such other employee or former employee;

 

or any class or classes thereof.

 

(B)           Any of the matters in article 99(A) may be
done either alone or in conjunction with any other person or company, and in
such manner as the board thinks fit.

 

(C)           Subject to the provisions of the Companies
Acts, any such director or other person mentioned in sub-paragraphs (i) to (iv)
inclusive of article 99(A) is entitled to receive and retain for his own
benefit any such pension, allowance, gratuity, assurance or other benefit (and
receipt of the same shall not disqualify any person from being or becoming a
director of the company) and any such director may vote as a director in the
exercise of any of the powers conferred by this article 99 notwithstanding that
he is interested therein.

 

Directors’ Interests

 

100.        Permitted Interests and
Voting

 

(A)          Subject to the provisions of the Companies
Acts and of paragraph (J) of this article, no director or proposed or intending
director shall be disqualified by his office from contracting with the company,
either with regard to his tenure of any office or place of profit or as vendor,
purchaser or in any other manner whatever, nor shall any contract in which any
director is in any way interested be liable to be avoided, nor shall any
director who is so interested be liable to account to the company or the
members for any remuneration, profit or other benefit realised by the contract
by reason of the director holding that office or of the fiduciary relationship
thereby established.

 

(B)           A director may hold any other office or place
of profit with the company (except that of auditor) in conjunction with his
office of director for such period (subject to the provisions of the Companies
Acts) and upon such other terms as the board may decide, and may be paid such
extra remuneration for so doing (whether by way of salary, commission,
participation in profits or otherwise) as the board or any committee authorised
by the board may decide, and either in addition to or in lieu of any remuneration
provided for by or pursuant to any other article.

 

(C)           A director may be or become a director or
other officer of, or otherwise interested in, or contract with any company
promoted by the company or in which the company may be interested or as regards
which it has any power of

 

37

 

appointment, and shall not be liable to
account to the company or the members for any remuneration, profit or other
benefit received by him as a director or officer of or from his interest in or
contract with the other company nor shall any such contract be liable to be
avoided. Subject to the Companies Acts and these articles, the board may also
cause any voting power conferred by the shares in any other company held or
owned by the company or any power of appointment to be exercised in such manner
in all respects as it thinks fit, including the exercise of the voting power or
power of appointment in favour of the appointment of the directors or any of
them as directors or officers of the other company, or in favour of the payment
of remuneration to the directors or officers of the other company. Subject to
the Companies Acts and these articles, a
director may also vote on and be counted in the quorum in relation to
any of such matters.

 

(D)          A director may act by himself or his firm in a
professional capacity for the company (otherwise than as auditor) and he or his
firm shall be entitled to remuneration for professional services as if he were
not a director.

 

(E)           A director shall not vote on or be counted in
the quorum in relation to any resolution of the board concerning his own
appointment, or the settlement or variation of the terms or the termination of
his own appointment, as the holder of any office or place of profit with the
company or any other company in which the company is interested but, where
proposals are under consideration concerning the appointment, or the settlement
or variation of the terms or the termination of the appointment, of two or more
directors to offices or places of profit with the company or any other company
in which the company is interested, a separate resolution may be put in
relation to each director and in that case each of the directors concerned
shall be entitled to vote and be counted in the quorum in respect of each
resolution unless it concerns his own appointment or the settlement or
variation of the terms or the termination of his own appointment or the
appointment of another director to an office or place of profit with a company in
which the company is interested and the director seeking to vote or be counted
in the quorum owns one per cent. or more of it.

 

(F)           Save as otherwise provided by these articles,
a director shall not vote on, or be counted in the quorum in relation to, any
resolution of the board in respect of any contract in which he has an interest
which (taken together with any interest of any person connected with him) is to
his knowledge a material interest and, if he shall do so, his vote shall not be
counted, but this prohibition shall not apply to any resolution where that
material interest arises only from one or more of the following matters:-

 

(i)            the giving to him of any guarantee, indemnity
or security in respect of money lent or obligations undertaken by him or by any
other person at the request of or for the benefit of the company or any of its
subsidiary undertakings;

 

38

 

(ii)           the giving to a third party of any guarantee,
indemnity or security in respect of a debt or obligation of the company or any
of its subsidiary undertakings for which he himself has assumed responsibility
in whole or in part under a guarantee or indemnity or by the giving of
security;

 

(iii)          the giving to him of any other indemnity where
all other directors are being offered indemnities on substantially the same
terms;

 

(iv)          the funding by the company of his expenditure
on defending proceedings or the doing by the company of anything to enable him
to avoid incurring such expenditure where all other directors are being offered
substantially the same arrangements;

 

(v)           where the company or any of its subsidiary
undertakings is offering securities in which offer the director is or may be
entitled to participate as a holder of securities or in the underwriting or
sub-underwriting of which the director is to participate;

 

(vi)          any contract in which he is interested by
virtue of his interest in shares or debentures or other securities of the
company or by reason of any other interest in or through the company;

 

(vii)         any contract concerning any other company (not
being a company in which the director owns one per cent. or more) in which he
is interested directly or indirectly whether as an officer, shareholder,
creditor or otherwise howsoever;

 

(viii)        any contract concerning the adoption,
modification or operation of a pension fund, superannuation or similar scheme
or retirement, death or disability benefits scheme or employees’ share scheme
which relates both to directors and employees of the company or of any of its
subsidiary undertakings and does not provide in respect of any director as such
any privilege or advantage not accorded to the employees to which the fund or
scheme relates;

 

(ix)           any contract for the benefit of employees of
the company or of any of its subsidiary undertakings under which he benefits in
a similar manner to the employees and which does not accord to any director as
such any privilege or advantage not accorded to the employees to whom the
contract relates; and

 

(x)            any contract for the purchase or maintenance
of insurance against any liability for, or for the benefit of, any director or
directors or for, or for the benefit of, persons who include directors.

 

(G)           A company shall be deemed to be one in which a
director owns one per cent. or more if and so long as (but only if and so long
as) he, taken together with any person connected with him, is to his knowledge
(either directly or indirectly) the

 

39

 

holder of or beneficially interested in one
per cent. or more of any class of the equity share capital of that company
(calculated exclusive of any shares of that class in that company held as
treasury shares) or of the voting rights available to members of that company.
In relation to an alternate director, an interest of his appointor shall be
treated as an interest of the alternate director without prejudice to any
interest which the alternate director has otherwise.

 

(H)          Where a company in which a director owns one per cent. or more
is materially interested in a contract, he also shall be deemed materially
interested in that contract.

 

(I)            If any question shall arise at any meeting of
the board as to the materiality of the interest of a director (other than the
chairman of the meeting) or as to the entitlement of any director (other than
the chairman of the meeting) to vote or be counted in the quorum and the
question is not resolved by his voluntarily agreeing to abstain from voting or
not to be counted in the quorum, the question shall be referred to the chairman
of the meeting and his ruling in relation to the director concerned shall be
conclusive except in a case where the nature or extent of his interest (so far
as it is known to him) has not been fairly disclosed to the board. If any
question shall arise in respect of the chairman of the meeting, the question
shall be decided by a resolution of the board (for which purpose the chairman
of the meeting shall be counted in the quorum but shall not vote on the matter)
and the resolution shall be conclusive except in a case where the nature or
extent of the interest of the chairman of the meeting (so far as it is known to
him) has not been fairly disclosed to the board.

 

(J)            A director who to his knowledge is in any way,
whether directly or indirectly, interested in a contract with the company shall
declare the nature of his interest at the meeting of the board at which the
question of entering into the contract is first taken into consideration, if he
knows his interest then exists, or in any other case at the first meeting of
the board after he knows that he is or has become so interested. For the
purposes of this article, a general notice to the board by a director to the
effect that (a) he is a member of a specified company or firm and is to be
regarded as interested in any contract which may after the date of the notice
be made with that company or firm or (b) he is to be regarded as interested in
any contract which may after the date of the notice be made with a specified
person who is connected with him, shall be deemed to be a sufficient
declaration of interest under this article in relation to any such contract;
provided that no such notice shall be effective unless either it is given at a
meeting of the board or the director takes reasonable steps to secure that it
is brought up and read at the next board meeting after it is given.

