Document:

exhibit10-43.htm

  

  

Exhibit 10.43

 

 

JOINT VENTURE AGREEMENT

 

BETWEEN

 

VISTA GOLD (BARBADOS) CORP.

 

AND

 

PAN ASIA RESOURCES CORP.

 

WITH RESPECT TO

 

SALU SIWA LTD.,

 

PT MASMINDO DWI AREA

 

AND THE

 

AWAK MAS PROJECT

 

 

 

 

  

  

Exhibit 10.43

TABLE OF CONTENTS

 

Page No.

	  	  	  
	
ARTICLE I

	
DEFINITIONS

	
1

	
ARTICLE II

	
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS

	
4

	
2.1

	
Capacity of Parties

	
4

	
2.2

	
Representations and Warranties of Vista Barbados

	
4

	
2.3

	
Disclosures

	
5

	
2.4

	
Record Title

	
5

	
ARTICLE III

	
GRANT AND EXERCISE OF OPTION

	
5

	
3.1

	
Grant of Option

	
5

	
3.2

	
Conditions to Exercise of Option

	
5

	
3.3

	
Notice of Exercise

	
6

	
3.4

	
Shareholders’ Agreement

	
6

	
3.5

	
Deemed Incurrence of Costs

	
6

	
ARTICLE IV

	
PURPOSES

	
7

	
4.1

	
Purposes

	
7

	
4.2

	
Limitation

	
7

	
ARTICLE V

	
RELATIONSHIP OF THE PARTIES

	
7

	
5.1

	
No Partnership

	
7

	
5.2

	
Other Business Opportunities

	
7

	
5.3

	
Implied Covenants; No Additional Duties

	
8

	
5.4

	
Liabilities; Indemnification

	
8

	
ARTICLE VI

	
RIGHTS AND COVENANTS PRIOR TO EXERCISE OF THE OPTION

	
8

	
6.1

	
Non-Compete Covenants

	
8

	
ARTICLE VII

	
TERMINATION

	
8

	
7.1

	
Termination

	
8

	
7.2

	
Termination without Exercise of Option

	
9

	
7.3

	
Termination on Exercise of Option

	
10

	
ARTICLE VIII

	
REPRESENTATION ON BOARD OF DIRECTORS

	
10

	
8.1

	
Pan Asia Representative

	
10

	
8.2

	
Representative’s Expenses

	
10

	
8.3

	
Powers of Representative

	
10

	
8.4

	
Resignation of Representative

	
10

	
8.5

	
Interim Period

	
10

	
ARTICLE IX

	
RESPONSIBILITY FOR OPERATIONS

	
10

	
9.1

	
General

	
10

	
9.2

	
Powers and Duties of Pan Asia

	
11

	
9.3

	
Standard of Care

	
13

	
9.4

	
Transactions With Affiliates

	
13

	
ARTICLE X

	
PROGRAMS AND BUDGETS

	
13

	
10.1

	
Initial Program and Budget

	
13

	
10.2

	
Operations Pursuant to Programs and Budgets

	
14

	
10.3

	
Presentation of Programs and Budgets

	
14

	
10.4

	
Budget Overruns; Program Changes

	
14

	
ARTICLE XI

	
FURTHER ACTS

	
14

	
11.1

	
Shareholders’ Agreement

	
14

	
11.2

	
Completion of Certain Matters

	
14

	
ARTICLE XII

	
ACCOUNTS AND SETTLEMENTS

	
14

	
12.1

	
Monthly Statements

	
14

	
12.2

	
Audits

	
15

	
ARTICLE XIII

	
ACQUISITIONS WITHIN AREA OF INTEREST

	
15

	
13.1

	
General

	
15

	
13.2

	
Notice to Non-acquiring Party

	
15

	
13.3

	
Option Exercised

	
15

	
13.4

	
Option Not Exercised

	
15

	
ARTICLE XIV

	
ASSIGNMENT OF INTEREST

	
16

	
14.1

	
Assignment

	
16

	
14.2

	
Retransfer From Affiliate

	
16

	
14.3

	
No Encumbrance

	
16

	
ARTICLE XV

	
CHANGE OF CONTROL OF PAN ASIA

	
16

	
15.1

	
Notice to Vista Barbados

	
16

	
15.2

	
Change in Control

	
16

	
ARTICLE XVI

	
CONFIDENTIALITY

	
16

	
16.1

	
General

	
16

	
16.2

	
Exceptions

	
17

	
16.3

	
Duration of Confidentiality

	
17

	
ARTICLE XVII

	
GENERAL PROVISIONS

	
17

	
17.1

	
Notices

	
17

	
17.2

	
Interpretation

	
18

	
17.3

	
Currency

	
19

	
17.4

	
Headings

	
19

	
17.5

	
Waiver

	
19

	
17.6

	
Modification

	
19

	
17.7

	
Force Majeure

	
19

	
17.8

	
Governing Law

	
19

	
17.9

	
Disputes

	
20

	
17.10

	
Rule Against Perpetuities

	
20

	
17.11

	
Further Assurances

	
20

	
17.12

	
No Third Party Beneficiaries

	
20

	
17.13

	
Entire Agreement; Successors and Assigns

	
20

	
17.14

	
Counterparts and Facsimile

	
20

	  	  	  
	
EXHIBIT A

	
PROPERTY DESCRIPTION AND AREA OF INTEREST

	
A-1

	
EXHIBIT B

	
FORM OF SHAREHOLDERS’ AGREEMENT

	
B-1

	
EXHIBIT C

	
INITIAL PROGRAM AND BUDGET

	
C-1

	
EXHIBIT D

	
FORM OF POWER OF ATTORNEY

	
D-1

 

 

  

  

Exhibit 10.43

JOINT VENTURE AGREEMENT

 

WITH RESPECT TO

 

SALU SIWA LTD., PT MASMINDO DWI AREA AND THE AWAK MAS PROJECT

 

THIS JOINT VENTURE AGREEMENT (this “Agreement”) is made as of December 23, 2009 (the “Effective Date”) between Vista Gold (Barbados) Corp. (“Vista Barbados”), a Barbados corporation, and Pan Asia Resources Corp. (“Pan Asia”), a Cayman Islands corporation.

 

RECITALS

 

A.           Vista Barbados is a wholly-owned subsidiary of Vista Gold Corp. (“Vista”).  Vista Barbados owns all of the issued and outstanding shares of Salu Siwa Ltd. (“Salu Siwa”), which in turn owns a 99% interest in PT Masmindo Dwi Area (“PT Masmindo”).  Vista Barbados directly holds a 1% interest in PT Masmindo.  PT Masmindo holds a Seventh Generation Contract of Work in the Property comprising the Awak Mas Project in Indonesia (defined below as the “Contract of Work”) as more particularly described in Part I of Exhibit A (defined below as the “Property”);

 

B.           Pursuant to a letter agreement dated July 2, 2009, as amended by (i) a letter agreement dated October 16, 2009, (ii) a letter agreement dated November 18, 2009, and (iii) a letter agreement dated December 15, 2009 (collectively, the “Letter Agreement”) between Vista and Pan Asia, Vista granted to Pan Asia the option, subject to the terms and conditions set out in the Letter Agreement, to enter into a joint venture arrangement for the purpose of earning a 60% interest in the Property via ownership of 60.6% of the outstanding shares of Salu Siwa (the “Joint Venture”);

 

C.           Pursuant to a notice dated September 30, 2009, Pan Asia elected to proceed with the Joint Venture; and

 

D.           Vista Barbados and Pan Asia wish to enter into this Agreement in order to govern the terms of the Joint Venture and to set out the terms upon which Pan Asia may earn a 60% interest in the Property.

 

IN CONSIDERATION OF the covenants and agreements contained herein, Vista Barbados and Pan Asia agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.

1.1           “Affiliate” means any person, partnership, limited liability company, joint venture, corporation or other form of enterprise which directly or indirectly controls, is controlled by, or is under common control with, a Party.  For purposes of the preceding sentence, “control” means possession, directly or indirectly, of the power to direct or cause direction of management and policies through ownership of voting securities, contract, voting trust or otherwise.

 

1.2           “Agreement” means this Joint Venture Agreement, including all amendments and modifications thereof, and all schedules and exhibits, which are incorporated herein by this reference.

 

1.3           “AMDAL” means the environmental impact assessment required under the Contract of Work.

 

1.4           “Area of Interest” means the area described in Part 2 of Exhibit A.

 

  

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Exhibit 10.43

1.5           “Assets” means the Property, Products and all other real and personal property, tangible and intangible, held by PT Masmindo.

 

1.6           “Awak Mas Project” means the mineral project located on the Property and governed by the Contract of Work.

 

1.7           “Board of Directors” means the board of directors of PT Masmindo.

 

1.8           “Budget” means a detailed estimate of all costs to be incurred by PT Masmindo with respect to a Program and a schedule of cash advances to be made by Pan Asia with respect to such Program (which, for the avoidance of doubt, shall include the initial budget appended at Exhibit C hereto.

 

1.9           “Business Day” means a day on which chartered banks are open for the transaction of regular business in the cities of Denver, Colorado and Vancouver, British Columbia.

 

1.10           “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 derive independent economic value, actual or potential, as a result of not being generally known to, or readily ascertainable by, third parties and which are the subject of efforts that are reasonable under the circumstances to maintain their 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 Party, Salu Siwa or PT Masmindo.

 

1.11           “Constating Documents” means the articles of association of PT Masmindo, as amended from time to time.

 

1.12           “Continuing Obligations” means 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.

 

1.13           “Contract of Work” means the contract of work between the Governments of the Republic of Indonesia and PT Masmindo dated January 19, 1998 (as may be amended from time to time).

 

1.14           “Development” means all preparation for the removal and recovery of Products, including the construction or installation of a mill or any other improvements to be used for the mining, handling, milling, processing or other beneficiation of Products.

 

1.15           “Effective Date” means the date first written above.

 

1.16           “Encumbrance” means any mortgage, charge, pledge, lien or other security interest, or any right or privilege capable of becoming any of the foregoing.

 

1.17           “Environmental Compliance” means action 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.

 

1.18           “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 release of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances as wastes into the

 

  

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Exhibit 10.43

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.

 

1.19           “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 PT Masmindo or either Party, by any person or entity other than the other Party, 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.

 

1.20           “Escrow Agreement” means the escrow agreement to be entered into among Vista Barbados, Pan Asia and Computershare Trust Company of Canada, or such other agent as is acceptable to the Parties acting reasonably, regarding the 2,000,000 ordinary shares of Pan Asia to be issued to Vista in accordance with Section 3.2(i).

 

1.21           “Expenditures” has the meaning ascribed thereto in Section 3.2.

 

1.22           “Exploration” means all activities directed toward ascertaining the existence, location, quantity, quality or commercial value of deposits of Products.

 

1.23           “Feasibility Study” has the meaning ascribed thereto in Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects, as amended from time to time.

 

1.24           “Interim Period” has the meaning ascribed thereto in Section 8.5.

 

1.25           “Joint Venture” has the meaning ascribed thereto in Recital B to this Agreement.

 

1.26           “Letter Agreement” has the meaning ascribed thereto in Recital B to this Agreement.

 

1.27           “Mining” means the mining, extracting, producing, handling, milling or other processing of Products.

 

1.28           “Operations” means the activities to be carried out by PT Masmindo under this Agreement.

 

1.29           “Option” has the meaning ascribed thereto in Section 3.1.

 

1.30           “Pan Asia” means Pan Asia Resources Corp.

 

1.31           “Party” and “Parties” mean Vista Barbados and Pan Asia, and any other person or entity admitted as a substituted or additional Party under this Agreement.

 

1.32           “Products” means all ores, minerals and mineral resources produced from the Property under this Agreement.

 

  

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Exhibit 10.43

1.33           “Power of Attorney” means the power of attorney in the form appended at Exhibit D.

 

1.34           “Program” means a description in reasonable detail of Operations to be conducted and objectives to be accomplished by Pan Asia for a year or any longer period (which, for the avoidance of doubt, shall include the initial program appended at Exhibit C hereto).

 

1.35           “Property” means those interests described in Part I of Exhibit A and all other interests in real property within the Area of Interest which are acquired and held subject to this Agreement.

 

1.36           “PT Masmindo” means PT Masmindo Dwi Area.

 

1.37           “Representative” means Pan Asia’s nominee to the Board of Directors, and, during the Interim Period, means the person to whom the Power of Attorney is granted.

 

1.38           “Salu Siwa” means Salu Siwa Ltd.

 

1.39           “Shareholders’ Agreement” means the shareholders’ agreement among Vista Barbados, Pan Asia and Salu Siwa, substantially in the form as attached at Exhibit B.

 

1.40           “Transfer” means to sell, grant, assign, encumber, pledge, or otherwise commit or dispose of.

 

1.41           “Vista” means Vista Gold Corp.

 

1.42           “Vista Barbados” means Vista Gold (Barbados) Corp.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS

 

2.1           Capacity of Parties

 

.  As of the Effective Date, each of the Parties represents and warrants as follows:

 

	
  

	
(a)

	
it is a corporation duly organized and in good standing in its jurisdiction of organization and is qualified to do business, and is in good standing in those jurisdictions where necessary in order to carry out the purposes of this Agreement;

 

	
  

	
(b)

	
it has the capacity to enter into and perform this Agreement and all transactions contemplated herein, and that all corporate 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; and

 

	
  

	
(d)

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

 

2.2           Representations and Warranties of Vista Barbados

 

.  As of the Effective Date, Vista Barbados makes the following representations and warranties to Pan Asia:

 

  

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Exhibit 10.43

(a)           With respect to those interests in the Property in which PT Masmindo holds an interest under the Contract of Work or other contracts: (i) PT Masmindo is in exclusive possession of such interests; (ii) PT Masmindo has not received any notice of default of any of the terms or provisions of such contracts; (iii) PT Masmindo has the authority under the Contract of Work to perform fully its obligations under this Agreement; (iv) to the best of Vista Barbados’ knowledge and belief, the Contract of Work is valid and is in good standing; and (v) to the best of Vista Barbados’ knowledge and belief, the interests covered thereby are free and clear of all defects, liens and encumbrances except for those specifically identified in Part 1 of Exhibit A or in the Contract of Work.  Vista Barbados has delivered to Pan Asia all information concerning title to the Properties in its or its Affiliates’ possession or control, including, but not limited to, a true and correct copy of the Contract of Work relating to the Property of which Vista Barbados has knowledge.