 

(K)          References in this article to a contract
include references to any proposed contract and to any transaction or
arrangement whether or not constituting a contract.

 

40

 

(L)           Subject to the provisions of the Companies
Acts, the company may by ordinary resolution suspend or relax the provisions of
this article to any extent or ratify any contract not properly authorised by
reason of a contravention of
this article.

 

Powers and Duties of the Board

 

101.        General Powers of Company
Vested in Board

 

Subject to the provisions of the Companies Acts, the memorandum of
association of the company and these articles and to any directions given by
the company in general meeting by special resolution, the business of the
company shall be managed by the board which may exercise all the powers of the
company whether relating to the management of the business of the company or not.
No alteration of the memorandum of association or these articles and no special
resolution shall invalidate any prior act of the board which would have been
valid if that alteration had not been made or that resolution had not been
passed. The powers given by this article shall not be limited by any special
power given to the board by any other article

 

102.        Borrowing Powers

 

(A)          The board may exercise all the powers of the
company to borrow money and to mortgage or charge all or any part of the
undertaking, property and assets (present and future) and uncalled capital of
the company, to issue debentures, debenture stock and other securities and to
give security, whether outright or as collateral security, for any debt,
liability or obligation of the company or of any third party.

 

(B)           The board shall restrict the borrowings of the
company and exercise all voting and other rights or powers of control
exercisable by the company in relation to its subsidiaries so as to secure (but
as regards its subsidiaries only in so far as by the exercise of the rights or
powers of control the board can secure) that the aggregate principal amount
from time to time outstanding of all net external borrowings by the company and
its subsidiaries shall not at any time without the previous sanction of an
ordinary resolution of the company exceed an amount equal to two times the
adjusted capital and reserves.

 

For the purposes of this paragraph of this
article:-

 

(i)            “the adjusted capital and
reserves” means the aggregate from time to time of:-

 

(a)           the amount paid up or credited as paid up on
the issued share capital of the company (including any shares held as treasury
shares);

 

(b)           the amount standing to the credit of the
reserves of the group, including any share premium account, capital redemption
reserve and credit balance on profit and loss account; and

 

41

 

(c)           an amount of £1,562,000,000 representing
goodwill arising on acquisitions prior to 1 July 1998 of subsidiaries, related companies
and businesses which remained within the group at 30 June 2004 and which has
been written off against share capital and reserves.

 

(a) and (b) above as shown by
the then latest audited balance sheet of the group but after:-

 

(d)           deducting from the aggregate amount any debit
balance on profit and loss account subsisting at the date of that audited balance
sheet except to the extent that a deduction has already been made on that
account;

 

(e)           excluding the effects on the reserves of the
group in that audited balance sheet of the recognition of any post employment
net assets or net liabilities reflected in accordance with any applicable
accounting standards; and

 

(f)            making such adjustments as may be appropriate
to reflect any variation in the amount of the paid up share capital, share premium
account, capital redemption reserve or other reserve since the date of that
audited balance sheet.

 

If any issue or proposed issue of shares by
the company for cash has been or becomes unconditionally underwritten, then
those shares shall be deemed to have been issued and the amount (including any
premium) of the subscription moneys payable in respect thereof shall (provided
such subscription moneys are payable not later than three months after the date
of allotment) be deemed to have been paid up on the date when those shares
become unconditionally underwritten but only to the extent of the underwriters’
liability to the company in respect of the subscription moneys;

 

(ii)           “net external borrowings”
means external borrowings less:-

 

(a)           cash at bank and liquid resources; and

 

(b)           any other assets which would be included in short
term investments,

 

in each case as shown in a consolidated
balance sheet of the group prepared on the date of the relevant calculation in
accordance with the principles with which the then latest audited balance sheet
of the group was prepared;

 

42

 

(iii)          “external borrowings”
does not include:-

 

(a)           borrowings owing by one member of the group to
another member of the group;

 

(b)           borrowings incurred by any member of the group
for the purpose of repaying within six months of the borrowing the whole or any
part of any borrowings of that or any other member of the group outstanding at
the relevant time, pending their application for that purpose within that
period;

 

(c)           borrowings incurred by any member of the group
for the purpose of financing any contract in respect of which any part of the
price receivable under the contract by that or any other member of the group is
guaranteed or insured by the Export Credits Guarantee Department or by any
other governmental department or agency fulfilling a similar function, up to an
amount equal to that part of the price receivable under the contract which is
so guaranteed or insured;

 

(d)           borrowings of, or amounts secured on assets of,
an undertaking which became a member of the group after the date as at which the
latest audited balance sheet was prepared, to the extent their amount does not
exceed their amount immediately after it became such a member; or

 

(e)           the minority proportion of moneys borrowed by
a partly-owned member of the group and not owing to another member of the group;

 

(iv)          when the aggregate principal amount of
borrowings required to be taken into account on any particular date is being
ascertained, any particular borrowing then outstanding which is denominated or
repayable in a currency other than sterling shall be notionally converted into
sterling at the rate of exchange prevailing in London on the last business day
before that date or, if it would result in a lower figure, at the rate of
exchange prevailing in London on the last business day six months before that
date and so that for these purposes the rate of exchange shall be taken as the
spot rate in London recommended by a London clearing bank, selected by the
board, as being the most appropriate rate for the purchase by the company of
the currency in question for sterling on the day in question;

 

(v)           if the amount of the adjusted capital and
reserves is being calculated in connection with a transaction involving a
company becoming or ceasing to be a member of the group, the amount is to be
calculated as if the transaction had already occurred;

 

43

 

(vi)          “audited balance sheet”
means the audited balance sheet of the company prepared for the purposes of the
Companies Acts for a financial year unless an audited consolidated balance
sheet dealing with the state of affairs of the group required to be dealt with
in group accounts has been prepared for those purposes for the same financial
year, in which case it means that audited consolidated balance sheet, and in
that case all references to reserves and profit and loss account shall be deemed
to be references to consolidated reserves and consolidated profit and loss
account respectively;

 

(vii)         the company may from time to time change the
accounting convention on which the audited balance sheet is based provided that
any new convention adopted complies with the requirements of the Companies
Acts; if the company should prepare its primary audited balance sheet on the
basis of one convention, but a supplementary audited balance sheet on the basis
of another, the primary audited balance sheet shall be taken as the audited
balance sheet;

 

(viii)        “the group”
means the company, its subsidiaries and any other entity the accounts of which
are required to be consolidated with the accounts of the company and its
subsidiaries;

 

(ix)           “the minority proportion”
means a proportion equal to the
proportion of the issued share capital of a partly-owned member of the group
which is not attributable to a member of the group; and

 

(x)            a certificate or report by the auditors as to
the amount of the adjusted capital and reserves or the amount of any borrowings
or to the effect that the limit imposed by this article has not been or will
not be exceeded at any particular time or times shall be conclusive evidence of
that amount or of that fact.

 

103.        Agents

 

(A)          The board can appoint anyone as the company’s
attorney by granting a power of attorney or by authorising them in some other
way. Attorneys can either be appointed directly by the board or the board can
give someone else the power to select attorneys. The board or the persons who
are authorised by it to select attorneys can decide on the purposes, powers,
authorities and discretions of attorneys. But they cannot give an attorney any
power, authority or discretion which the board does not have under these
articles.

 

(B)           The board can decide how long a power of
attorney will last for and attach any conditions to it. The power of attorney
can include any provisions which the board decides on for the protection and
convenience of anybody dealing with the attorney. The power of attorney can
allow the attorney to grant any or all of his power, authority or discretion to
any other person.

 

44

 

(C)           The board can:-

 

(i)            delegate any of its authority, powers or
discretions to any manager or agent of the company;

 

(ii)           allow managers or agents to delegate to
another person;

 

(iii)          remove any people it has appointed in any of
these ways; and

 

(iv)          cancel or change anything that it has
delegated, although this will not affect anybody who acts in good faith who has
not had any notice of any cancellation or change.

 

Any appointment or delegation by the board
which is referred to in this article can be on any conditions decided on by the
board.

 

(D)          The ability of the board to delegate under
this article applies to all its powers and is not limited because certain
articles refer to powers being exercised by the board or by a committee
authorised by the board while other articles do not.

 

(E)           Without prejudice to any powers of delegation granted
to the directors elsewhere under these articles, the board may make such
arrangements as it thinks fit for the management and transaction of the company’s
affairs in the United Kingdom, the Republic of Ireland and elsewhere, and may
for that purpose appoint local boards, managers and agents and delegate to them
upon such terms and conditions as the board thinks fit any of the powers of the
board (other than the power to borrow and make calls) with power to
sub-delegate, and may authorise them to fill any vacancies in their number or
to act notwithstanding any vacancies.

 

104.        Delegation to Individual
Directors

 

The board may entrust to and confer upon any director any of its powers,
authorities and discretions (with power to sub-delegate) upon such terms and
conditions and with such restrictions as it thinks fit, and either collaterally
with, or to the exclusion of, its own powers, authorities and discretions and
may from time to time revoke or vary all or any of them but no person dealing
in good faith and without notice of the revocation or variation shall be
affected by it. The power to delegate contained in this article shall be
effective in relation to the powers, authorities and discretions of the board
generally and shall not be limited by the fact that in certain articles, but
not in others, express reference is made to particular powers, authorities or
discretions being exercised by the board or by a committee authorised by the
board.

 

105.        Official Seals

 

The company may exercise all the powers conferred by the Companies Acts
with regard to having official seals and those powers shall be vested in the
board.

 

45

 

106.        Branch Registers

 

The board may direct the company to keep, in any part of the world
outside the United Kingdom in which the company transacts business, a branch
register or registers of members resident in such territory, and the board may
(subject to the provisions of the Companies Acts) make and vary such
regulations as it thinks fit regarding the keeping of any such register or
registers, provided that if there are in issue any uncertificated shares such
regulations shall be consistent with the Uncertificated Securities Regulations.

 

107.        Provision for Employees

 

The board may exercise any power conferred by the Companies Acts to make
provision for the benefit of persons employed or formerly employed by the
company or any of its subsidiaries in connection with the cessation or the
transfer to any person of the whole or part of the undertaking of the company
or that subsidiary.

 

Proceedings of the Board

 

108.        Board Meetings

 

The board may meet for the despatch of business, adjourn and otherwise
regulate its meetings as it thinks fit. A meeting of the board may be called on
reasonable notice by (and shall be so called by the secretary at the
requisition of) any of the following:

 

(A)          the chairman or the joint chairmen (or either
of them);

 

(B)           the vice-chairman or the joint vice-chairmen
(or either of them);

 

(C)           the deputy chairman or the joint deputy
chairmen (or either of them);

 

(D)          the chief executive;

 

(E)           the managing director (or any joint managing
director); or

 

(F)           any two directors.

 

109.        Notice of Board Meetings

 

Notice of a board meeting shall be deemed to be properly given to a
director if it is given to him personally or by word of mouth or sent in
writing to him at his last known address or any other address given by him to
the company for this purpose. A director absent or intending to be absent from
the United Kingdom or the Republic of Ireland may request the board that
notices of board meetings shall during his absence be sent in writing to him at
an address given by him to the company for this purpose, but such notices need
not be given any earlier than notices given to directors not so absent and if
no request is made to the board it shall not be necessary to give notice of a
board meeting to any director who is absent from the United Kingdom or the
Republic of Ireland at the relevant time. A director may waive notice of any
meeting either

 

46

 

prospectively or retrospectively. In this article references to in
writing include the use of electronic communications subject to such terms and
conditions as the board may decide.

 

110.        Quorum

 

The quorum necessary for the transaction of the business of the board
may be fixed by the board but shall not be less than three. Subject to the
provisions of these articles, any director who ceases to be a director at a
board meeting may continue to be present and to act as a director and be
counted in the quorum until the termination of the board meeting if no other
director objects and if otherwise a quorum of directors would not be present.

 

111.        Directors below Minimum
through Vacancies

 

The continuing directors or a sole continuing director may act
notwithstanding any vacancy in their number but, if and so long as the number
of directors is reduced below the minimum number fixed by or in accordance with
these articles or is below the number fixed by or in accordance with these
articles as the quorum or there is only one continuing director, the continuing
directors or director may act for the purpose of filling vacancies or of
summoning general meetings of the company but not for any other purpose. If
there are no directors or director able or willing to act, then any two members
(excluding any member holding shares as treasury shares) may summon a general
meeting for the purpose of appointing directors.

 

112.        Appointment of Chairman,
Vice-Chairman and Deputy Chairman

 

The board may appoint a chairman or joint chairmen and, if it thinks
fit, a vice-chairman or joint vice-chairmen and a joint deputy chairman or
deputy chairmen of its meetings and determine the period for which they
respectively are to hold office. If there are joint chairmen at any time, they
shall, unless otherwise determined by the board, chair alternate meetings of
the board. If no chairman, vice-chairman or deputy chairman is appointed, or
none is present within five minutes after the time fixed for holding any
meeting, the directors present may choose one of their number to act as
chairman of the meeting. If more than one person is appointed as vice-chairman
or deputy chairman, and a dispute arises as to which of them shall be chairman
the directors present shall determine which person is to act as chairman.

 

113.        Competence of Meetings

 

A meeting of the board at which a quorum is present shall be competent
to exercise all the powers, authorities and discretions vested in or exercisable
by the board.

 

114.        Voting

 

Questions arising at any meeting shall be determined by a majority of
votes. In the case of an equality of votes the chairman of the meeting shall
have a second or casting vote.

 

115.        Delegation to Committees

 

(A)          The board may delegate any of its powers,
authorities and discretions (with power to sub-delegate) for such time, on such
terms and subject to such

 

47

 

conditions as it thinks fit to any committee, consisting of such person or
persons (whether a member or members of its body or not) as it thinks fit. Any
committee so formed may exercise its powers to sub-delegate by sub-delegating
to any person or persons (whether or not a member of the board or of the
committee).

 

(B)           Any committee so formed shall, in the exercise
of the powers, authorities and discretions so delegated, conform to any
regulations which may be imposed on it by the board. The meetings and
proceedings of any committee consisting of three or more members shall be
governed by the provisions contained in these articles for regulating the
meetings and proceedings of the board so far as the same are applicable and are
not superseded by any regulations imposed by the board.

 

(C)           The power to delegate contained in this
article shall be effective in relation to the powers, authorities and
discretions of the board generally and shall not be limited by the fact that in
certain articles, but not in others, express reference is made to particular
powers, authorities or discretions being exercised by the board or by a
committee authorised by the board.

 

116.        Participation in Meetings by
Telephone

 

All or any of the members of the board may participate in a meeting of
the board by means of a conference telephone or any communication equipment
which allows all persons participating in the meeting to speak to and hear each
other. A person so participating shall be deemed to be present in person at the
meeting and shall be entitled to vote or be counted in a quorum accordingly.