 

	
  

	
(b)

	
With respect to the Contract of Work, (i) all filings required to maintain in good standing the claims subject thereto have been properly and timely recorded or filed with appropriate governmental agencies; (ii) such claims are free and clear of defects, liens and encumbrances arising by, through or under PT Masmindo; and (iii) PT Masmindo has no knowledge of conflicting claims.

 

	
  

	
(c)

	
With respect to the Property, there are no pending or threatened actions, suits, claims or proceedings.

 

The representations and warranties set forth above shall survive the execution and delivery of any documents of Transfer provided under this Agreement.

 

2.3           Disclosures

 

.  Each of the Parties represents and warrants that it is unaware of any material facts or circumstances which have not been disclosed in this Agreement, which should be disclosed to the other Party in order to prevent the representations in this ARTICLE II from being materially misleading.

 

2.4           Record Title

 

.  Title to the Assets shall be held by PT Masmindo.

 

ARTICLE III

 

GRANT AND EXERCISE OF OPTION

 

3.1           Grant of Option

 

.  Vista Barbados hereby gives and grants to Pan Asia the sole, exclusive and irrevocable right and option (the “Option”), on and subject to the terms of this Agreement, to acquire a 60% undivided beneficial interest in the Property via ownership of 60.6% of the issued and outstanding shares of Salu Siwa.

 

3.2           Conditions to Exercise of Option

 

.  Pan Asia may exercise the Option by (and only after) completing the following matters to the reasonable satisfaction of Vista Barbados:

 

	
  

	
(i)

	
issuing to Vista within 30 days of the Effective Date, 2,000,000 (two million) ordinary shares in Pan Asia free and clear of any encumbrances, to be held in

 

  

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Exhibit 10.43

	
  

	
escrow until an extension to the Contact of Work is granted by the Government of Indonesia in accordance with the terms of the Escrow Agreement;

 

	
  

	
(ii)

	
granting to Vista, within 30 days of the Effective Date, the right to purchase up to 2,000,000 (two million) ordinary shares in Pan Asia free and clear of any encumbrance (except a hold period required by a regulatory authority or by a stock exchange on which such securities are listed) on the same terms as such shares are issued in connection with an initial public offering thereof, such right to be effective for the term of this Agreeement;

 

	
  

	
(iii)

	
directly funding to PT Masmindo, within a period of 30 months from the Effective Date, a minimum of $3,000,000 (the “Expenditures”) to further define, explore and develop the Properties, less a management fee equal to up to 10% of the value of all Expenditures actually incurred by Pan Asia; and

 

	
  

	
(iv)

	
directing and implementing the Operations of PT Masmindo in accordance with Article IX for a period of 30 months following the Effective Date (unless extended in accordance with the prior written agreement of Vista Barbados).

 

3.3           Notice of Exercise

 

.  Pan Asia shall give notice to Vista Barbados forthwith upon Pan Asia having complied with the conditions contemplated in Section 3.2.

 

3.4 Shareholders’ Agreement

 

.  Upon Pan Asia exercising its Option in accordance with Sections 3.2 and 3.3, Vista Barbados shall cause Salu Siwa to issue to Pan Asia from treasury, for no additional consideration, such number of shares as results in Pan Asia owning 60.6% of the then issued and outstanding shares of Salu Siwa, and the Parties shall enter into the Shareholders’ Agreement, substantially in the form attached hereto at Exhibit B.  The Shareholders’ Agreement shall govern the relationship of Pan Asia and Vista in respect of Salu Siwa, PT Masmindo and the Properties and, as of the date the Shareholders’ Agreement becomes effective, this Agreement shall cease to apply.

 

3.5           Deemed Incurrence of Costs

 

.  Upon the execution of the Shareholders’ Agreement, the Parties shall be deemed to have made the following contributions to their respective Tracking Account (as defined in the Shareholders’ Agreement) and to respectively have the following Proportionate Share (as defined in the Shareholders’ Agreement):

 

	  	
Initial Contribution to Tracking Account

	
Initial Proportionate Share

	
Pan Asia

	
$6,000,000

	
60%

	
Vista Barbados

	
$4,000,000

	
40%

 

  

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Exhibit 10.43

ARTICLE IV

 

PURPOSES

 

4.1           Purposes

 

.  During the term of this Agreement, Salu Siwa shall be limited to the following purposes, and shall serve as the exclusive means by which the Parties, or either of them, accomplish such purposes:

 

	
  

	
(a)

	
to hold shares in PT Masmindo; and

 

	
  

	
(b)

	
to cause PT Masmindo to:

 

	
  

	
(i)

	
conduct Exploration within the Area of Interest;

 

	
  

	
(ii)

	
evaluate the possible Development of the Properties;

 

	
  

	
(iii)

	
complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties;

 

	
  

	
(iv)

	
complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties;

 

	
  

	
(v)

	
engage in Development and Mining Operations on the Properties; and

 

	
  

	
(vi)

	
perform any other activity necessary, appropriate, or incidental to any of the foregoing.

 

4.2           Limitation

 

.  Unless the Parties otherwise agree in writing, the Operations shall be limited to the purposes described in Section 4.1, and nothing in this Agreement shall be construed to enlarge such purposes.

 

ARTICLE V

 

RELATIONSHIP OF THE PARTIES

 

5.1           No Partnership

 

.  Nothing contained in this Agreement shall be deemed to constitute either Party the partner of the other, or to create any mining, commercial or other partnership.  Except pursuant to the authority expressly granted herein or as otherwise agreed in writing between the Parties, neither Party shall have any authority to act for Salu Siwa, PT Masmindo or another Party, or to assume any obligation or responsibility on behalf of Salu Siwa, PT Masmindo or the other Party, solely by virtue of being a Party.

 

5.2           Other Business Opportunities

 

.  Except as expressly provided in this Agreement, each Party shall have the right independently to engage in and receive full benefits from business activities, whether or not competitive with the Operations, without consulting the other.  The doctrines of “corporate opportunity” or “business opportunity” shall not be applied to any other activity, venture, or operation of either Party, and, except as otherwise provided in Section 6.1, neither Party shall have any obligation to the other Party with respect to any opportunity to acquire any property outside the Area of Interest at any time.

 

  

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Exhibit 10.43

5.3           Implied Covenants; No Additional Duties

 

.  There are no implied covenants contained in this Agreement other than those of the contractual covenant of good faith and fair dealing.  Notwithstanding any contrary provision of this Agreement, in carrying out any duties hereunder, neither Party shall be liable to Salu Siwa, PT Masmindo or to the other Party for breach of any duty due to such Party’s good faith reliance on the provisions of this Agreement, the records of Salu Siwa, PT Masmindo, or such information, opinions, reports or statements presented by the other Party, any officer or employee of Salu Siwa, PT Masmindo, or the Board of Directors or any committee thereof, or by any other person as to matters such Party reasonably believes are within such other person’s professional or expert competence.

 

5.4           Liabilities; Indemnification

 

	
  

	
(a)

	
No Party shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation or liability of Salu Siwa or PT Masmindo, whether such liability or obligation arises in contract, tort or otherwise, solely by reason of being a Party to this Agreement.

 

	
  

	
(b)

	
Subject to Section 5.3, each Party shall indemnify, defend and hold harmless Salu Siwa, PT Masmindo, the other Party, and such other Party’s directors, officers, employees, agents and attorneys from and against any and all losses, claims, damages and liabilities arising out of or relating to (i) any unauthorized act or any assumption of liability by the indemnifying Party (including in the case of Pan Asia, in its capacity as a operator of PT Masmindo), or any of its directors, officers, employees, agents and attorneys done or undertaken, or apparently done or undertaken, on behalf of PT Masmindo or the other Party, except pursuant to the authority expressly granted herein or as otherwise agreed in writing between the Parties, (ii) any breach by such Party of any of its representations or warranties set forth in this Agreement or (iii) any breach by such Party of any covenant contained in this Agreement caused by or attributable to such Party’s wilful misconduct or gross negligence, including in the case of Pan Asia, in its capacity as a operator of PT Masmindo.

 

ARTICLE VI

 

RIGHTS AND COVENANTS PRIOR TO EXERCISE OF THE OPTION

 

6.1           Non-Compete Covenants

 

.  In the event that this Agreement terminates prior to the exercise by Pan Asia of the Option in accordance with Sections 3.2 and 3.3, Pan Asia shall not directly or indirectly acquire any interest in a property within 3 kilometres from the boundary of the Area of Interest for 12 months after the date of the termination of this Agreement.  If Pan Asia breaches this Section 6.1, it shall be obligated to offer to convey to Vista Barbados, without cost, any such property or interest so acquired.  Such offer shall be made in writing and may be accepted by Vista Barbados at any time within 45 days after it is received by Vista Barbados.

 

ARTICLE VII

 

TERMINATION

 

7.1           Termination

 

.  This Agreement shall terminate:

 

  

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Exhibit 10.43

(a)           if Pan Asia gives written notice of termination to Vista Barbados, which Pan Asia shall be at liberty to do at any time after the execution of this Agreement and prior to its exercise of the Option pursuant to Sections 3.2 and 3.3;

 

	
  

	
(b)

	
if any of the following shall occur:

 

	
  

	
(i)

	
Pan Asia fails to pay or contest in good faith bills or debts of PT Masmindo within 60 days after they are due; or

 

	
  

	
(ii)

	
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 60 days after the making thereof, or such appointment is consented to, requested by, or acquiesced in by Pan Asia; or

 

	
  

	
(iii)

	
Pan Asia commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect; 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; makes a general assignment for the benefit of creditors; fails generally to pay its, or PT Masmindo’s debts as such debts become due; or takes corporate or other action in furtherance of any of the foregoing; or

 

	
  

	
(iv)

	
entry is made against Pan Asia of a judgment, decree or order for relief affecting a substantial part of its 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; or

 

	
  

	
(c)

	
if Pan Asia defaults with respect to any of its material covenants and agreements contained herein, Vista delivers notice to Pan Asia specifying the nature of such default and Pan Asia does not rectify such default within 60 days of the receipt of notice of such default from Vista, upon Vista giving written notice of termination to Pan Asia.

 

7.2           Termination without Exercise of Option

 

.  Upon termination of this Agreement pursuant to Subsection 7.1(a) or (b), Pan Asia shall:

 

	
  

	
(a)

	
cease to be liable to Vista Barbados under or in relation to this Agreement, except as provided in this Section 7.2 and for the performance of those of its agreements or covenants under this Agreement which should have been performed prior to such termination; and

 

	
  

	
(b)

	
deliver at no cost to Vista Barbados, not later than 90 days after the termination of this Agreement, copies of all information and data in its possession pertaining to the Property, PT Masmindo, Vista Barbados, Salu Siwa or any of their Affiliates, or results of operations on the Property not already provided to Vista Barbados, including maps, surveys, reports, records, studies, assays, core samples or logs in electronic or printed form, as applicable and available.

 

  

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Exhibit 10.43

7.3           Termination on Exercise of Option

 

.  Upon the exercise by Pan Asia of the Option pursuant to Sections 3.2 and 3.3 and the Parties entering into the Shareholders’ Agreement pursuant to Section 3.4, this Agreement shall terminate and, thereafter, the relationship of the Parties shall be governed by the Shareholders’ Agreement.

 

ARTICLE VIII

 

REPRESENTATION ON BOARD OF DIRECTORS

 

8.1           Pan Asia Representative

 

.  During the term of this Agreement, Pan Asia shall be entitled to appoint one nominee (“Representative”) as an executive member of the Board of Directors.  Pan Asia’s Representative will be entitled to receive notice of every meeting of the Board of Directors in accordance with the Constating Documents and shall be entitled to one vote on every question submitted at a meeting of the Board of Directors.  For greater certainty, each of the other members of the Board of Directors is also entitled to one vote on every question submitted at a meeting of the Board of Directors.  Pan Asia’s Representative will also be entitled to be included in the quorum required under the Constating Documents in order to approve a written consent resolution of the Board of Directors.

 

8.2           Representative’s Expenses

 

.  Pan Asia shall bear the expenses incurred by its Representative in attending meetings of the Board of Directors and otherwise with respect to the role of such Representative as an executive member of the Board of Directors.

 

8.3           Powers of Representative

 

.  Subject to the Constating Documents and applicable law, Pan Asia’s Representative shall have the powers and duties to implement and undertake the matters described in Section 9.2.

 

8.4           Resignation of Representative

 

.  Pan Asia shall cause its Representative to resign immediately upon the termination of this Agreement.

 

8.5           Interim Period

 

.  The Parties acknowledge that due to Indonesian regulatory requirements it may take up to a few months from the Effective Date to appoint Pan Asia’s Representative to the Board of Directors (the “Interim Period”).  The Parties agree that Pan Asia shall conduct Operations during the Interim Period pursuant to the Power of Attorney, which Power of Attorney shall be caused to be granted by Vista Barbados to a nominee of Pan Asia, and which Power of Attorney shall, for greater certainty, expire immediately upon the appointment of Pan Asia’s Representative to the Board of Directors.

 

ARTICLE IX

 

RESPONSIBILITY FOR OPERATIONS

 

9.1           General

 

.  The Parties hereby agree that Pan Asia shall have overall management responsibility for Operations during the term of, and subject to, this Agreement.