 

117.        Resolution in Writing

 

A resolution in writing signed by a majority of the directors who are at
the relevant time entitled to receive notice of a meeting of the board or a
committee of the board and who would be entitled to vote on the resolution at a
meeting of the board or a meeting of a committee of the board (if that number
is sufficient to constitute a quorum) shall be as valid and effectual as a
resolution passed at a meeting of the board (or, as the case may be, of that
committee) properly called and constituted. The resolution may be contained in
one document or in several documents in like form each signed by one or more of
the directors concerned. In this article references to in writing include the
use of electronic communications subject to such terms and conditions as the
board may decide.

 

118.        Validity of Acts of Board or
Committee

 

All acts done by the board or by any committee or sub-committee of the
board or by any person acting as a director or member of a committee or sub-committee
shall, notwithstanding that it is afterwards discovered that there was some
defect in the appointment of any member of the board or committee or
sub-committee or person so acting or that they or any of them were disqualified
from holding office or had vacated office or were not entitled to vote, be as
valid as if each such member or person had been properly appointed and was
qualified and had

 

48

 

continued to be a director or member of the committee or sub-committee
and had been entitled to vote.

 

Secretary

 

119.        Appointment and Removal of
the Secretary

 

(A)          Subject to the provisions of the Companies
Acts, the secretary shall be appointed by the board for such term and upon such
conditions as the board may think fit, and any secretary so appointed may be
removed by the board. The company secretary shall receive such remuneration as
the board or any committee authorised by the board for these purposes shall
decide.

 

(B)           The board may also appoint one or more deputy
secretaries or joint, assistant or acting secretaries for such term and upon
such conditions as it thinks fit; any deputy, joint, assistant or acting
secretary so appointed may be removed by the board.

 

(C)           Any provision of the Companies Act or these
articles requiring or authorising a thing to be done by or to a director and
the secretary shall not be satisfied by its being done by or to the same person
acting both as director and as, or in place of, the secretary.

 

120.        Authentication of Documents

 

(A)          Any director or the secretary or any person
appointed by the board for the purpose, has the power to authenticate any
documents affecting the constitution of the company and any resolutions passed
by the company or the board or any committee of the board and any books,
records, documents and accounts relating to the business of the company, and to
certify copies or extracts as true copies or extracts. Where any books,
records, documents or accounts are elsewhere than at the office, the officer or
local manager of the company having custody of such books, records, documents
or accounts is deemed to be a person appointed by the board for these purposes.

 

(B)           A document purporting to be a copy of a
resolution, or an extract from the minutes of a meeting of the company or of
the board or of any committee, which is certified as such in accordance with
article 120(A) is conclusive evidence in favour of all persons dealing with the
company on the faith of the document that the resolution has been duly passed
or, as the case may be, that the extract is a true and accurate record of
proceedings at a duly constituted meeting.

 

Seals

 

121.        Use of Seals

 

The board shall provide for the custody of every seal of the company. A
seal shall only be used by the authority of the board or of a committee of the
board authorised by the board in that

 

49

 

behalf. Subject as otherwise provided in these articles, and to any
resolution of the board or committee of the board dispensing with the
requirement for counter-signature on any occasion, any instrument to which the
common seal is applied shall be signed by at least one director and the
secretary, or by at least two directors or by such other person or persons as
the board may approve. Any instrument to which an official seal is applied need
not, unless the board otherwise decides or the law otherwise requires, be
signed by any person.

 

122.        Seal for Use Abroad

 

The company may have:

 

(A)          an official seal kept by virtue of the
Companies Acts; and

 

(B)           an official seal for use abroad under the
provisions of the Companies Acts, where and as the board determines, and the
company may by writing under the seal appoint any agent or committee abroad to
be the duly authorised agents of the company for the purpose of affixing and
using such official seal and may impose such restrictions on its use as the
board thinks fit.

 

Dividends and Other Payments

 

123.        Declaration of Dividends by
Company

 

The company may by ordinary resolution from time to time declare
dividends in accordance with the respective rights of the members, but no
dividend shall exceed the amount recommended by the board.

 

124.        Payment of Interim and Fixed
Dividends by Board

 

Subject to the provisions of the Companies Acts, the board may pay such
interim dividends as appear to the board to be justified by the financial
position of the company and may also pay any dividend payable at a fixed rate
at intervals settled by the board whenever the financial position of the company,
in the opinion of the board, justifies its payment. If the board acts in good
faith, it shall not incur any liability to the holders of any shares for any
loss they may suffer in consequence of the payment of an interim or fixed
dividend on any other class of shares ranking pari passu with or after those
shares.

 

125.        Calculation and Currency of
Dividends

 

Except in so far as the rights attaching to, or the terms of issue of,
any share otherwise provide:-

 

(i)            all dividends shall be declared and paid according
to the amounts paid up on the share in respect of which the dividend is paid,
but no amount paid up on a share in advance of calls shall be treated for the
purposes of this article as paid up on the share;

 

50

 

(ii)           all dividends shall be apportioned and paid
pro rata according to the amounts paid up on the share during any portion or portions of the period in
respect of which the dividend is paid; and

 

(iii)          dividends may be declared or paid in any currency.

 

The board shall decide, in accordance with article 126, the basis of
conversion for any currency conversions that may be required and how any costs
involved are to be met.

 

126.        Payment of Dividends in
Foreign Currencies

 

(A)          The board may in its discretion make provisions to enable such approved depositaries
and/or members as the board shall from time to time determine to receive
dividends duly declared in a currency or currencies other than sterling. For
the purposes of the calculation of the amount receivable in respect of any dividend, the rate of exchange to
be used to determine the foreign currency equivalent of any sum payable as a
dividend shall be such market rate selected by the board as they shall consider
appropriate ruling at the close of business in London on the date which is the
business day last preceding:

 

(i)            in the case of a dividend to be declared by
the company in general meeting, the date on which the board publicly announces
its intention to recommend that dividend; and

 

(ii)           in the case of any other dividend, the date on
which the board publicly announces its intention to pay that dividend.

 

(B)           Where an approved depositary has elected or
agreed to receive dividends in a foreign
currency, the board may in its discretion approve the entering into of arrangements
with the approved depositary to enable payment of the dividend in such foreign
currency for value on the date on which the relevant dividend is paid, or on
such other date as the board may determine.

 

127.        Amounts Due on Shares may be
Deducted from Dividends

 

The board may deduct from any dividend or other moneys payable to a
member by the company on or in respect of any shares all sums of money (if any)
presently payable by him to the company on account of calls or otherwise in
respect of shares of the company. Sums so deducted can be used to pay amounts
owing to the company in respect of the shares.

 

128.        No Interest on Dividends

 

Subject to the rights attaching to, or the terms of issue of, any
shares, no dividend or other moneys payable by the company on or in respect of
any share shall bear interest against the company.

 

51

 

129.        Payment Procedure

 

(A)          Any dividend or other sum payable in cash by
the company in respect of a share may be paid by cheque, warrant or similar
financial instrument sent by post addressed to the holder at his registered
address or, in the case of an approved depositary (subject to the approval of
the board), to such persons and addresses as the approved depositary may notify
or, in the case of joint holders, addressed to the holder whose name stands
first in the register in respect of the shares at his address as appearing in
the register or addressed to such person and at such address as the holder or
joint holders may in writing direct.

 

(B)           Every cheque, warrant or similar financial
instrument shall, unless the holder or joint holders otherwise direct, be made
payable to the holder or, in the case of joint holders, to the holder whose
name stands first on the register in respect of the shares, and shall be sent
at his or their risk and payment of the cheque, warrant or similar financial
instrument by the financial institution on which it is drawn shall constitute a
good discharge to the company. In addition, any such dividend or other sum may
be paid by any bank or other funds transfer system or such other means
including, in respect of uncertificated shares, by means of the facilities and
requirements of a relevant system and to or through such person as the holder
or joint holders may in writing direct and the company may agree, and the
making of such payment shall be a good discharge to the company and the company
shall have no responsibility for any sums lost or delayed in the course of
payment by any such system or other means or where it has acted on any such
directions and accordingly, payment by any such system or other means shall
constitute a good discharge to the company.

 

(C)           Any one of two or more joint holders may give
effectual receipts for any dividends or other moneys payable or property
distributable on or in respect of the shares held by them. Where a person is
entitled by transmission to a share, any dividend or other sum payable by the
company in respect of the share may be paid as if he were a holder of the share and his address
noted in the register were his registered address and where two or more persons
are so entitled, any one of them may give effectual receipts for any dividends
or other moneys payable or property distributable on or in respect of the
shares.

 

130.        Uncashed Dividends

 

The company may cease to send any cheque, warrant or similar financial
instrument through the post or to employ any other means of payment, including
payment by means of a relevant system, for any dividend payable on any shares
in the company which is normally paid in that manner on those shares if in
respect of at least two consecutive dividends payable on those shares the
cheques, warrants or similar financial instruments have been returned undelivered
or remain uncashed during or at the end of the period for which the same are
valid or that means of payment has failed. In addition, the company may cease
to send any cheque, warrant or similar financial instrument through the post or
may cease to employ any other means of payment if, in respect of one dividend
payable on those shares, the cheque, warrant or similar financial instrument
has been returned undelivered or remains uncashed during or at the end of

 

52

 

the period for which the same is valid or that means of payment has
failed and reasonable enquiries have failed to establish any new address or
account of the holder. Subject to the provisions of these articles, the company
must recommence sending cheques, warrants or similar financial instruments or
employing such other means in respect of dividends payable on those shares if
the holder or person entitled by transmission requests such recommencement in
writing.

 

131.        Forfeiture of Unclaimed Dividends

 

All dividends or other sums payable on or in respect of any shares which
remain unclaimed may be invested or otherwise made use of by the board for the
benefit of the company until claimed. Any dividend or other sum unclaimed after
a period of 12 years from the date when it was declared or became due for
payment shall be forfeited and shall revert to the company unless the board
decides otherwise and the payment by the board of any unclaimed dividend or
other sum payable on or in respect of a share into a separate
account shall not constitute the company a trustee in respect of it.

 

132.        Dividends Not in Cash

 

Any general meeting declaring a dividend may, upon the recommendation of
the board, by ordinary resolution direct that it shall be satisfied wholly or
partly by the distribution of assets, and in particular of paid up shares or
debentures of any other company, and where any difficulty arises in regard to
the distribution the board may settle it as it thinks expedient, and in
particular may authorise any person to sell and transfer any fractions or may
ignore fractions altogether, and may fix the value for distribution purposes of
any assets or any part thereof to be distributed and may determine that cash
shall be paid to any members upon the footing of the value so fixed in order to
secure equality of distribution and may vest any assets to be distributed in
trustees as may seem expedient to the board.

 

133.        Dividend Reinvestment Plans

 

The board may from time to time make available to members the
opportunity to participate in a dividend reinvestment plan or similar scheme.

 

Capitalisation of Reserves

 

134.        Power to Capitalise Reserves
and Funds

 

The company may, upon the recommendation of the board, at any time and
from time to time pass an ordinary resolution to the effect that it is
desirable to capitalise all or any part of any amount standing to the credit of
any reserve or fund (including the profit and loss account) at the relevant
time whether or not the same is available for distribution and accordingly that
the amount to be capitalised be set free for distribution among the members or
any class of members who would be entitled to it if it were distributed by way
of dividend and in the same proportions, on the footing that it is applied either
in or towards paying up the amounts unpaid at the relevant time on any shares in
the company held by those members respectively or in paying up in full unissued
shares, debentures or other obligations of the company to be allotted

 

53

 

and distributed credited as fully paid up among those members, or partly
in one way and partly in the other, but so that, for the purposes of this
article:

 

(i)            a share premium account and a capital
redemption reserve, and any reserve or fund representing unrealised profits,
may be applied only in paying up in full unissued shares of the company; and

 

(ii)           where the amount capitalised is applied in
paying up in full unissued shares, the company will also be entitled to participate
in the relevant distribution in relation to any shares of the relevant class
held by it as treasury shares and the proportionate entitlement of the relevant
class of members to the distribution will be calculated accordingly.

 

The board may authorise any person to enter into an agreement with the
company on behalf of the persons entitled to participate in the distribution
and the agreement shall be binding on those persons.

 

135.        Settlement of Difficulties in
Distribution

 

Where any difficulty arises in regard to any distribution of any
capitalised reserve or fund the board may settle the matter as it thinks
expedient and in particular may authorise any person to sell and transfer any
fractions or may resolve that the distribution should be as nearly as may be
practicable in the correct proportion but not exactly so or may ignore
fractions altogether, and may determine that cash payments shall be made to any
members in order to adjust the rights of all parties, as may seem expedient to
the board.

 

Record Dates

 

136.        Power to Choose Any Record
Date

 

Notwithstanding any other provision of these articles, the company or
the board may fix any date as
the record date for any dividend, distribution, allotment or issue and such
record date may be on or at any time before or after any date on which the
dividend, distribution, allotment or issue is declared, paid or made. The power
to fix any such record date shall include the power to fix a time on the chosen
date.

 

Accounting Records and Summary Financial Statements

 

137.        Records to be Kept

 

The board shall cause to be kept accounting records sufficient to show
and explain the company’s transactions, and such as to disclose with reasonable
accuracy at any time the financial position of the company at that time, and
which accord with the Companies Acts.

 

54

 

138.        Inspection of Records

 

No member in his capacity as such shall have any right of inspecting any
accounting record or book or document of the company except as conferred by
law, ordered by a court of competent jurisdiction or authorised by the board or
by ordinary resolution of the company.

 

139.        Summary Financial Statements

 

The company may send summary financial statements to members of the
company instead of copies of its full accounts and reports and for the purposes
of this article sending includes using electronic communications and
publication on a website in accordance with the Companies Acts.

 

Service of Notices and Documents

 

140.        Service of Notices

 

Any notice or document (including a share certificate) may be served on
or sent or delivered to any member by the company either personally or by
sending it through the post addressed to the member at his registered address
or by leaving it at that address addressed to the member or by means of a
relevant system or, where appropriate, by sending it using electronic
communications to an address notified by the member concerned to the company
for that purpose or by publication on a website in accordance with the
Companies Acts or by any other means authorised in writing by the member
concerned. In the case of joint holders of a share, service, sending or
delivery of any notice or document on or to one of the joint holders shall for
all purposes be deemed a sufficient
service on or sending or delivery to all the joint holders.

 

141.        Record Date for Service

 

Any notice or document may be served, sent or delivered by the company
by reference to the register as it stands at any time not more than 28 days
before the date of service, sending or delivery. No change in the register
after that time shall invalidate that service, sending or delivery. Where any
notice or document is served on or sent or delivered to any person in respect
of a share in accordance with these articles, no person deriving any title or
interest in that share shall be entitled to any further service, sending or
delivery of that notice or document.

 

142.        Members Resident Abroad or on
branch registers

 

(A)          Any member whose registered address is not
within the United Kingdom or the Republic of Ireland and who gives to the
company a postal address within the United Kingdom or the Republic of Ireland
at which notices or documents may be served upon, or delivered to, him shall be
entitled to have notices or documents served on or sent or delivered to him at
that address. Any member whose registered address is not within the United
Kingdom or the Republic of Ireland and who gives to the company an address for
the purposes of electronic communications may, at the absolute discretion of
the board, have notices or documents sent to him at that address. Otherwise, a
member whose registered

 

55

 

address is not within the United Kingdom or
the Republic of Ireland shall not be entitled to receive any notice or document
from the company.

 

(B)           For a member registered on a branch register,
notices or documents can be posted or despatched in the United Kingdom or in
the country where the branch register is kept.