 

  

- 10 -

Exhibit 10.43

9.2           Powers and Duties of Pan Asia

 

.  Subject to the terms and provisions of this Agreement and the Constating Documents, Pan Asia shall, through its Representative and PT Masmindo, have the following powers and duties which shall be discharged in accordance with adopted Programs and Budgets:

 

	
  

	
(a)

	
Pan Asia shall, through its Representative and PT Masmindo:

 

	
  

	
(i)

	
manage, direct and control Operations;

 

	
  

	
(ii)

	
fund and make all expenditures necessary to carry out adopted Programs;

 

	
  

	
(iii)

	
(A) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made on the best terms available, taking into account all of the circumstances; (B) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (C) keep the Assets free and clear of all liens and encumbrances, except for 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 released or discharged in a diligent manner, or liens and encumbrances specifically approved by Board of Directors;

 

	
  

	
(iv)

	
conduct such title examinations and cure such title defects as may be advisable in the reasonable judgment of Pan Asia;

 

	
  

	
(v)

	
(A) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements related to the Assets; (B) pay all taxes, assessments and like charges on Operations and Assets; (C) if authorized by the Board of Directors, contest in the courts or otherwise, the validity or amount of any taxes, assessments or charges if Pan Asia deems them to be unlawful, unjust, unequal or excessive, or to undertake such other steps or proceedings as Pan Asia may deem reasonably necessary to secure a cancellation, reduction, readjustment or equalization thereof before Pan Asia shall be required to pay them, but in no event shall Pan Asia permit or allow title to the Assets to be lost as the result of the non-payment of any taxes, assessments or like charges; and (D) shall do all other acts reasonably necessary to maintain the Assets;

 

	
  

	
(vi)

	
(A) apply for all necessary permits, licenses and approvals; (B) comply with all applicable laws and regulations; (C) notify promptly the Board of Directors of any allegations of violation thereof; and (D) prepare and file all reports or notices required for Operations.  Pan Asia shall not be in breach of this provision if a violation has occurred in spite of Pan Asia’s good faith efforts to comply, and Pan Asia has timely cured or disposed of such violation through performance, or payment of fines and penalties;

 

	
  

	
(vii)

	
prosecute and defend, but not initiate without consent of the Board of Directors, all litigation or administrative proceedings arising out of Operations.  Vista Barbados shall have the right to participate, at its own expense, in such litigation or administrative proceedings.  The Board of Directors shall approve in advance

 

  

- 11 -

Exhibit 10.43

	
  

	
any settlement involving payments, commitments or obligations in excess of $100,000 in cash or value;

 

	
  

	
(viii)

	
obtain insurance for the benefit of PT Masmindo as determined from time to time by the Board of Directors; and

 

	
  

	
(ix)

	
dispose of Assets, whether by abandonment, surrender or Transfer in the ordinary course of business, except that Pan Asia shall not:  (A) dispose of Assets having a value in excess of $25,000; (B) dissolve or begin a liquidation of PT Masmindo; or (C) dispose of all or a substantial part of the Assets necessary to achieve the purposes of PT Masmindo.

 

	
  

	
(b)

	
Subject to applicable law, Pan Asia and its Representative shall have the right to carry out Pan Asia’s responsibilities hereunder through agents or independent contractors.

 

	
  

	
(c)

	
Pan Asia shall:

 

	
  

	
(i)

	
perform or cause to be performed during the term of this Agreement all assessment and other work required by law in order to maintain the Contract of Work and Property in good standing using reasonable best efforts;

 

	
  

	
(ii)

	
not be liable on account of any determination by any court or governmental agency that the work performed by Pan Asia 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 in accordance with the adopted Program and Budget;

 

	
  

	
(iii)

	
timely file with the appropriate agencies of the Government of Indonesia, quarterly reports in accordance with the Contract of Work as required by Indonesian law; and

 

	
  

	
(iv)

	
if authorized by the Board of Directors, amend the boundary of the Contract of Work of PT Masmindo in accordance with the existing Indonesian regulations governing such amendments.

 

	
  

	
(d)

	
Pan Asia and its Representative shall keep the Board of Directors advised of all Operations by submitting in writing to the Board of Directors: (i) monthly progress reports which 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 30 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 the Board of Directors may reasonably request.  Pan Asia and its Representative shall keep and maintain all required accounting and financial records in accordance with customary cost accounting practices in the mining industry.  At all reasonable times, Pan Asia and its Representative shall provide the Board of Directors or the representative of Vista Barbados, upon the request of any member of the Board of Directors, access to, and the right to inspect and copy all maps, drill logs, core tests, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other information acquired in Operations.  In addition, Pan Asia shall allow Vista Barbados, at the latter’s sole risk and expense, and subject to

 

  

- 12 -

Exhibit 10.43

	
  

	
reasonable safety regulations, to inspect the Assets and Operations at all reasonable times, so long as Vista Barbados does not unreasonably interfere with Operations.

 

	
  

	
(e)

	
Pan Asia shall prepare an Environmental Compliance plan for all Operations consistent with the requirements of the Contract of Work, any applicable laws or contractual obligations and shall include in each Program and Budget sufficient funding to implement the Environmental Compliance plan and satisfy the financial assurance requirements of any applicable law or contractual obligation pertaining to Environmental Compliance, the Contract of Work and the regulations of the Government of the Republic of Indonesia.  To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of the Property disturbed by Operations.

 

	
  

	
(f)

	
Pan Asia and its Representative shall perform Continuing Obligations when and as economic and appropriate.  As part of each Program and Budget submittal, Pan Asia shall specify in such Program and Budget the measures to be taken for performance of Continuing Obligations and the cost of such measures.  Pan Asia shall keep the other Party reasonably informed about Pan Asia’s efforts to discharge Continuing Obligations.  Authorized representatives of each Party shall have the right from time to time to enter the Property to inspect work directed toward satisfaction of Continuing Obligations and audit books, records and accounts related thereto.

 

	
  

	
(g)

	
In accordance with prevailing regulations from the Indonesian Government, PT Masmindo may be required to provide reclamation and post-mining guarantee funds to the Indonesian Government.  Pan Asia hereby covenants to undertake and perform acts reasonably necessary to finance and fulfill the foregoing.

 

Pan Asia shall not be in default of any duty under this Section 9.2 if its failure to perform results from the failure of Vista Barbados to perform acts required of it by this Agreement.

 

9.3           Standard of Care

 

.  Pan Asia shall 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 the terms and provisions of leases, licenses, permits, contracts and other agreements pertaining to Assets.  Notwithstanding anything in this Agreement to the contrary, Pan Asia shall not be liable to Vista Barbados, Salu Siwa or PT Masmindo for any breach of this Agreement or other act or omission resulting in damage or loss except to the extent caused by or attributable to Pan Asia’s wilful misconduct, negligence or breach of this Section 9.3.

 

9.4           Transactions With Affiliates

 

.  Subject to applicable law, if Pan Asia engages its Affiliates to provide services hereunder, it shall do so on terms no less favorable than would be the case with unrelated persons in arm’s-length transactions or on terms that have been approved by Vista Barbados.

 

ARTICLE X

 

PROGRAMS AND BUDGETS

 

10.1           Initial Program and Budget

 

.  The initial Program and Budget, which has been adopted by the Parties, is attached as Exhibit C.

 

  

- 13 -

Exhibit 10.43

10.2           Operations Pursuant to Programs and Budgets

 

.  Except as otherwise provided in this Agreement, Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to approved Programs and Budgets.  Each Program and Budget adopted pursuant to this Agreement shall provide for accrual of reasonably anticipated Environmental Compliance expenses for all Operations contemplated under the Program and Budget.

 

10.3           Presentation of Programs and Budgets

 

.  Proposed Programs and Budgets shall be prepared by Pan Asia for a period of one year or any longer period.  Each adopted Program and Budget, regardless of length, shall be reviewed at least once a year at a meeting of the Board of Directors.  During the period encompassed by any Program and Budget, and at least two months prior to its expiration, a proposed Program and Budget for the succeeding period shall be prepared by Pan Asia and submitted to the Board of Directors.  Each such proposed Program and Budget shall be in a form and degree of detail substantially similar to Exhibit C.

 

10.4           Budget Overruns; Program Changes

 

.  Pan Asia shall immediately notify the Board of Directors of any material departure from a Program and Budget.

 

ARTICLE XI

 

FURTHER ACTS

 

11.1           Shareholders’ Agreement

 

.  Vista Barbados and Pan Asia agree to use their commercially reasonable efforts to negotiate and finalize, as soon as practicable, but in no event later than the day which is 90 days from the Effective Date, the Shareholders’ Agreement (which Shareholders’ Agreement shall be substantially in the form as appended at Exhibit B hereto, modified as necessary to reflect the corporate laws of Australia and tax laws and accounting procedures in Australia, Indonesia and Canada) and otherwise as agreed by the Parties.

 

11.2           Completion of Certain Matters

 

– Within 30 days from the Effective Date:

 

	
  

	
(i)

	
Vista Barbados shall cause to be granted the Power of Attorney (substantially in the form as appended to Exhibit D hereto) to a nominee of Pan Asia designated in writing; and

 

	
  

	
(ii)

	
Vista Barbados and Pan Asia shall finalize the terms of the Escrow Agreement (using their commercially reasonable efforts).

 

ARTICLE XII

 

ACCOUNTS AND SETTLEMENTS

 

12.1           Monthly Statements

 

.  Pan Asia shall cause its Representative to promptly submit to the Board of Directors monthly statements of account reflecting in reasonable detail (i) the amount of Expenditures funded to PT Masmindo by Pan Asia during each preceding fiscal quarter, and (ii) the manner in which such Expenditures have been used or are intended to be used.

 

  

- 14 -

Exhibit 10.43

12.2           Audits

 

.  In accordance with the requirements of the Contract of Work and Indonesian law, Pan Asia shall order an audit of the accounting and financial records for each year (or other accounting period), and shall provide copies of the audit results to the Board of Directors within 30 days of receipt of the audit results.  All written exceptions to and claims upon Pan Asia for discrepancies disclosed by such audit shall be made not more than three months after receipt by the Board of Directors of the audit report.  Failure to make any such exception or claim within the three month period shall mean the audit is correct and binding upon the Parties and PT Masmindo.  The audits shall be conducted by a firm of certified public accountants selected by Pan Asia, unless otherwise agreed by the Board of Directors.

 

ARTICLE XIII

 

ACQUISITIONS WITHIN AREA OF INTEREST

 

13.1           General

 

.  Any interest or right to acquire any interest in real property within the Area of Interest acquired during the term of this Agreement by or on behalf of a Party or any Affiliate of a Party shall be subject to the terms and provisions of this Agreement.

 

13.2           Notice to Non-acquiring Party

 

.  Within 10 days after the acquisition of any interest or the right to acquire any interest in real property wholly or partially within the Area of Interest (except real property acquired by or on behalf of PT Masmindo pursuant to a Program), the acquiring Party shall notify the other Party of such acquisition.  The acquiring Party’s notice shall describe in detail the acquisition, the lands and minerals covered thereby, the cost thereof, and the reasons why the acquiring Party believes that the acquisition of the interest is in the best interests of the Parties under this Agreement.  In addition to such notice, the acquiring Party shall make any and all information concerning the acquired interest available for inspection by the other Party.

 

13.3           Option Exercised

 

.  If, within 15 days after receiving the acquiring Party’s notice, the other Party notifies the acquiring Party of its election to participate in the acquired interest, the acquiring Party or its Affiliate shall convey to PT Masmindo (or to the other Party or another entity as mutually agreed by the Parties), by special warranty deed, its entire acquired interest (or if to the other Party, a proportionate undivided interest therein based on the deemed Percentage Interests of the Parties as set out in Section 3.5).  If conveyed to PT Masmindo, the acquired interest shall become a part of the Property for all purposes of this Agreement immediately upon the notice of such other Party’s election to participate therein.  Such other Party shall promptly pay to the acquiring Party its proportionate share based on the deemed Proportionate Share (as set out in Section 3.5) of the latter’s actual out-of-pocket acquisition costs.

 

13.4           Option Not Exercised

 

.  If the other Party does not give such notice within the 15 day period set forth in Section 13.3, neither such Party nor PT Masmindo shall have any interest in the acquired interest, and the acquired interest shall not be a part of the Property or otherwise be subject to this Agreement.

 

  

- 15 -

Exhibit 10.43

ARTICLE XIV

 

ASSIGNMENT OF INTEREST

 

14.1           Assignment

 

.  During the term of this Agreement, neither Party shall sell, transfer or assign this Agreement or its rights or beneficial interest in the Property, without the consent of the other Party; provided that (a) either Party shall be permitted to assign this Agreement to an Affiliate.  An assignment to an Affiliate shall be subject to:

 

	
  

	
(a)

	
the Affiliate entering into an agreement, in form and substance satisfactory to the other Party, acting reasonably, to be bound by this Agreement; and

 

	
  

	
(b)

	
the Party assigning this Agreement to an Affiliate shall provide a guarantee to the other Party, in a form satisfactory to such other Party acting reasonably, guaranteeing the obligations of the Affiliate under this Agreement.

 

14.2           Retransfer From Affiliate

 

.  No Party may, after its assignment of this Agreement to an Affiliate pursuant to Section 14.1, take or permit any action whereby that Affiliate will cease to be an Affiliate of such Party without first causing the Affiliate to retransfer its rights and obligations under this Agreement to the Party whom originally assigned this Agreement.

 

14.3           No Encumbrance

 

.  Prior to the termination of this Agreement, neither Party will cause or allow an Encumbrance to be placed on its beneficial interest in the Properties or its rights under this Agreement.

 

ARTICLE XV

 

CHANGE OF CONTROL OF PAN ASIA

 

15.1           Notice to Vista Barbados

 

.  If there is any change in control of Pan Asia, Pan Asia shall forthwith give notice in writing to Vista Barbados advising it of the change in control and stating the name of the person or persons who have acquired control.

 

15.2           Change in Control

 

.  In this Article XIV, a change in control of Pan Asia shall occur if a person becomes a control person (as that term is defined in the Securities Act (British Columbia) of Pan Asia who was not previously such a control person, provided that the listing of the securities of Pan Asia on any widely-recognized stock exchange shall not constitute a change in control.

 

ARTICLE XVI

 

CONFIDENTIALITY

 

16.1           General

 

.  Subject to applicable law, each Party will keep confidential and not use, reveal, provide or transfer to any third party any Confidential Information it obtains or has obtained concerning PT Masmindo, Salu

 

  

- 16 -

Exhibit 10.43

Siwa, the Properties or the other Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld.

 

16.2           Exceptions

 

.  Subject to applicable law, the consent required by Section 16.1 shall not apply to a disclosure:

 

	
  

	
(a)

	
to a consultant, contractor, subcontractor, officer, director, professional advisor or employee of PT Masmindo, Salu Siwa, Pan Asia or any Party or any of their respective Affiliates that has a bona fide need to be informed;

 

	
  

	
(b)

	
to any third party to whom the disclosing Party contemplates a Transfer of all or any part of its rights or obligations under this Agreement, provided that such Transfer is in accordance with this Agreement;

 

	
  

	
(c)

	
to any actual or potential lender, underwriter or investors for the sole purpose of evaluating whether to make a loan to or investment in the disclosing Party, PT Masmindo, Salu Siwa or any of their Affiliates; or

 

	
  

	
(d)

	
to a governmental or regulatory agency which the disclosing Party believes in good faith requires the disclosure of such information pursuant to pertinent law or regulation or the rules of any stock exchange.