 

143.        Service of Notice on Person
Entitled by Transmission

 

A person who is entitled by transmission to a share, upon supplying the
company with a postal address within the United Kingdom or the Republic of
Ireland for the service of notices shall be entitled to have served upon or
delivered to him at such address any notice or document to which he would have
been entitled if he were the holder of that share. A person who is entitled by
transmission to a share, upon supplying the company with an address for the purposes
of electronic communications for the service of notices may, at the absolute
discretion of the board, have sent to him at such address any notice or
document to which he would have been entitled if he were the holder of that
share. In either case, such service, sending or delivery shall for all purposes
be deemed a sufficient service, sending or delivery of such notice or document
on all persons interested (whether jointly with or as claimants through or
under him) in the share. Otherwise, any notice or other document served on or
sent or delivered to any member pursuant to these articles shall,
notwithstanding that the member is then dead or bankrupt or that any other
event giving rise to the transmission of the share by operation of law has
occurred and whether or not the company has notice of the death, bankruptcy or
other event, be deemed to have been properly served, sent or delivered in
respect of any share registered in the name of that member as sole or joint
holder.

 

144.        When Notice Deemed Served

 

Any notice or document, if sent by the company by post, shall be deemed
to have been served or delivered on the day following that on which it was put
in the post if first class post was used or 72 hours after it was posted if first class post was not used and,
in proving service or delivery, it shall be sufficient to prove that the notice
or document was properly addressed, prepaid and put in the post. Any notice or
document not sent by post but left by the company at a registered address or at
an address (other than an address for the purposes of electronic
communications) notified to the company in accordance with these articles by a
person who is entitled by transmission to a share shall be deemed to have been
served or delivered on the day it was so left. Any notice or document served or
delivered by the company by means of a relevant system shall be deemed to have
been served or delivered when the company or any sponsoring system-participant
acting on its behalf sends the issuer-instruction relating to the notice or
document. Any notice or document sent by the company using electronic
communications shall be deemed to have been received on the day following that
on which it was sent. A notice or other document placed on the company’s
website or websites shall be deemed to have been received on the day following
that on which a notice of
availability was sent. Proof that a notice or document contained in an
electronic communication was given or sent in accordance with current guidance
issued by the Institute of Chartered Secretaries and Administrators shall be
conclusive evidence that the notice or document was given or sent. Any notice
or document served, sent or delivered by the company by any other means
authorised in writing by the

 

56

 

member concerned shall be deemed to have been served, received or
delivered when the company has carried out the action it has been authorised to
take for that purpose.

 

145.        Notice When Post Not
Available

 

If at any time by reason of the suspension or curtailment of postal
services within the United Kingdom or the Republic of Ireland or some part of
the United Kingdom or the Republic of Ireland or of the relevant electronic
communication system the company is unable effectively to convene a general
meeting by notice sent through the post or by electronic communications, notice
of the general meeting may be given to members affected by the suspension or
curtailment by a notice advertised in at least two leading national daily
newspapers published in the United Kingdom and in one leading national daily
newspaper published in the Republic of Ireland. Notice published in this way
shall be deemed to have been properly served on all affected members who are
entitled to have notice of the meeting served upon them, at noon on the day
when the last such advertisement has appeared. If at least seven clear days
prior to the meeting the sending of notices by post or by electronic
communications has again become generally possible, the company shall send
confirmatory copies of the notice by post or by electronic communications to
the persons entitled to receive them.

 

146.        Members Present Deemed to
Have Received Notice

 

Any member present, either in person or by proxy, at any general meeting
of the company or of the holders of any class of shares in the company shall
for all purposes be deemed to have received due notice of that meeting and of
the purposes for which the meeting was called.

 

147.        Power to Stop Sending Notices
or Other Documents.

 

Subject to the Companies Acts, if on two consecutive occasions a notice
or other document sent to a member has been returned undelivered, such member
shall not thereafter be entitled
to receive notices or documents from the company until he shall have
communicated with the company and supplied to the company (or its agent) a new
registered address, or a postal address within the United Kingdom or the
Republic of Ireland for the service of notices and documents, or shall have
informed the company, in such manner as may be specified by the company, of an
address for the service of notices and documents by electronic communications.
For these purposes:-

 

(i)            a notice or document sent by post shall be
treated as returned undelivered if the notice or document is sent back to the
company (or its agents), and a notice or document sent by electronic
communications shall be treated as returned undelivered if the company (or its
agents) receives notification that the notice or document was not delivered to the
address to which it was sent; and

 

(ii)           references to a document include references to
any cheque, warrant or similar financial instrument, but nothing in this
article shall entitle the company to cease (or refuse to recommence) sending
any cheque, warrant or similar financial instrument for any dividend, unless it
is otherwise entitled under these articles to do so.

 

57

 

Destruction of Documents

 

148.        Presumptions Where Documents
Destroyed

 

If the company destroys or
deletes :-

 

(i)            any share certificate which has been cancelled
at any time after a period of one year has elapsed from the date of
cancellation; or

 

(ii)           any instruction concerning the payment of
dividends or other moneys in respect of any share or any notification of change
of name or address at any time after a period of two years has elapsed from the
date the instruction or notification was recorded by the company; or

 

(iii)          any instrument of transfer of shares or
operator-instruction for the transfer of shares which has been registered by
the Company at any time after a period of six years has elapsed from the date
of registration; or

 

(iv)          any other document on the basis of which any
entry is made in the register at any time after a period of six years has
elapsed from the date the entry was first made in the register in respect of
it,

 

and the company destroys or deletes the document or instruction in good
faith and without express notice that its preservation was relevant to a claim,
it shall be presumed irrebuttably in favour of the company that every share
certificate so destroyed was a valid certificate and was properly cancelled,
that every instrument of transfer or operator-instruction so destroyed or
deleted was a valid and effective instrument of transfer or instruction and was
properly registered and that every other document so destroyed was a valid and
effective document and that any particulars of it which are recorded in the
books or records of the company were correctly recorded. If the documents
relate to uncertificated shares, the company must comply with any requirements
of the Uncertificated Securities Regulations which limit its ability to destroy
these documents. Nothing contained in this article shall be construed as imposing
upon the company any liability which, but for this article, would not exist or by reason only of the
destruction of any document of the kind mentioned above before the relevant
period mentioned in this article has elapsed or of the fact that any other condition
precedent to its destruction mentioned above has not been fulfilled. References
in this article to the destruction of any document include references to its
disposal in any manner.

 

Winding Up

 

149.        Distribution of Assets
Otherwise Than in Cash

 

If the company commences liquidation, the liquidator may, with the
sanction of an extraordinary resolution of the company and any other sanction
required by the Companies Acts:-

 

(i)            divide among the members (excluding any member
holding shares as treasury shares) in kind the whole or any part of the assets
of the company (whether they shall consist of property of the same kind or not)
and, for that purpose, set

 

58

 

such values as he deems fair upon any property
to be divided and determine how the division shall be carried out as between
the members or different classes of members; or

 

(ii)           vest the whole or any part of the assets in
trustees upon such trusts for the benefit of the contributories as the liquidator,
with the like sanction, shall think fit,

 

but no member shall be compelled to accept any shares or other assets
upon which there is any liability.

 

Indemnity

 

150.        Indemnity of Officers and
Insurance

 

Subject to the provisions of the Companies Acts:

 

(i)            the company may indemnify any director or other officer of the company or of
any associated company or subsidiary undertaking against any liability and may
purchase and maintain for any such director or officer insurance against any
liability; and

 

(ii)           the company may indemnify the auditor of the
company against any liability incurred by him in the execution of his duties as
auditor of the company and may purchase and maintain for the auditor insurance
against any such liability.