 

In any case to which this Section 16.2 is applicable, the disclosing Party shall give notice to the other Party concurrently with the making of such disclosure.  As to any disclosure pursuant to Section 16.2(a) (b) or (c), only such Confidential Information as such third party has a legitimate business need to know shall be disclosed and such third party (other than governmental or regulatory agencies) shall first agree in writing to protect the Confidential Information from further disclosure to the same extent as the Parties are obligated under this ARTICLE XVI, and the disclosing Party 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.

 

16.3           Duration of Confidentiality

 

.  The provisions of this ARTICLE XVI shall apply to a Party until the date that is two years after the termination of this Agreement in accordance with Article VII or the Transfer by such Party of its rights and obligations hereunder; provided that with respect to any Confidential Information that constitutes “trade secrets” of a Party (or of PT Masmindo, Salu Siwa or the Properties to the extent distributed or otherwise assigned to a Party pursuant to this Agreement) under applicable law, the provisions of this ARTICLE XVI shall survive indefinitely.

 

ARTICLE XVII

 

GENERAL PROVISIONS

 

17.1           Notices

 

.  All notices or other communications to be given hereunder shall be delivered by hand, facsimile or electronic transmission, and, if delivered by hand, shall be deemed to have been given on the date of delivery, or, if sent by facsimile or electronic transmission, on the date of transmission if sent before 5:00 p.m. (local time) and such date is a Business Day, or, if not, on the first Business Day following the date of transmission.

 

  

- 17 -

Exhibit 10.43

Notices to Vista Barbados shall be addressed to:

 

Vista Gold (Barbados) Corp.

c/o Vista Gold Corp.

7961 Shaffer Parkway, Suite 5

Littleton, Colorado  80127

 

Attention:                      Frederick H. Earnest

Facsimile:                      720-981-1186

Email:                      fhearnest@vistagold.com

 

with a copy (for informational purposes only) to:

 

Borden Ladner Gervais LLP

1200 Waterfront Centre

200 Burrard Street

P.O. Box 48600

Vancouver, British Columbia, Canada

V7X 1T2

 

Attention:                      Jason J. Brooks

Facsimile:                      604-622-5902

Email:                      jbrooks@blgcanada.com

 

Notices to Pan Asia shall be addressed to:

 

Pan Asia Resources Corp.

Suite 1740 – 1177 West Hastings Street

Vancouver, British Columbia  V6E 2K3

 

Attention:                      Stephen Walters

Facsimile:                      +62 21 747 11748

Email:                      stephen@panasiares.com

 

with a copy (for informational purposes only) to:

 

Tupper, Jonsson & Yeadon

Suite 1710 - 1177 West Hastings Street

Vancouver, British Columbia, Canada

V6E 2L3

 

Attention:                      Glenn R. Yeadon

Facsimile:                      604-681-0139

Email:                      yeadon@securitieslaw.bc.ca

 

Any Party may change its address for service aforesaid by notice in writing to the other Party specifying its new address for service hereunder.

 

17.2           Interpretation

 

  

- 18 -

Exhibit 10.43

.  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.

 

17.3           Currency

 

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

 

17.4           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.

 

17.5           Waiver

 

.  The failure of a Party 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 Party’s right thereafter to enforce any provision or exercise any right.

 

17.6           Modification

 

.  No modification of this Agreement shall be valid unless made in writing and duly executed by each of the Parties.

 

17.7           Force Majeure

 

.  Except for any obligation to make payments when due hereunder, the obligations of a Party 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, labour disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God; laws, regulations, orders, proclamations, 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 applicable environmental standards; acts of war or terrorism or conditions arising out of or attributable to war or terrorism, whether declared or undeclared; riot, civil strife, insurrection, insurgency or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought, hurricane, tsunami 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, labour, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; or any other cause whether similar or dissimilar to the foregoing.  The affected Party shall promptly give notice to the other Party of the suspension of performance, stating therein the nature of the suspension, the reasons therefore, and the expected duration thereof.  The affected Party or Operator shall resume performance as soon as reasonably possible.

 

17.8           Governing Law

 

.  This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein, without regard to the conflicts of laws principles thereof.  Each of the Parties hereto irrevocably attorns to the jurisdiction of the courts of

 

  

- 19 -

Exhibit 10.43

the Province of British Columbia and all appellate courts having jurisdiction thereover with respect to all disputes arising out of or in connection with this Agreement.

 

17.9           Disputes

 

.  All disputes arising out of or in connection with this Agreement will be determined by arbitration.  There will be three arbitrators.  The place of arbitration will be Vancouver, British Columbia.  The language of the arbitration will be English.  The arbitration will be administered by the British Columbia International Commercial Arbitration Centre (“BCICAC”) in accordance with its rules or, if the BCICAC no longer is operative or is unwilling or unable to administer the arbitration, then it will be unadministered and will be conducted under the UNCITRAL Arbitration Rules the ADR Institute of Canada, Inc. acting as appointing authority.

 

17.10           Rule Against Perpetuities

 

.  Any right or option to acquire any interest in real or personal property under this Agreement must be exercised, if at all, so as to vest such interest in the acquirer within 21 years after the Effective Date.

 

17.11           Further Assurances

 

.  Each Party agrees to take from time to time such 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.

 

17.12           No Third Party Beneficiaries

 

.  This Agreement is for the sole benefit of the Parties, and no other Person, including without limitation, any creditor of any Party, is intended to be a beneficiary of this Agreement or shall have any rights hereunder.

 

17.13           Entire Agreement; Successors and Assigns

 

.  This Agreement, together with the Exhibits hereto, contains the entire understanding of the Parties with respect to the subject hereof and supersedes all prior agreements and understandings 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 Parties.  In the event of any conflict between this Agreement and any Exhibit attached hereto, the terms of this Agreement shall be controlling.

 

17.14           Counterparts and Facsimile

 

.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.  This Agreement and any counterpart thereof may be delivered by facsimile and when so delivered shall be deemed to be an original.

 

~ Signature Page Follows ~

 

  

- 20 -

Exhibit 10.43

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

 

VISTA GOLD (BARBADOS) CORP.

 

By:           (signed) Michael B. Richings                                                      

Authorized Signatory

 

Name: Michael B. Richings

 

Position: Director

 

PAN ASIA RESOURCES CORP.

 

By:           (signed) Stephen Walters                                                      

Authorized Signatory

 

Name: Stephen Walters

 

Position: President

 

 

 

 

  

- 21 -

Exhibit 10.43

EXHIBIT A

 

PROPERTY DESCRIPTION AND AREA OF INTEREST

 

PART 1 - Property Description

See the description contained in the attached Decree of the Minister of Energy and Mineral Resource (Number: 352.K/30/DJB/2009), and the English translation thereof (attached for reference only), which form part of this Exhibit A.  In the event of any inconsistency between the description contained in the copy of such Decree in Bahasa and the English translation thereof, the copy in Bahasa shall govern.

 

  

A-1

Exhibit 10.43

 

  

A-2

Exhibit 10.43

 

 

 

 

  

A-3

Exhibit 10.43

 

  

A-4

Exhibit 10.43

 

  

A-5

Exhibit 10.43

  

A-6

Exhibit 10.43

 

  

A-7

Exhibit 10.43

 

PART 2 - Area of Interest

 

  

A-8

Exhibit 10.43

EXHIBIT B

 

FORM OF SHAREHOLDERS’ AGREEMENT

 

 

SHAREHOLDERS’ AGREEMENT

 

AMONG

 

VISTA GOLD (BARBADOS) CORP.

 

AND

 

PAN ASIA RESOURCES CORP.

 

AND

 

SALU SIWA LTD.

 

—, 200[—]

 

 

  

B-1

Exhibit 10.43

 

TABLE OF CONTENTS

 

	
ARTICLE I

	
DEFINITIONS

	
B-4

	
ARTICLE II

	
REPRESENTATIONS AND WARRANTIES; TITLE TO PROPERTIES

	
B-9

	
2.1

	
Capacity of Shareholders

	
B-9

	
ARTICLE III

	
NAME, PURPOSES AND TERM

	
B-10

	
3.1

	
General

	
B-10

	
3.2

	
Effective Date and Term

	
B-10

	
3.3

	
Registered Agent; Offices

	
B-10

	
3.4

	
Constating Documents

	
B-10

	
3.5

	
Agreement to be Bound

	
B-11

	
3.6

	
Approval of Certain Matters

	
B-11

	
ARTICLE IV

	
RELATIONSHIP OF SHAREHOLDERS

	
B-11

	
4.1

	
No Partnership

	
B-11

	
4.2

	
No Holding Out

	
B-12

	
4.3

	
No Fiduciary Duty

	
B-12

	
4.4

	
Tax Returns

	
B-12

	
4.5

	
Other Business Opportunities

	
B-12

	
4.6

	
Waiver of Right to Partition

	
B-12

	
4.7

	
Transfer of Shares

	
B-12

	
4.8

	
Implied Covenants; No Additional Duties

	
B-12

	
4.9

	
Liabilities; Indemnification

	
B-13

	
4.10

	
Extraordinary Matters

	
B-14

	
ARTICLE V

	
CONTRIBUTIONS BY SHAREHOLDERS

	
B-15

	
5.1

	
Shareholders’ Initial Contributions

	
B-15

	
5.2

	
Funding of Joint Venture Company

	
B-16

	
5.3

	
Conversion to Net Smelter Royalty

	
B-19

	
5.4

	
Return of Contributions

	
B-19

	
5.5

	
Bankruptcy of a Shareholder

	
B-19

	
5.6

	
Continuing Obligations and Liabilities of Shareholders

	
B-19

	
5.7

	
Indemnity by Shareholders for Salu Siwa Liabilities

	
B-20

	
ARTICLE VI

	
BOARD OF DIRECTORS

	
B-20

	
6.1

	
General Responsibility and Authority

	
B-20

	
6.2

	
Matters to be Decided

	
B-21

	
6.3

	
Appointment of Representatives

	
B-21

	
6.4

	
Frequency of Meetings

	
B-21

	
6.5

	
Notice of and Place of Meetings

	
B-22

	
6.6

	
Quorum

	
B-22

	
6.7

	
Adjournment for Lack of Quorum

	
B-22

	
6.8

	
Chairman and Secretary

	
B-22

	
6.9

	
Voting

	
B-22

	
6.10

	
Decision by Written Consent

	
B-23

	
6.11

	
Decisions Binding on Parties

	
B-23

	
6.12

	
Representatives' Expenses

	
B-23

	
6.13

	
Power to Establish Other Rules

	
B-23

	
6.14

	
No Power to Bind

	
B-23

	
ARTICLE VII

	
OPERATOR OF PT MASMINDO

	
B-23

	
7.1

	
Appointment

	
B-23

	
7.2

	
Powers and Duties of Operator

	
B-24

	
7.3

	
Standard of Care

	
B-26

	
7.4

	
Transactions With Affiliates

	
B-26

	
7.5

	
Activities During Deadlock

	
B-27

	
ARTICLE VIII

	
PROGRAMS AND BUDGETS

	
B-27

	
8.1

	
Initial Program and Budget

	
B-27

	
8.2

	
Operations Pursuant to Programs and Budgets

	
B-27

	
8.3

	
Presentation of Programs and Budgets

	
B-27

	
8.4

	
Review and Approval of Proposed Programs and Budgets

	
B-27

	
8.5

	
Deadlock on Proposed Programs and Budgets

	
B-27

	
8.6

	
Budget Overruns; Program Changes

	
B-28

	
8.7

	
Emergency or Unexpected Expenditures

	
B-28

	
ARTICLE IX

	
AUDITS

	
B-28

	
9.1

	
Audits

	
B-28

	
ARTICLE X

	
RESTRICTIONS

	
B-28

	
10.1

	
Area of Interest

	
B-28

	
10.2

	
Right to Acquire Shares

	
B-29

	
ARTICLE XI

	
NO OTHER SHAREHOLDERS

	
B-30

	
11.1

	
No Other Shareholders

	
B-30

	
ARTICLE XII 

	
DISTRIBUTIONS

	B-30
	
12.1

	
Distributions

	
B-30

	
ARTICLE XIII

	
SHAREHOLDER MEETINGS

	
B-30

	
13.1

	
Frequency of, Notice and Place of Meetings

	
B-30

	
ARTICLE XIV

	
TAXATION

	
B-31

	
13.2

	
General

	
B-31

	
13.3

	
Royalties, Production Taxes and Other Payments Based on Production

	
B-31

	
ARTICLE XV

	
ABANDONMENT AND SURRENDER OF PROPERTIES

	
B-31

	
14.1

	
Surrender or Abandonment of Property

	
B-31

	
ARTICLE XVI

	
CONFIDENTIALITY

	
B-31

	
15.1

	
General

	
B-31

	
15.2

	
Exceptions

	
B-31

	
15.3

	
Duration of Confidentiality

	
B-32

	
15.4

	
Press Releases

	
B-32

	
ARTICLE XVII

	
SHAREHOLDER’S INSURANCE

	
B-32

	
16.1

	
Shareholder’s Independent Insurance

	
B-32

	
ARTICLE XVIII

	
DISSOLUTION AND WITHDRAWAL

	
B-33

	
16.2

	
Dissolution

	
B-33

	
16.3

	
Withdrawal from Joint Venture

	
B-33

	
16.4

	
Liquidation and Termination After Dissolution

	
B-33

	
16.5

	
Right to Data After Termination

	
B-34

	
16.6

	
Continuing Authority

	
B-34

	
ARTICLE XIX

	
GENERAL PROVISIONS

	
B-34

	
17.1

	
Notices

	
B-34

	
17.2

	
Interpretation

	
B-36

	
17.3

	
Currency

	
B-36

	
17.4

	
Headings

	
B-36

	
17.5

	
Waiver

	
B-36

	
17.6

	
Modification

	
B-36

	
17.7

	
Force Majeure

	
B-36

	
17.8

	
Governing Law

	
B-37

	
17.9

	
Disputes

	
B-37

	
17.10

	
Rule Against Perpetuities

	
B-37

	
17.11

	
Further Assurances

	
B-37

	
17.12

	
No Third Party Beneficiaries

	
B-37

	
17.13

	
Entire Agreement; Successors and Assigns

	
B-37

	
17.14

	
Counterparts and Facsimile

	
B-38

	
EXHIBIT A–

	
PROPERTY DESCRIPTION AND AREA OF INTEREST

	
B-40

	
EXHIBIT B–

	
NET SMELTER RETURNS PAYMENT

	
B-41

	
EXHIBIT C–

	
INSURANCE

	
B-42

	
EXHIBIT D–

	
INITIAL PROGRAM AND BUDGET

	
B-43

	
EXHIBIT E–

	
AMENDED CONSTATING DOCUMENTS

	
B-44

 

 

  

B-2

Exhibit 10.43

 SHAREHOLDERS’ AGREEMENT

 

THIS AGREEMENT made as of —, 20·

 

AMONG:

 

	
  

	
VISTA GOLD (BARBADOS) CORP., a corporation existing under the laws of Barbados

 

(“Vista Barbados”)

 

AND:

 

PAN ASIA RESOURCES CORP., a corporation existing under the laws of the Cayman Islands

 

(“Pan Asia”, and together with Vista Barbados,

 

the “Shareholders”, and each a “Shareholder”)

 

AND:

 

SALU SIWA LTD., a corporation existing under the laws of Australia

 

(“Salu Siwa” and together with the

 

Shareholders, the “Parties”, and each a “Party”)

 

WHEREAS:

 

A.           Vista Barbados is a wholly-owned subsidiary of Vista Gold Corp. (“Vista”).  Vista Barbados owns all of the issued and outstanding shares of Salu Siwa Ltd. (“Salu Siwa”), which in turn owns a 99% interest in PT Masmindo Dwi Area (“PT Masmindo”).  Vista Barbados directly holds a 1% interest in PT Masmindo.  PT Masmindo holds a Seventh Generation Contract of Work in the property comprising the Awak Mas Project in Indonesia (defined below as the “Contract of Work”) as more particularly described in Part I of Exhibit A (defined below as the “Property”);

 

B.           Pursuant to a letter agreement dated July 2, 2009, as amended by (i) a letter agreement dated October 16, 2009, (ii) a letter agreement dated November 18, 2009, and (iii) a letter agreement dated December 15, 2009 (collectively, the “Letter Agreement”) between Vista and Pan Asia, Vista granted to Pan Asia the option, subject to the terms and conditions set out in the Letter Agreement, to enter into a joint venture arrangement for the purpose of earning a 60% interest in the Property via ownership of 60.6% of the outstanding shares of Salu Siwa (the “Joint Venture”);

 

C.           Vista Barbados and Pan Asia entered into a Joint Venture Agreement made as of December —, 2009 pursuant to which Vista Barbados granted Pan Asia the option (the “Option”) to earn 60% of the outstanding shares of Salu Siwa subject to and on the terms contained in the Joint Venture Agreement;

 

D.           Pan Asia has exercised the Option in accordance with the terms of the Joint Venture Agreement; and

 

 

  

B-3

Exhibit 10.43

E.           The Parties wish to enter into this Agreement in order to govern the terms of the Joint Venture and the respective rights and obligations of the Shareholders in their capacity as shareholders of Salu Siwa.

 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and mutual covenants herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1.1 “Acceptance Period” has the meaning ascribed thereto in Section 10.2.

 

1.2           “Acquired Property” has the meaning ascribed thereto in Section 10.1.

 

1.3           “Acquiring Shareholder” has the meaning ascribed thereto in Section 10.1.

 

1.4           “Acquisition Notice” has the meaning ascribed thereto in Section 10.1(a).

 

1.5           “Affiliate” means any Person which, directly or indirectly, controls, is controlled by, or is under common control with, a Party.  For purposes of the preceding sentence, “control” means possession, directly or indirectly, of the power to direct or cause direction of management and policies through ownership of voting securities, contract, voting trust or otherwise.

 

1.6           “Agreement” means this Shareholders’ Agreement, including all amendments and modifications thereof, and all schedules and exhibits, which are incorporated herein by this reference.

 

1.7           “Amended Constating Documents” has the meaning ascribed thereto in Section 3.4.

 

1.8           “Area of Interest” means the area described in Part 2 of Exhibit A.

 

1.9           “Assets” means the Properties, Products and all other real and personal property, tangible and intangible, held by Salu Siwa.

 

1.10           “Australian Corporate Law” means the Corporations Act (Australia), 2001.

 

1.11           “Board” or “Board of Directors” means the board of directors of Salu Siwa.

 

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

 

1.13           “Business Day” means a day on which chartered banks are open for the transaction of regular business in the cities of Denver, Colorado and Vancouver, British Columbia.

 

1.14           “Chairman” means the chairman of the Board of Directors.

 

1.15           “Closing Date” has the meaning ascribed thereto in Section 10.2(d).

 

1.16           “Confidential Information” means:

 

	
  

	
(a)

	
all information, data or other material relating to the Property, any Mine, PT Masmindo or Salu Siwa obtained by either Shareholder, their Affiliates, or their representatives

 

 

 

  

B-4

Exhibit 10.43

	
  

	
(each a “Recipient”), directly or indirectly, whether written, oral or stored in electronic or other form or medium;

 

	
  

	
(b)

	
all documents, copies, reproductions, summaries, extracts, notes, interpretations, memoranda, records, studies, forecasts, compilations, checks, evaluations or other data which pertain to, or derive, in whole or in part, from:

 

	
  

	
(i)

	
the information, data or other materials described in Section 1.16(a); or

 

	
  

	
(ii)

	
any examination of any sample or core extracted from, or any site visit to, the Properties; and

 

provided that the following shall not constitute “Confidential Information”:

 

	
  

	
(c)

	
any information that:

 

	
  

	
(i)

	
at any time forms part of the public domain, other than by reason of a Recipient’s failure to comply with the terms hereof;

 

	
  

	
(ii)

	
is lawfully obtained by a Recipient from a third party who is, to the best of the knowledge of the Recipient, not under an obligation of confidentiality with respect to such information;

 

	
  

	
(iii)

	
the Recipient can demonstrate was in the Recipient’s possession prior to the date the same information is obtained hereunder;

 

	
  

	
(iv)

	
the Recipient can demonstrate was ascertained or developed independently by the Recipient without reference to information that would otherwise constitute Confidential Information hereunder; or

 

	
  

	
(v)

	
the Recipient is required to report or disclose by law, or pursuant to an order by any court or regulatory authority having jurisdiction, including any stock exchange, provided that the Recipient, will, unless the Recipient is compelled to make the disclosure or would otherwise be subject to censure or penalty (in which case it will disclose only such of the information as is required), give notice to Salu Siwa before any such report or disclosure is made in order to permit Salu Siwa the opportunity to contest or to otherwise restrict such disclosure or reporting.

 

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

 

1.18           “Cover Payment” has the meaning ascribed thereto in Section 5.2(e).

 

1.19           “Development” means all preparation for the removal and recovery of Products, including the development, construction or installation of a Mine.

 

1.20           “Director” means a director of the Board.

 

  

  

B-5

Exhibit 10.43

1.21           “Disposing Party” has the meaning ascribed thereto in Section · .

 

1.22           “Effective Date” means the date first written above.

 

1.23           “Environmental Compliance” means action 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 applicable to the Properties, any Mine or Salu Siwa.

 

1.24           “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 release 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.

 

1.25           “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 Salu Siwa, either Shareholder or the Operator, by any Person or entity other than the other Shareholder, 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 Property and/or emanating or migrating and/or threatening to emanate or migrate from the Property to off-site properties; (ii) physical disturbance of the environment; or (iii) the violation or alleged violation of any Environmental Laws.

 

1.26           “Exploration” means all activities directed toward ascertaining the existence, location, quantity, grade or value of deposits of Minerals.

 

1.27           “Indemnified Party” has the meaning ascribed thereto in Section 4.9(e).

 

1.28           “Indemnifying Party” has the meaning ascribed thereto in Section 4.9(e).

 

1.29           “Indonesian Corporate Law” means · [NTD: Indonesian Counsel to advise]

 

1.30           “Initial Proportionate Share” means the initial proportion, expressed as a percentage of the outstanding Shares in Salu Siwa, held by each of Vista Barbados and Pan Asia, being 40% and 60%, respectively, as of the Effective Date.

 

1.31           “Joint Venture” has the meaning ascribed thereto in Recital B to this Agreement.

 

1.32           “Letter Agreement” has the meaning ascribed thereto in Recital B to this Agreement.

 

1.33           “Listed Security” has the meaning ascribed thereto in Section ·..

 

  

  

B-6

Exhibit 10.43

1.34           “Mine” means the workings, plant, facilities, infrastructure and improvements acquired, obtained or constructed in order to bring the Property, or any portion thereof, into production, and to maintain, the commercial production of Products.

 

1.35           “Minerals” means any minerals, precious or base, metallic or non-metallic, in, on or under the Properties which may lawfully be explored for, mined and sold.

 

1.36           “Mining” means the mining, extracting, producing, handling, milling or other processing of Products.

 

1.37           “National Instrument 43-101” means Canadian National Instrument 43-101, Standards of Disclosure for Mineral Projects, as amended from time to time.

 

	
1.38

	
“Net Smelter Returns” means [Note to draft: To be drafted.]

 

	
1.39

	
“Offer Notice” has the meaning ascribed thereto in Section 10.2

 

1.40           “Operating Year” means a calendar year unless the Board of Directors determines otherwise.

 

1.41           “Operations” means every kind of work done by, or under the direction of, the Operator on or in respect of the Property pursuant to a Program and Budget approved by the Board of Directors to carry out Exploration, to determine the feasibility of Development of a Mine, and, if approved by a Production Decision, carry out Development of a Mine and to operate the Mine, in each case on behalf of or through PT Masmindo, including, without limitation:

 

	
  

	
(a)

	
surveying, mapping, sampling (including bulk or underground sampling), trenching, drilling and exploring (including geochemical and geophysical exploration);

 

	
  

	
(b)

	
establishing drill sites, sample/core preparation and sample/core storage areas, pilot plant areas, temporary building areas, lay down areas and constructing such roads, airstrips, and other access as may be necessary to conduct Operations;

 

	
  

	
(c)

	
transporting to and installing on the Property, and removing from time to time, buildings, plant, equipment, machinery, tools, appliances, camp facilities, materials and supplies;

 

	
  

	
(d)

	
engaging and transporting employees or contractors to work on the Properties;

 

	
  

	
(e)

	
supplying food, lodgings and other reasonable needs for any employees or contractors engaged to work on the Property;

 

	
  

	
(f)

	
preparing reports, estimates and studies in respect of the Property as the Operator may deem necessary or as are required by terms set out herein;

 

	
  

	
(g)

	
removing from the Property reasonable quantities of rock and Minerals and to transport the same for purpose of sampling, testing, metallurgical testing, grading or assaying;

 

	
  

	
(h)

	
designing a Mine;

 

	
  

	
(i)

	
obtaining all permits, licences, approvals, government authorizations, rights of way and easements necessary in connection with Operations or the Development of a Mine, including environmental permits for tailings and waste disposal;

 

  

  

B-7

Exhibit 10.43

	
  

	
(j)

	
securing all necessary ancillary lands, water rights and uses necessary in connection with Operations or the Development of a Mine, including local community negotiations and land and water purchases from individuals;

 

	
  

	
(k)

	
preparing and presenting to the Board of Directors Programs and Budgets and carrying out approved Programs and Budgets;

 

	
  

	
(l)

	
purchasing or otherwise acquiring 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, and obtaining such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and

 

	
  

	
(m)

	
caring for and maintaining a Mine during periods in which the Mine is not in operation.

 

1.42           “Operator” means the Person appointed pursuant to Article VII from time to time as the Operator of PT Masmindo.

 

1.43           [“Operator’s Fee” means ●.]

 

1.44           “Pan Asia” means Pan Asia Resources Corp.

 

1.45           “Parties” means Vista Barbados, Pan Asia, their respective permitted successors and assigns, and Salu Siwa, and “Party” means any one of them.

 

1.46           “Person” means an individual, corporation, limited liability company, unlimited liability corporation, partnership, limited partnership, joint venture, firm, trust, unincorporated organization, government or any agency or political subdivision thereof, or other entity or form of enterprise.

 

1.47           “Prime Rate” means the higher of the interest rate quoted as “U.S. Prime” by the Royal Bank of Canada, at its head office, as said rate may change from day to day (which quoted rate may not be the lowest rate at which such bank loans funds) and the benchmark interest rate prescribed by or under Section 109N of the Commonwealth of Australia’s Income Assessment Act 1936 (and any amending legislation).

 

1.48           “Products” means all Minerals (including concentrates derived therefrom) produced from the Properties.

 

1.49           “Program” means a description in reasonable detail of Operations to be conducted and objectives to be accomplished by the Operator:

 

	
  

	
(a)

	
over 12 months or such other period as is approved by the Board of Directors;

 

	
  

	
(b)

	
up to an aggregate amount of expenditures as is approved by the Board of Directors; or

 

	
  

	
(c)

	
to achieve technical milestones approved by the Board of Directors.

 

1.50           “Property” means those interests in mineral properties or PT Masmindo described in Part 1 of Exhibit A.

 

1.51           “Proportionate Share” has the meaning ascribed thereto in Section 5.2.

 

  

  

B-8

Exhibit 10.43

1.52           “Recipient” has the meaning ascribed thereto in Section 1.17. [Note to draft: incorrect.]

 

1.53           “Representatives” has the meaning ascribed thereto in Section 6.3.

 

1.54           “Right of First Refusal” has the meaning ascribed thereto in Section 10.2(a).

 

1.55           “Shareholder” and “Shareholders” means Vista Barbados and Pan Asia, and any other Person who acquires Shares in accordance with the terms of this Agreement.