 

59

 

CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Exclusion
  of Table A

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Form
  of Resolution

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Authorised
  Share Capital

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Rights
  Attached to Shares

  	
  4

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Redeemable
  Shares

  	
  4

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Purchase
  of Own Shares

  	
  4

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Variation
  of Rights

  	
  4

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Pari
  Passu Issues

  	
  5

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Unissued
  Shares

  	
  5

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Payment
  of Commission

  	
  7

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Trusts
  Not Recognised

  	
  7

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Suspension
  of Rights Where Non-Disclosure of Interest

  	
  7

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Uncertificated
  Shares

  	
  10

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Right
  to Share Certificates

  	
  11

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Replacement
  of Share Certificates

  	
  11

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Execution
  of Share Certificates

  	
  12

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Company’s
  Lien on Shares Not Fully Paid

  	
  12

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Enforcing
  Lien by Sale

  	
  12

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Application
  of Proceeds of Sale

  	
  12

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Calls

  	
  13

  

 

 

	
  22.

  	
  Timing
  of Calls

  	
  13

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Liability
  of Joint Holders

  	
  13

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Interest
  Due on Non-Payment

  	
  13

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Sums
  Due on Allotment Treated as Calls

  	
  13

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Power
  to Differentiate

  	
  13

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Payment
  of Calls in Advance

  	
  14

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Notice
  if Call or Installment Not Paid

  	
  14

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Form
  of Notice

  	
  14

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Forfeiture
  for Non-Compliance with Notice

  	
  14

  
	
   

  	
   

  	
   

  
	
  31.

  	
  Notice
  after Forfeiture

  	
  14

  
	
   

  	
   

  	
   

  
	
  32.

  	
  Sale
  of Forfeited Shares

  	
  15

  
	
   

  	
   

  	
   

  
	
  33.

  	
  Arrears
  to be Paid Notwithstanding Forfeiture

  	
  15

  
	
   

  	
   

  	
   

  
	
  34.

  	
  Effect
  of Forfeiture

  	
  15

  
	
   

  	
   

  	
   

  
	
  35.

  	
  Statutory
  Declaration as to Forfeiture

  	
  15

  
	
   

  	
   

  	
   

  
	
  36.

  	
  Transfer

  	
  15

  
	
   

  	
   

  	
   

  
	
  37.

  	
  Execution
  of Transfer

  	
  16

  
	
   

  	
   

  	
   

  
	
  38.

  	
  Rights
  to Decline Registration of Partly Paid Shares

  	
  16

  
	
   

  	
   

  	
   

  
	
  39.

  	
  Other
  Rights to Decline Registration

  	
  16

  
	
   

  	
   

  	
   

  
	
  40.

  	
  No
  Fee for Registration

  	
  17

  
	
   

  	
   

  	
   

  
	
  41.

  	
  Renunciation
  of Allotment

  	
  17

  
	
   

  	
   

  	
   

  
	
  42.

  	
  Untraced
  Shareholders

  	
  17

  
	
   

  	
   

  	
   

  
	
  43.

  	
  Transmission
  on Death

  	
  18

  
	
   

  	
   

  	
   

  
	
  44.

  	
  Entry
  of Transmission in Register

  	
  18

  
	
   

  	
   

  	
   

  
	
  45.

  	
  Election
  of Person Entitled by Transmission

  	
  19

  

 

61

 

	
  46.

  	
  Rights
  of Person Entitled by Transmission

  	
  19

  
	
   

  	
   

  	
   

  
	
  47.

  	
  Increase,
  Consolidation, Sub-Division and Cancellation

  	
  19

  
	
   

  	
   

  	
   

  
	
  48.

  	
  Fractions

  	
  20

  
	
   

  	
   

  	
   

  
	
  49.

  	
  Reduction
  of Capital

  	
  20

  
	
   

  	
   

  	
   

  
	
  50.

  	
  Extraordinary
  General Meetings

  	
  20

  
	
   

  	
   

  	
   

  
	
  51.

  	
  Annual
  General Meetings

  	
  21

  
	
   

  	
   

  	
   

  
	
  52.

  	
  Convening
  of Extraordinary General Meetings

  	
  21

  
	
   

  	
   

  	
   

  
	
  53.

  	
  Separate
  General Meetings

  	
  21

  
	
   

  	
   

  	
   

  
	
  54.

  	
  Length
  of Notice

  	
  21

  
	
   

  	
   

  	
   

  
	
  55.

  	
  Omission
  or Non-Receipt of Notice

  	
  21

  
	
   

  	
   

  	
   

  
	
  56.

  	
  Postponement
  of General Meetings

  	
  22

  
	
   

  	
   

  	
   

  
	
  57.

  	
  Quorum

  	
  22

  
	
   

  	
   

  	
   

  
	
  58.

  	
  Procedure
  if Quorum Not Present

  	
  22

  
	
   

  	
   

  	
   

  
	
  59.

  	
  Security
  Arrangements

  	
  22

  
	
   

  	
   

  	
   

  
	
  60.

  	
  Chairman
  of General Meeting

  	
  23

  
	
   

  	
   

  	
   

  
	
  61.

  	
  Orderly
  Conduct

  	
  24

  
	
   

  	
   

  	
   

  
	
  62.

  	
  Entitlement
  to Attend and Speak

  	
  24

  
	
   

  	
   

  	
   

  
	
  63.

  	
  Adjournments

  	
  24

  
	
   

  	
   

  	
   

  
	
  64.

  	
  Notice
  of Adjournment

  	
  25

  
	
   

  	
   

  	
   

  
	
  65.

  	
  Amendments
  to Resolutions

  	
  25

  
	
   

  	
   

  	
   

  
	
  66.

  	
  Amendments
  Ruled Out of Order

  	
  25

  
	
   

  	
   

  	
   

  
	
  67.

  	
  Votes
  of Members

  	
  25

  
	
   

  	
   

  	
   

  
	
  68.

  	
  Method
  of Voting

  	
  26

  
	
   

  	
   

  	
   

  
	
  69.

  	
  Procedure
  if Poll Demanded

  	
  26

  

 

62

 

	
  70.

  	
  When
  Poll to be Taken

  	
  26

  
	
   

  	
   

  	
   

  
	
  71.

  	
  Continuance
  of Other Business after Poll Demand

  	
  27

  
	
   

  	
   

  	
   

  
	
  72.

  	
  Votes
  on a Poll

  	
  27

  
	
   

  	
   

  	
   

  
	
  73.

  	
  Casting
  Vote of Chairman

  	
  27

  
	
   

  	
   

  	
   

  
	
  74.

  	
  Votes
  of Joint Holders

  	
  27

  
	
   

  	
   

  	
   

  
	
  75.

  	
  Voting
  on Behalf of Incapable Member

  	
  27

  
	
   

  	
   

  	
   

  
	
  76.

  	
  No
  Right to Vote where Sums Overdue on Shares

  	
  28

  
	
   

  	
   

  	
   

  
	
  77.

  	
  Objections
  or Errors in Voting

  	
  28

  
	
   

  	
   

  	
   

  
	
  78.

  	
  Appointment
  and Receipt of Proxies

  	
  28

  
	
   

  	
   

  	
   

  
	
  79.

  	
  Maximum
  Validity of Proxy

  	
  30

  
	
   

  	
   

  	
   

  
	
  80.

  	
  Form
  of Proxy

  	
  30

  
	
   

  	
   

  	
   

  
	
  81.

  	
  Cancellation
  of Proxy’s Authority

  	
  30

  
	
   

  	
   

  	
   

  
	
  82.

  	
  Board’s
  Power to Issue Proxies

  	
  30

  
	
   

  	
   

  	
   

  
	
  83.

  	
  Corporations
  Acting by Representatives

  	
  30

  
	
   

  	
   

  	
   

  
	
  84.

  	
  Number
  of Directors

  	
  31

  
	
   

  	
   

  	
   

  
	
  85.