 

1.56           “Shares” means the ordinary shares in the capital of Salu Siwa with full voting rights and, where the context permits, includes: (a) any securities into which such ordinary shares may be converted, reclassified, redesignated, subdivided, consolidated or otherwise changed; (b) any securities of Salu Siwa or of any other Person received by the holders of such ordinary shares as a result of any merger, amalgamation, reorganization, arrangement or other similar transaction involving Salu Siwa; and (c) any security, other instrument or right that is exercisable, exchangeable or convertible into, or evidences the right to acquire, any ordinary shares or other securities of Salu Siwa.

 

1.57           “Straight-Line Dilution” has the meaning ascribed thereto in Section 5.2(d).

 

1.58           “Tracking Account” has the meaning ascribed thereto in Section 5.2(a).

 

1.59           “Transfer” means: (i) any transfer, sale, assignment, exchange, gift, donation or other disposition thereof whereby possession, legal title, direct ownership or the economic risk or return associated therewith passes directly or indirectly from one Person to another or to the same Person in a different legal capacity, whether or not for value, whether or not voluntary and however occurring; or (ii) any agreement, undertaking or commitment to effect any of the foregoing, but for greater certainty does not include the pledge by a Shareholder of its Shares to a creditor as security pursuant to a bona fide loan or similar agreement entered into by the Shareholder or any of its Affiliates.

 

1.60           “Vista Barbados” means Vista Gold (Barbados) Corp.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES; TITLE TO PROPERTIES

 

	
2.1  

	
Capacity of Shareholders

 

 – As of the Effective Date, each of the Shareholders represents and warrants as follows:

 

	
(a)  

	
it is a corporation, duly organized and existing and in good standing in its respective jurisdiction of incorporation, and is qualified to do business and is in good standing in those jurisdictions where necessary in order to carry out the purposes of this Agreement;

 

	
(b)  

	
it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

 

	
(c)  

	
it will not breach any agreement, arrangement or its constating documents by entering into or performing this Agreement;

 

	
(d)  

	
this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms; and

 

  

  

B-9

Exhibit 10.43

	
(e)  

	
this Agreement is enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of a court.

 

ARTICLE III

 

NAME, PURPOSES AND TERM

 

	
3.1  

	
General

 

 – The Shareholders agree that all of their rights with respect to Salu Siwa, PT Masmindo and all of the Operations shall be subject to and governed by this Agreement.  To the fullest extent permitted by Australian Corporate Law, this Agreement shall control as to any conflict between this Agreement and Australian Corporate Law or as to any matter provided for in this Agreement that is also provided for under Australian Corporate Law.

 

	
3.2  

	
Effective Date and Term

 

 – The Effective Date of this Agreement shall be the date first recited above.  The Joint Venture and this Agreement shall continue from the Effective Date and for so long thereafter until all Operations have ceased, all materials, supplies, equipment and infrastructure have been salvaged and disposed of, and any required Environmental Compliance is completed and accepted, unless the Joint Venture and this Agreement are earlier terminated, pursuant to Section 18.1.

 

	
3.3  

	
Registered Agent; Offices

 

 – The registered office and registered agent of Salu Siwa shall be as set forth in Salu Siwa’s Organisational Extract, provided that at all times the registered office and registered agent are located in [location].  The Operator may from time to time request from the Shareholders that the Shareholders designate a successor registered office and registered agent and may request that the Shareholders amend the Organisational Extract of Salu Siwa to reflect any such change provided, however, that any such successor registered office or registered agent shall be in [location].  The location of the principal place of business of Salu Siwa shall be at such location as the Operator shall from time to time select; provided, however, that such principal place of business shall be in [location].  [NTD:  PWC to provide guidance re desired location Tax advisors to be consulted]

 

	
3.4  

	
Constating Documents

 

 – Immediately prior to the Effective Date, Vista Barbados shall have caused Salu Siwa to adopt, and Salu Siwa shall have adopted, any necessary amendments to the existing constating documents of Salu Siwa so that following such amendments, the constating documents are in the form as set out in Exhibit F (the “Amended Constating Documents”), and both Vista Barbados and Salu Siwa shall have taken and have caused to be taken all such steps, corporate, regulatory or otherwise, as necessary in order for the Amended Constating Documents to be the constating documents of Salu Siwa immediately prior to the Effective Date.  The Parties acknowledge and agree that not all of the terms contained in this Agreement relating to the relationship, rights and obligations of the Shareholders and the relationship, rights and obligations of the Shareholders vis-à-vis Salu Siwa will be expressly provided for in the Amended Constating Documents of Salu Siwa, and the Parties agree that where the Amended Constating Documents are silent as to any matter, the provisions of this Agreement shall apply to, govern and prevail over such matter.  In the event of a conflict between the provisions of this Agreement and the provisions of the Amended Constating Documents, each Shareholder covenants and agrees at all times to:

 

  

  

B-10

Exhibit 10.43

cause its Representatives on the Board of Directors to vote or take all steps;

 

	
(a)  

	
to vote, or cause to be voted, the Shares held or controlled by it;

 

	
(b)  

	
to otherwise exercise its rights as a shareholder of Salu Siwa; and

 

	
(c)  

	
to take all other steps,

 

as may reasonably be required under Australian Corporate Law and the Amended Constating Documents to amend the Amended Constating Documents to resolve such conflict so that the provisions of this Agreement will, to the extent permitted by Australian Corporate Law, at all times prevail.

 

	
3.5  

	
Agreement to be Bound

 

 –  Each Shareholder agrees to take all such steps as may reasonably be within such Shareholder’s power, so as to comply with and act, and to cause its Affiliates and Salu Siwa to comply with and act, in a manner contemplated by the provisions of this Agreement and so as to give effect to the terms, intent and meaning of this Agreement and shall cause its Representatives on the Board of Directors to act accordingly and, if one or more of such Representatives fails to act accordingly, each Shareholder shall forthwith take such steps as may be within such Shareholder’s power to immediately remove the non-complying Representative(s) from such position.

 

	
3.6  

	
Approval of Certain Matters

 

 – Within 48 hours of the Effective Date, the Shareholders shall approve, among other things, the following matters, in compliance with Salu Siwa’s Amended Constating Documents and Australian Corporate Law:

 

(a)           appointing the following new Directors and alternate Directors of Salu Siwa:

 

●, ●;

 

(b)           removing all existing powers of attorney; and

 

	
  

	
(c)

	
the issuance of sufficient shares in Salu Siwa such that 60.6% of the issued share capital in Salu Siwa is owned by Pan Asia.

 

ARTICLE IV

 

RELATIONSHIP OF SHAREHOLDERS

 

	
4.1  

	
No Partnership

 

 – Nothing herein contained shall be construed as creating a partnership of any kind or as imposing upon any Shareholder any partnership duty, obligation or liability to any other Shareholder hereto.  Except pursuant to the authority expressly granted in Article VII or elsewhere herein or as otherwise agreed in writing by the Shareholders, neither Shareholder shall have any authority to act for Salu Siwa, PT Masmindo or another Shareholder or to assume any obligation or responsibility on behalf of Salu Siwa or the other Shareholder solely by virtue of being a Shareholder.  Any Shareholder that takes any action or binds Salu Siwa in violation of this Section 4.1 shall be solely responsible for any loss and expense incurred by Salu Siwa or the other Shareholder as a result of the unauthorized action and shall indemnify and hold Salu Siwa and such other Shareholder harmless with respect to the loss or expense pursuant to Section 4.9(c)of this Agreement.

 

  

  

B-11

Exhibit 10.43

No Holding Out

 

 – No Shareholder shall, except when required by this Agreement or by any law, by-law, ordinance, rule, order or regulation, use, suffer or permit to be used, directly or indirectly, the name of any other Shareholder for any purpose related to the Property or Salu Siwa.

 

	
4.2  

	
No Fiduciary Duty

 

 – Nothing contained in this Agreement shall be construed as imposing any fiduciary duty to Salu Siwa, PT Masmindo or to any Shareholder on any other Shareholder (in its capacity as a Shareholder of Salu Siwa).

 

	
4.3  

	
Tax Returns

 

 – The Operator shall prepare and shall file, after approval by the Board of Directors, any tax returns, elections, designations or other tax forms required for Salu Siwa.

 

	
4.4  

	
Other Business Opportunities

 

 – Except as expressly provided in this Agreement, each Shareholder and the Operator shall have the right independently to engage in and receive full benefits from business activities, whether or not competitive with the Operations, without consulting the other.  The doctrines of “corporate opportunity” or “business opportunity” shall not be applied to any other activity, venture, or operation of either Shareholder or the Operator, and, except as otherwise provided in Article X, neither Shareholder nor the Operator shall have any obligation to any Shareholder with respect to any opportunity to acquire any property within the Area of Interest.  Unless otherwise agreed in writing, no Shareholder nor the Operator shall have any obligation to mill, beneficiate or otherwise treat any Products in any facility owned or controlled by the Operator or any Shareholder.

 

	
4.5  

	
Waiver of Right to Partition

 

 – The Shareholders hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of Assets, including any such rights provided by law, except in the event that such rights are created by the insolvency or dissolution of Salu Siwa.

 

	
4.6  

	
Transfer of Shares

 

 – Except as permitted by Section 10.2 of this Agreement, neither Shareholder shall Transfer all or any part of its Shares.

 

	
4.7  

	
Implied Covenants; No Additional Duties

 

 – There are no implied covenants contained in this Agreement other than those contractual covenants of good faith and fair dealing.  The Operator shall not have any fiduciary or other duties to Salu Siwa except as specifically provided by this Agreement.  The Operator shall not be liable to Salu Siwa for any duties not expressly provided for under this Agreement, liability for which is expressly excluded.  Notwithstanding any contrary provision of this Agreement, in carrying out any duties hereunder, the Operator and Shareholders shall not be liable to Salu Siwa nor to any Shareholder for breach of any duty for the Operator’s or any such Shareholder’s good faith reliance on the provisions of this Agreement, the records of Salu Siwa, any information, opinions, reports or statements presented by any other Shareholder, Operator, officer or employee of Salu Siwa, the Board of Directors, or any committee of

 

  

  

B-12

Exhibit 10.43

Salu Siwa, or by any other Person as to matters such Shareholder or the Operator reasonably believes are within such other Person’s professional or expert competence.  The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided in Australian Corporate Law.

 

	
4.8  

	
Liabilities; Indemnification

 

	
(a)  

	
No Shareholder or Operator shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation or liability of Salu Siwa, whether such liability or obligation arises in contract, tort or otherwise, solely by reason of being a Shareholder or Operator.

 

	
(b)  

	
Salu Siwa shall indemnify, defend and hold harmless each Shareholder (in its capacity as a shareholder), and their respective directors, officers, employees, agents and attorneys, from and against any and all third party losses, claims, damages and liabilities arising out of or relating to:

 

	
(i)  

	
Salu Siwa, PT Masmindo or the Operations, including without limitation Environmental Liabilities and Continuing Obligations;

 

	
(ii)  

	
any Property assigned to a Shareholder as an objecting Shareholder pursuant to Section 15.1, but only to the extent arising out of or relating to Operations, including without limitation Environmental Liabilities and Continuing Obligations, conducted prior to the date of such assignment; and

 

	
(iii)  

	
any reimbursements by one Shareholder to the other Shareholder or Operator of any of the foregoing pursuant to Section 5.7,

 

except in any case of clauses (i) through (iii) above to the extent such losses, claims, damages or liabilities arise out of or result from any conduct described in any of clauses (i) through (iii) of Section 4.9(c) below.

 

	
(c)  

	
Subject to Section 4.9(d), each Shareholder shall indemnify, defend and hold harmless Salu Siwa, the other Shareholder, and such other Shareholder’s directors, officers, employees, agents and attorneys, from and against any and all losses, claims, damages and liabilities arising out of or relating to:

 

	
(i)  

	
any unauthorized act or any assumption of liability by the indemnifying Shareholder (including in its capacity as an Operator), or any of its directors, officers, employees, agents and attorneys done or undertaken, or apparently done or undertaken, on behalf of Salu Siwa or the other Shareholder, except pursuant to the authority expressly granted herein or as otherwise agreed in writing between the Shareholders;

 

	
(ii)  

	
any misrepresentation or inaccuracy in any of such Shareholder’s representations or warranties set forth in this Agreement; or

 

	
(iii)  

	
any breach by such Shareholder of any covenant contained in this Agreement caused by or attributable to such Shareholder’s willful misconduct or gross negligence, including in its capacity as an Operator.

 

  

  

B-13

Exhibit 10.43

	
(iv)  

	
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PERSON OR ENTITY OTHER THAN A SHAREHOLDER SHALL HAVE THE RIGHT TO ENFORCE ANY REPRESENTATION OR WARRANTY OF A SHAREHOLDER HEREUNDER, OR ANY OBLIGATION OF A SHAREHOLDER TO CONTRIBUTE CAPITAL HEREUNDER, TO FUND CONTINUING OBLIGATIONS, TO REIMBURSE OR INDEMNIFY ANY OTHER SHAREHOLDER HEREUNDER, AND SPECIFICALLY NEITHER SALU SIWA NOR ANY LENDER OR OTHER THIRD PARTY SHALL HAVE ANY SUCH RIGHTS, IT BEING EXPRESSLY UNDERSTOOD THAT THE REPRESENTATIONS AND WARRANTIES, AND THE CONTRIBUTION, REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS SET FORTH IN ARTICLES IV and V SHALL BE ENFORCEABLE ONLY BY A SHAREHOLDER AGAINST ANOTHER SHAREHOLDER (WHICH, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ARE IN ALL SUCH CASES FOR THE BENEFIT OF THE SHAREHOLDERS).  FOR THE AVOIDANCE OF DOUBT, SALU SIWA SHALL BE BOUND BY ARTICLES IV and V, BUT SHALL HAVE NO RIGHT TO ENFORCE THOSE PROVISIONS AGAINST A SHAREHOLDER, SUCH RIGHTS BEING EXCLUSIVELY VESTED IN THE SHAREHOLDERS.

 

	
(d)  

	
If any claim or demand is asserted against an indemnified party under this Section 4.9 (an “Indemnified Party”) in respect of which such Indemnified Party may be entitled to indemnification under this Agreement, written notice of such claim or demand shall promptly be given to the Party responsible hereunder for indemnification (the “Indemnifying Party”).  The Indemnifying Party shall have the right, but not the obligation, by notifying the Indemnified Party within 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 Party to participate, at the Indemnified Party’s expense and with competent and experienced counsel of the Indemnified Party’s choice), the defense, compromise, or settlement of the matter, including, at the Indemnifying Party’s expense, employment of competent and experienced counsel of the Indemnifying Party’s choice.  Any losses, claims, damages or liabilities of the Indemnified Party caused by a failure by the Indemnifying Party to defend, compromise, or settle a claim or demand in a reasonable and expeditious manner requested by the Indemnified Party, after the Indemnifying Party has given notice that it will assume control of the defense, compromise, or settlement of the matter, shall be included in the losses, claims, damages and liabilities for which the Indemnifying Party shall be obligated to indemnify the Indemnified Party.  Any settlement or compromise of a matter by the Indemnifying Party shall include a full release of claims against the Indemnified Party which have arisen out of the indemnified claim or demand.

 

	
4.9  

	
Extraordinary Matters

 

	
(a)  

	
Salu Siwa may not make a decision about, take action on or implement any of the following without the approval of the Shareholders (or Shareholder, as the case may be) holding at least 75% of the Shares in the aggregate, in addition to any Board of Directors or other approval required under Australian Corporate Law:

 

  

  

B-14

Exhibit 10.43

	
(b)  

	
amending or revoking the Amended Constating Documents in whole or in part or enacting any additional by-law, except to resolve any conflict in favour of this Agreement;

 

	
(i)  

	
increasing or reducing the authorized capital of Salu Siwa or increasing or reducing the issued capital of Salu Siwa by way of share split, share consolidation, conversion or exchange of securities or similar transaction;

 

	
(ii)  

	
amalgamating, merging or entering into an arrangement or other reorganization involving Salu Siwa;

 

	
(iii)  

	
purchasing, redeeming or acquiring any Shares or other securities of Salu Siwa, except as expressly contemplated in this Agreement;

 

	
(iv)  

	
requiring or permitting any additional capital contribution by a Shareholder except as expressly provided for herein; or

 

	
(v)  

	
allotting, reserving, setting aside or issuing any Shares, except as expressly provided for herein;

 

	
(vi)  

	
determining the subscription price for Shares issued otherwise than in connection with a capital contribution or cash call contemplated in Section 5.2, and/or the value of any non-cash consideration contributed by a Shareholder;

 

	
(vii)  

	
creating, assuming or incurring any debt (other than capital leases or trade payables arising in the ordinary course of business) of Salu Siwa exceeding $[—];

 

	
(viii)  

	
entering into any loan arrangement with a Shareholder;

 

	
(ix)  

	
making any loan to any Person or guaranteeing the obligations of any Person; or

 

	
(x)  

	
entering into any contract or other transaction with any Person who is not at arm’s length to Salu Siwa or the Shareholders, except as expressly provided for herein; and

 

	
(c)  

	
Shareholders have 10 Business Days to give or decline any approval needed under Section 4.10(a) from the date such approval is requested in writing.  If a Shareholder fails to respond within the specified time period to a written request for an approval needed under Section 4.10(a), that Shareholder shall be deemed to have given the approval requested and shall take, or cause to be taken, all steps required under Australian Corporate Law and the Amended Constating Documents, as may be necessary to give effect to these resolutions, including, but not limited to, attending a Shareholders’ meeting and voting in favour of the resolution or resolutions in respect of which approval was sought by the other Shareholder.

 

ARTICLE V

 

CONTRIBUTIONS BY SHAREHOLDERS

 

	
5.1  

	
Shareholders’ Initial Contributions

 

  

  

B-15

Exhibit 10.43

	
5.2  

	
 – On the Effective Date, the Parties shall be deemed to have made the following contributions to their respective Tracking Account and to respectively have the following Proportionate Share:

 

	  	
Deemed Contribution

	
Proportionate Share

	
Pan Asia

	
$6,000,000

	
60%

	
Vista Barbados

	
$4,000,000

	
40%

 

	
5.3  

	
Funding of Joint Venture Company

 

	
(a)  

	
The Operator shall create and maintain a funding tracking account (the “Tracking Account”) for each of the Shareholders.  The total initial amount to be recorded in Vista Barbados’ Tracking Account shall be $4,000,000 and the total initial amount to be recorded in Pan Asia’s Tracking Account shall be $6,000,000.

 

For greater certainty, the Tracking Accounts are intended to track the actual and deemed capital contributions of the Shareholders for determining each Shareholder’s Proportionate Share and is separate from the capital of Salu Siwa for Australian Corporate Law purposes [Note to draft: Aus counsel to review.].  Each Shareholder’s Tracking Account shall be credited with any further capital contributions made by such Party as set out in this Section 5.2.

 

	
(b)  

	
Each Shareholder shall fund its Proportionate Share of all costs, expenses and liabilities incurred by Salu Siwa through subscriptions for treasury Shares (at the same par share price), which Proportionate Share, from time to time, shall be determined as follows:

 

“Proportionate Share” at any time (subject to adjustment for Double Dilution below) means:

 

	
(i)  

	
the total amount of the Shareholder’s then Tracking Account, divided by:

 

	
(ii)  

	
the total amount of the then Tracking Accounts of both Shareholders.

 

Each time a Shareholder funds costs, expenses and liabilities incurred by Salu Siwa, such amount shall be credited to the Shareholder’s Tracking Account.  For the purposes of Australian Corporate Law, if a Shareholder contributes funds pursuant to this Section 5.2(b), the Parties shall cause to be issued to such funding Shareholder the number of additional Shares as is necessary so that the Shareholders’ respective Shareholdings in Salu Siwa reflect their then Proportionate Share.

 

	
(c)  

	
Promptly following approval of a Program and Budget, the Operator shall prepare and provide to the Board of Directors for consideration and approval a proposed schedule of the monthly cash calls the Operator anticipates making over the course of that Program and Budget.  On the basis of each approved Program and Budget, the Operator shall submit prior to the last day of each month a cash call billing to Shareholders for estimated cash requirements of Salu Siwa for the next month.  Within 30 days after receipt of each billing, each Shareholder shall advance its Proportionate Share of such cash requirements.  The Operator shall record all funds received by Salu Siwa pursuant to such cash advances.  The Operator may issue cash calls in order to maintain a cash balance in Salu Siwa approximately equal to the reasonably expected rate of Salu Siwa’s

 

  

  

B-16

Exhibit 10.43

	
(d)  

	
expenditures under an approved Program and Budget for a maximum of 30 days.  All funds in excess of immediate cash requirements received by Salu Siwa pursuant to cash calls shall be invested by the Operator for the benefit of Salu Siwa in cash management accounts and investments selected at the discretion of the Operator, which accounts may include, but are not limited to, money market investments and money market funds.

 

	
(e)  

	
Notwithstanding the above, within 20 days of approval of a Program and Budget by the Board of Directors, each Shareholder will have the opportunity to elect to contribute its Proportionate Share, a lesser amount or no amount to such Program and Budget.  Failure of a Shareholder to provide an election to the Operator within such 20 day period shall be deemed to be an election to fund its Proportionate Share.  In the event that a Shareholder notifies the Operator that it elects not to fund its Proportionate Share (whether less than its Proportionate Share or none at all) of a Program and Budget within such 20 days of the Board of Directors approving such Program and Budget, the other Shareholder will have the right, but not the obligation, to fund all or part of the unpaid portion of the advance by increasing its contribution or subscription, as the case may be, such that it results in straight-line dilution (“Straight-Line Dilution”) of the Shareholder not funding (as reflected by the Shareholders’ Tracking Accounts after such funding is credited) in accordance with the following formula:

 

	
Y%  =

	
100           x

	
A1 + A2

	
B1 + B2 +A2

Where:

 

	
Y

	
=

	
the non-funding Shareholder’s Proportionate Share (expressed as a percentage);

	
A1

	
=

	
the amount of the non-funding Shareholder’s Tracking Account immediately before the first cash call of the Program and Budget at issue;

	
A2

	
=

	
the non-funding Shareholder’s contribution, if any, to all cash calls for the Program and Budget at issue;

	
B1

	
=

	
the total of the Tracking Accounts of both Shareholders immediately before the first cash call of the Program and Budget at issue; and

	
B2

	
=

	
the funding Shareholder’s contribution, if any, to all cash calls for the Program and Budget at issue.

In the event a Shareholder suffers a reduction in its Proportionate Share pursuant to the above Straight-Line Dilution formula, the other Shareholder’s Proportionate Share will be correspondingly increased by the amount of the reduction.

 

If the other Shareholder does not wish to fund the elected shortfall, the Program and Budget may be sent back to the Board of Directors for amendment and re-approval.

 

	
(f)  

	
In the event that a Shareholder fails to advance cash to fund a cash call billing submitted by the Operator pursuant to Section 5.2(c), in accordance with its election under Section 5.2(d), the other Shareholder will have the right, but not the obligation, to fund all or part of the unpaid portion of the advance by making a demand loan to the non

 

 

  

B-17

Exhibit 10.43

	
(g)  

	
funding Shareholder at an annual rate of interest equal to the U.S. Prime Rate (a “Cover Payment”).  Each and every Cover Payment shall constitute a demand loan bearing interest from the date of the advance at the Prime Rate.  If more than one Cover Payment is made, the Cover Payments shall be aggregated and the rights and remedies described herein pertaining to an individual Cover Payment shall apply to the aggregated Cover Payments.  The failure to repay such loan upon demand shall be a default.  All funding will be funded as subscriptions for treasury Shares and not contributed surplus.

 

	
(h)  

	
In the event that a Shareholder fails to advance cash to fund a cash call billing submitted by the Operator pursuant to Section 5.2(c), in accordance with its election under Section 5.2(d) and no Cover Payment is made or the non-funding Party fails to pay such Cover Payment loan upon demand pursuant to Section 5.2(e), the non-funding Shareholder shall be in default and, as liquidated damages and the exclusive remedy for such default, the funding Shareholder shall be entitled to cause the non-funding Shareholder’s Proportionate Share to be diluted (and to be so reflected in the non-funding Shareholders’ Tracking Account) at a rate which is double that of Straight-Line Dilution (“Double Dilution”) in accordance with the following formula.  The amount of any Cover Payment and interest not paid upon demand shall be included as an amount advanced by the funding Shareholder (and not the non-funding Shareholder):

 

	
Y%  =

	
100           x

	
A1 + A2

	
B1 + 2 (B2) +A2

Where:

 

	
Y

	
=

	
the non-funding Shareholder’s Proportionate Share (expressed as a percentage);

	
A1

	
=

	
the amount of the non-funding Shareholder’s Tracking Account immediately before the first cash call of the Program and Budget at issue;

	
A2

	
=

	
the non-funding Shareholder’s contribution, if any, to all cash calls for the Program and Budget at issue;

	
B1

	
=

	
the total of the Tracking Accounts of both Shareholders immediately before the first cash call of the Program and Budget at issue; and

	
B2

	
=

	
the funding Shareholder’s contribution, if any, to all cash calls for the Program and Budget at issue.

In the event a Shareholder suffers a reduction in its Proportionate Share pursuant to the above Double Dilution formula, the other Shareholder's Proportionate Share shall be correspondingly increased by the amount of the reduction.  In order that the Shareholders’ Tracking Accounts will reflect the new Proportionate Shares, the non-funding Shareholder’s Tracking Account will be credited with the amount equal to A2 above and the funding Party’s Tracking Account will be credited with the amount equal to 2 times B2 above.  Double Dilution shall be effective as of the date of the default giving rise to such Double Dilution.

 

	
(i)  

	
From time to time, in the event of either Straight-Line Dilution or Double Dilution pursuant to this Section 5.2, Salu Siwa will either: (a) issue for nominal consideration,

 

  

  

B-18

Exhibit 10.43

	
(j)  

	
such number of Shares to a funding Shareholder as is necessary so that the Shareholders’ respective Shareholdings in Salu Siwa reflect their then Proportionate Share; or (b) accept for surrender, and the non-funding Shareholders shall surrender to Salu Siwa, such number of Shares held by the non-funding Shareholder as is necessary so that the Shareholders’ respective Shareholdings in Salu Siwa reflect their then Proportionate Share following such Straight-Line Dilution or Double Dilution.

 

	
(k)  

	
For greater certainty, in the event of either Straight-Line Dilution or Double Dilution the non-funding Party’s dilution extinguishes any debt associated with their failure to fund.

 

	
5.4  

	
Conversion to Net Smelter Royalty

 

– If at any time, a Shareholder’s Proportionate Share is less than 10 percent, that Shareholder shall forthwith surrender, free and clear of all liens and encumbrances, all of its Shares for cancellation and such Shareholder shall have no further rights, interests or obligations in respect of Salu Siwa, its assets or the Property, except that as a refund Salu Siwa shall promptly enter into an agreement with such Shareholder pursuant to which such Shareholder shall receive, at the election of the receiving Shareholder, (i) a 10% carried interest in the Property, or (ii) within 60 days of the end of each calendar quarter during which the commercial production of Minerals occurs from a Property, a cash payment equal to 1.5% of Net Smelter Returns in accordance with Exhibit B.

 

Upon a Shareholder surrendering its Shares pursuant to this Section 5.3, such Shareholder shall cause its Representatives to the Board of Directors to immediately resign.

 

	
5.5  

	
Return of Contributions

 

 – No Shareholder shall be entitled to the return of any part of its capital contributions from Salu Siwa or to be paid interest in respect of such capital contributions, except as determined by the Board of Directors.  No unrepaid capital contribution shall constitute a liability of Salu Siwa, PT Masmindo, the Operator or any Shareholder.  A Shareholder is not required to contribute or to lend cash or property to Salu Siwa to enable Salu Siwa to return any Shareholder’s capital contributions.  The provisions of this Section 5.4 shall not limit a Shareholder’s rights or obligations under Article XVIII.

 

	
5.6  

	
Bankruptcy of a Shareholder

 

 – A Shareholder shall cease to have any power as a Shareholder or Operator or to exercise any voting rights under its Shares or rights of approval hereunder upon the bankruptcy, insolvency, dissolution or assignment for the benefit of creditors of such Shareholder, provided that such Shareholder shall continue to be liable for all obligations of the Shareholder under this Agreement.  The foregoing shall continue to apply to any of the Shareholder’s successors as a result of such bankruptcy, insolvency, dissolution or assignment for the benefit of creditors.  In such event, the Shareholder shall cause its Representatives on the Board of Directors to immediately resign or be removed and such Shareholder (and any successor holding such Shareholder’s Shares) shall cease to have a right to vote on the Board of Directors and to nominate any director to the Board.