  	
  Age
  of Directors

  	
  31

  
	
   

  	
   

  	
   

  
	
  86.

  	
  Directors’
  Shareholding Qualification

  	
  31

  
	
   

  	
   

  	
   

  
	
  87.

  	
  Power
  of Company to Elect Directors

  	
  31

  
	
   

  	
   

  	
   

  
	
  88.

  	
  Power
  of Board to Appoint Directors

  	
  31

  
	
   

  	
   

  	
   

  
	
  89.

  	
  Directors
  to Retire by Rotation

  	
  32

  
	
   

  	
   

  	
   

  
	
  90.

  	
  Power
  of Removal by Special Resolution

  	
  32

  
	
   

  	
   

  	
   

  
	
  91.

  	
  Persons
  Eligible as Directors

  	
  33

  
	
   

  	
   

  	
   

  
	
  92.

  	
  Position
  of Retiring Directors

  	
  33

  
	
   

  	
   

  	
   

  
	
  93.

  	
  Vacation
  of Office by Directors

  	
  33

  

 

63

 

	
  94.

  	
  Alternate
  Directors

  	
  34

  
	
   

  	
   

  	
   

  
	
  95.

  	
  Chief
  Executive, Managing and Executive Directors

  	
  35

  
	
   

  	
   

  	
   

  
	
  96.

  	
  Directors’
  Fees

  	
  36

  
	
   

  	
   

  	
   

  
	
  97.

  	
  Additional
  Remuneration

  	
  36

  
	
   

  	
   

  	
   

  
	
  98.

  	
  Expenses
  and Legal Costs

  	
  36

  
	
   

  	
   

  	
   

  
	
  99.

  	
  Power
  to Pay Pensions and Gratuities

  	
  36

  
	
   

  	
   

  	
   

  
	
  100.

  	
  Permitted
  Interests and Voting

  	
  37

  
	
   

  	
   

  	
   

  
	
  101.

  	
  General
  Powers of Company Vested in Board

  	
  41

  
	
   

  	
   

  	
   

  
	
  102.

  	
  Borrowing
  Powers

  	
  41

  
	
   

  	
   

  	
   

  
	
  103.

  	
  Agents

  	
  44

  
	
   

  	
   

  	
   

  
	
  104.

  	
  Delegation
  to Individual Directors

  	
  45

  
	
   

  	
   

  	
   

  
	
  105.

  	
  Official
  Seals

  	
  45

  
	
   

  	
   

  	
   

  
	
  106.

  	
  Branch
  Registers

  	
  46

  
	
   

  	
   

  	
   

  
	
  107.

  	
  Provision
  for Employees

  	
  46

  
	
   

  	
   

  	
   

  
	
  108.

  	
  Board
  Meetings

  	
  46

  
	
   

  	
   

  	
   

  
	
  109.

  	
  Notice
  of Board Meetings

  	
  46

  
	
   

  	
   

  	
   

  
	
  110.

  	
  Quorum

  	
  47

  
	
   

  	
   

  	
   

  
	
  111.

  	
  Directors
  below Minimum through Vacancies

  	
  47

  
	
   

  	
   

  	
   

  
	
  112.

  	
  Appointment
  of Chairman, Vice-Chairman and Deputy Chairman

  	
  47

  
	
   

  	
   

  	
   

  
	
  113.

  	
  Competence
  of Meetings

  	
  47

  
	
   

  	
   

  	
   

  
	
  114.

  	
  Voting

  	
  47

  
	
   

  	
   

  	
   

  
	
  115.

  	
  Delegation
  to Committees

  	
  47

  
	
   

  	
   

  	
   

  
	
  116.

  	
  Participation
  in Meetings by Telephone

  	
  48

  
	
   

  	
   

  	
   

  
	
  117.

  	
  Resolution
  in Writing

  	
  48

  

 

64

 

	
  118.

  	
  Validity
  of Acts of Board or Committee

  	
  48

  
	
   

  	
   

  	
   

  
	
  119.

  	
  Appointment
  and Removal of the Secretary

  	
  49

  
	
   

  	
   

  	
   

  
	
  120.

  	
  Authentication
  of Documents

  	
  49

  
	
   

  	
   

  	
   

  
	
  121.

  	
  Use
  of Seats

  	
  49

  
	
   

  	
   

  	
   

  
	
  122.

  	
  Seal
  for Use Abroad

  	
  50

  
	
   

  	
   

  	
   

  
	
  123.

  	
  Declaration
  of Dividends by Company

  	
  50

  
	
   

  	
   

  	
   

  
	
  124.

  	
  Payment
  of Interim and Fixed Dividends by Board

  	
  50

  
	
   

  	
   

  	
   

  
	
  125.

  	
  Calculation
  and Currency of Dividends

  	
  50

  
	
   

  	
   

  	
   

  
	
  126.

  	
  Payment
  of Dividends in Foreign Currencies

  	
  51

  
	
   

  	
   

  	
   

  
	
  127.

  	
  Amounts
  Due on Shares may be Deducted from Dividends

  	
  51

  
	
   

  	
   

  	
   

  
	
  128.

  	
  No
  Interest on Dividends

  	
  51

  
	
   

  	
   

  	
   

  
	
  129.

  	
  Payment
  Procedure

  	
  52

  
	
   

  	
   

  	
   

  
	
  130.

  	
  Uncashed
  Dividends

  	
  52

  
	
   

  	
   

  	
   

  
	
  131.

  	
  Forfeiture
  of Unclaimed Dividends

  	
  53

  
	
   

  	
   

  	
   

  
	
  132.

  	
  Dividends
  Not in Cash

  	
  53

  
	
   

  	
   

  	
   

  
	
  133.

  	
  Dividend
  Reinvestment Plans

  	
  53

  
	
   

  	
   

  	
   

  
	
  134.

  	
  Power
  to Capitalise Reserves and Funds

  	
  53

  
	
   

  	
   

  	
   

  
	
  135.

  	
  Settlement
  of Difficulties in Distribution

  	
  54

  
	
   

  	
   

  	
   

  
	
  136.

  	
  Power
  to Choose Any Record Date

  	
  54

  
	
   

  	
   

  	
   

  
	
  137.

  	
  Records
  to be Kept

  	
  54

  
	
   

  	
   

  	
   

  
	
  138.

  	
  Inspection
  of Records

  	
  55

  
	
   

  	
   

  	
   

  
	
  139.

  	
  Summary
  Financial Statements

  	
  55

  
	
   

  	
   

  	
   

  
	
  140.

  	
  Service
  of Notices

  	
  55

  
	
   

  	
   

  	
   

  
	
  141.

  	
  Record
  Date for Service

  	
  55

  

 

65

 

	
  142.

  	
  Members
  Resident Abroad or on branch registers

  	
  55

  
	
   

  	
   

  	
   

  
	
  143.

  	
  Service
  of Notice on Person Entitled by Transmission

  	
  56

  
	
   

  	
   

  	
   

  
	
  144.

  	
  When
  Notice Deemed Served

  	
  56

  
	
   

  	
   

  	
   

  
	
  145.

  	
  Notice
  When Post Not Available

  	
  57

  
	
   

  	
   

  	
   

  
	
  146.

  	
  Members
  Present Deemed to Have Received Notice

  	
  57

  
	
   

  	
   

  	
   

  
	
  147.

  	
  Power
  to Stop Sending Notices or Other Documents.

  	
  57

  
	
   

  	
   

  	
   

  
	
  148.

  	
  Presumptions
  Where Documents Destroyed

  	
  58

  
	
   

  	
   

  	
   

  
	
  149.

  	
  Distribution
  of Assets Otherwise Than in Cash

  	
  58

  
	
   

  	
   

  	
   

  
	
  150.

  	
  Indemnity
  of Officers and Insurance

  	
  59

  

 

66

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}]]