 

	
5.7  

	
Continuing Obligations and Liabilities of Shareholders

 

 – On dissolution of Salu Siwa under Article XVIII of this Agreement, each Shareholder shall remain liable for its respective Proportionate Share of liabilities to third parties (whether such arises before or after such dissolution), including Environmental Liabilities and Continuing Obligations, for which Shareholders or former Shareholders are determined to be personally liable under Australian Corporate

 

  

  

B-19

Exhibit 10.43

Law or any other applicable law.  Further, and notwithstanding anything to the contrary herein, any withdrawal or deemed withdrawal of a Shareholder pursuant to Article XVIII or Section 5.3, any Transfer by such Shareholder of all or any portion of its Shares, or any reduction of a Shareholder’s Proportionate Share shall not relieve such Shareholder of its share of any such liability accruing before such resignation, Transfer or reduction.  In the event of the withdrawal or deemed withdrawal of a Shareholder pursuant to Article XVIII of this Agreement, the resigning Shareholder’s share of such liabilities shall be equal to its Proportionate Share at the time such liability was incurred, after first taking into account any reduction, readjustment, and restoration under Section 5.2 and 5.3 (or, as to liabilities arising prior to the Effective Date, its initial Proportionate Share).

 

	
5.8  

	
Indemnity by Shareholders for Salu Siwa Liabilities

 

 – To the extent either or both Shareholders (in their capacity as shareholders) are finally determined to be personally liable for any third party losses, claims, damages and liabilities arising out of or relating to: (i) Salu Siwa, PT Masmindo or the Operations, including without limitation Environmental Liabilities and Continuing Obligations, incurred by such other Shareholder; or (ii) any Property assigned to the other Shareholder as an objecting Shareholder pursuant to Section 15.1, but only to the extent in the case of this Section 5.7 arising out of or relating to Operations, including without limitation Environmental Liabilities and Continuing Obligations, conducted prior to the date of such assignment, such Shareholder(s) shall first seek indemnity from Salu Siwa pursuant to Section 4.9(b) and only to the extent Salu Siwa does not have assets sufficient to cover such indemnity or is otherwise unable to meet its obligations thereunder, each Shareholder shall be liable to the other Shareholder to reimburse and pay to such other Shareholder its respective share of the third party losses, claims, damages and liabilities, such respective share to be based on each Shareholder’s Proportionate Share.  The reimbursement obligation of a Shareholder under this Section 5.7 shall apply whether or not any such losses, claims, damages or liabilities accrue before or after the withdrawal or deemed withdrawal of such Shareholder, the Transfer by such Shareholder of all or any portion of its Shares, the dissolution or liquidation of Salu Siwa or PT Masmindo, or any reduction of such Shareholder’s Proportionate Share, but shall not apply to the extent the Shareholder is indemnified by Salu Siwa pursuant to Section 4.9(b), or to the extent such losses, claims, damages and liabilities arise out of conduct of the Shareholder requesting reimbursement described in any of clauses (i) through (iii) of Section 4.9(b).  For purposes of this Section 5.7, each Shareholder’s share of such liability shall be equal to its Proportionate Share at the time such liability was incurred, after first taking into account any reduction, readjustment, and restoration under Section 5.2 and 5.3 (or, as to liabilities arising prior to the Effective Date, its initial Proportionate Share).  Notwithstanding the foregoing, the provisions of this Section 5.7 shall not be construed as a waiver or reduction of the limitations of liability under Australian Corporate Law or other applicable law of the liability of a Shareholder or the Operator for Salu Siwa’s obligations.

 

ARTICLE VI

 

BOARD OF DIRECTORS

 

	
6.1  

	
General Responsibility and Authority

 

 – Subject to the terms and conditions set forth in this Agreement, the Board of Directors shall have the general responsibility and authority for the management of the affairs of Salu Siwa.  Without limiting the generality of the foregoing, the Board of Directors will:

 

	
(a)  

	
establish objectives, policies and strategies relating to the Joint Venture and its Operations, it being agreed that the Operator shall be responsible for the supervision and carrying out of such objectives, policies and strategies;

 

  

  

B-20

Exhibit 10.43

	
(b)  

	
receive and consider proposed Programs and Budgets submitted to it by the Operator and to approve the same, with or without such amendments, additions, deletions and/or changes thereto as the Board of Directors may consider advisable;

 

	
(c)  

	
review ongoing Programs and Budgets, notwithstanding the prior approval thereof by the Board of Directors, and amend or change such ongoing Programs and Budgets as it considers advisable; provided that the Operator shall have no power to increase the amount of moneys to be expended upon any Program or Budget unless the Board of Directors confirms that the increased amount may be expended as contemplated within the period of such Program and Budget and only with the prior written approval of each of the Shareholders; and

 

	
(d)  

	
review and consider data collected and reports produced by the Operator in connection with Operations.

 

	
6.2  

	
Matters to be Decided

 

 – The following matters shall be brought before the Board of Directors for approval:

 

	
(a)  

	
annual Programs and Budgets in respect of the Properties proposed by the Operator;

 

	
(b)  

	
any matter relating to the initiation, defence or settlement of court proceedings involving Salu Siwa, PT Masmindo or the Property; and

 

	
(c)  

	
[Note to draft: Vista and Pan Asia to confirm other matters that must be approved by the Board]

 

	
6.3  

	
Appointment of Representatives 

 

 – Each Shareholder shall appoint two nominees (“Representatives”) and up to two alternate Representatives to the Board of Directors.  Alternate Representatives may attend all meetings and an alternate Representative may act for any of a Shareholder’s Representatives in his or her absence.  Each Shareholder may replace its Representatives or alternative Representatives by written notice to the other Shareholder and a resolution removing the Shareholder’s Representatives or alternative Representatives and appointing the Shareholder’s new Representatives or alternative Representatives, as the case may be, will be adopted at the next Shareholders’ meeting.

 

If a Shareholder Transfers all of its Shares under this Agreement (except to an Affiliate), the Representatives appointed by such Shareholder must resign or be removed (by vote of the Shareholders immediately prior to the Transfer) in accordance with the requirements of Australian Corporate Law.  The new holder of the Shares will be entitled to the same rights to nominate Representatives as the transferring Shareholder had prior to such Transfer.

 

	
6.4  

	
Frequency of Meetings

 

 – The Board of Directors shall meet at least once each calendar quarter either on dates fixed at an earlier meeting or as called by the Chairman; provided that up to three of the quarterly meetings per year may be cancelled if each of the Representatives consents to each such cancellation.  If any event occurs between quarterly Board meetings and deferring discussion of the matter to the next Board meeting is not reasonable in the circumstances, a Representative may request the Chairman to call a meeting and the Chairman shall, within 15 days of being requested, call a meeting.  Notwithstanding the foregoing, the

 

  

  

B-21

Exhibit 10.43

requirement to hold any meeting may be dispensed with by consent of a Representative of each Shareholder.  At least five days prior to calling a meeting, the Operator shall circulate a draft agenda to each Representative.  A Representative shall be entitled to have items added to the agenda upon delivering notice to the Chairman within two days of receiving the draft agenda.  Otherwise, following the calling of a Board meeting, no item shall be added to the agenda nor dealt with at the Board meeting unless emergency items are brought forward by the Chairman, having given as much advance notice as reasonably possible or unless a Representative from each Shareholder is present and agrees to the addition.

 

	
6.5  

	
Notice of and Place of Meetings

 

 – The Chairman shall give notice, specifying the time and place of, and the agenda for, each meeting of the Board of Directors, to all Representatives at least five days before the time appointed for the meeting.  Notice of a meeting shall not be required if a Representative of each Shareholder is present, waives notice and agrees upon the agenda.  The Board of Directors shall meet in a mutually agreeable place, and failing agreement, at Salu Siwa’s principal office in [location].  Meetings of the Board of Directors may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such communications equipment shall constitute presence in person at the meeting; provided, however, that all resolutions passed at any such meeting are unanimous and subsequently confirmed in writing.  [Note to draft: To be considered by tax advisors]

 

	
6.6  

	
Quorum

 

 – A quorum for any meeting of the Board of Directors shall consist of at least [one] Representative of each Shareholder present in person or by telephone.  Subject to Section 6.5, if a quorum is present at the commencement of the meeting, the Board of Directors shall be competent to exercise all of the authorities, powers and discretion bestowed upon it.

 

	
6.7  

	
Adjournment for Lack of Quorum

 

 – No business shall be transacted at any meeting of the Board of Directors unless a quorum is present.  If a quorum is not present within half an hour from the time appointed for a meeting, the meeting shall, at the election of those Representatives who are present be dissolved or be adjourned to the same place but on a date and at a time to be fixed by the Chairman before the adjournment of the meeting, which shall be not less than 14 days following the original date for which the meeting was called.  Notice of the adjourned meeting shall be given by the Chairman to all Representatives forthwith after the adjournment of the meeting.  If a quorum is not present at the adjourned meeting within half an hour from the time appointed, the Representative or Representatives present and entitled to attend and vote at the meeting, shall constitute a quorum.

 

	
6.8  

	
Chairman and Secretary

 

 – [Any Shareholder with greater than 50% of the Shares, shall be entitled to have one of its Representatives appointed as the Chairman of the Board of Directors.]  The Chairman shall be entitled to appoint the secretary for the meeting.  The secretary of the meeting shall prepare minutes of that meeting and circulate copies thereof to each Representative within ten Business Days after the meeting.  The minutes, when signed by all Representatives, shall be the official record of the decision made by the Board of Directors and shall be binding on the Operator and the Shareholders.

 

	
6.9  

	
Voting

 

  

  

B-22

Exhibit 10.43

	
6.10  

	
 – The Board of Directors shall decide every question submitted to it by a vote, with the Representatives of each Shareholder being entitled to cast (in the aggregate) that number of votes which is equal to such Shareholder’s respective Proportionate Share at the time of the vote.  [Note to draft:  Does this work under Aus corporate law?]

 

The Chairman will not be entitled to a casting vote.

 

The Board of Directors shall make decisions by simple majority, subject to the following:

 

	
(a)  

	
approval of annual operating Budgets, expenditures for unbudgeted individual line items exceeding $200,000 and contracts exceeding an annual expenditure of $500,000, shall require approval by the Board of Directors by Representatives of Shareholders holding at least 75% of the Shares; and

 

	
(b)  

	
[Note to draft: Consider adding further items.]

 

	
6.11  

	
Decision by Written Consent

 

 – Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting and without prior notice if the action is evidenced by a written consent describing the action taken, signed by all of the Representatives.  Action taken under this Section 6.10 shall be effective upon the signing by all Representatives of the consent, unless the consent specifies a different effective date.

 

	
6.12  

	
Decisions Binding on Parties

 

 – Subject to this Agreement, decisions of the Board of Directors made in accordance with this Article VI shall be binding upon all of the Shareholders.

 

	
6.13  

	
Representatives' Expenses

 

 – Each Shareholder shall bear the expenses incurred by its Representatives in attending meetings of the Board of Directors.  If personnel employed in operations, and not then a Representative, are required to attend a meeting of the Board of Directors, reasonable costs incurred in connection with such attendance shall be a cost to Salu Siwa.

 

	
6.14  

	
Power to Establish Other Rules

 

 – The Board of Directors may, by agreement of all Representatives, establish such other rules of procedure, not inconsistent with this Agreement or with Australian Corporate Law, as the Board of Directors deems fit.

 

	
6.15  

	
No Power to Bind

 

 – Except as set forth in this Agreement, no Representative (including the Chairman) shall have the power to bind Salu Siwa.

 

ARTICLE VII

 

OPERATOR OF PT MASMINDO

 

	
7.1  

	
Appointment

 

  

  

B-23

Exhibit 10.43

	
7.2  

	
 – The Shareholders hereby appoint Pan Asia as the Operator of PT Masmindo with overall management responsibility for Operations.  Pan Asia hereby agrees to serve until it resigns as provided in ·.  Pan Asia further agrees to discharge its duties through its representatives to the Board of Directors and through its representatives to the board of directors of PT Masmindo, unless otherwise agreed to in writing by the Parties.

 

	
7.3  

	
Powers and Duties of Operator

 

 – Subject to the terms and provisions of this Agreement, the Operator shall have the following powers and duties which shall be discharged in accordance with adopted Programs and Budgets:

 

	
(a)  

	
The Operator shall manage, direct and control Operations.

 

	
(b)  

	
The Operator shall implement the decisions of the Board of Directors, shall make from Salu Siwa’s funds [Note to draft: tax advisors to consider] all expenditures necessary to carry out adopted Programs, and shall promptly advise the Board of Directors if PT Masmindo lacks sufficient funds for the Operator to carry out its responsibilities under this Agreement.

 

	
(c)  

	
The Operator shall: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made 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 liens and encumbrances, except for 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 released or discharged in a diligent manner, or liens and encumbrances specifically approved by the Board of Directors.

 

	
(d)  

	
The Operator shall conduct such title examinations and cure such title defects as may be advisable in the reasonable judgment of the Operator.

 

	
(e)  

	
The Operator shall: (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a Shareholder’s sales revenue or net income.  If authorized by the Board of Directors, the Operator shall have the right to contest in the courts or otherwise, the validity or amount of any taxes, assessments or charges if the Operator deems them to be unlawful, unjust, unequal or excessive, or to undertake such other steps or proceedings as the Operator may deem reasonably necessary to secure a cancellation, reduction, readjustment or equalization thereof before the Operator shall be required to pay them, but in no event shall the Operator permit or allow title to the Assets to be lost as the result of the non-payment of any taxes, assessments or like charges; and (iii) shall do all other acts reasonably necessary to maintain the Assets.

 

	
(f)  

	
The Operator shall: (i) apply for all necessary permits, licenses and approvals; (ii) comply with all applicable laws and regulations; (iii) notify promptly the Board of Directors of any allegations of substantial violation thereof; and (iv) prepare and file all reports or notices required for Operations.  The Operator shall not be in breach of this provision if a violation has occurred in spite of the Operator’s good faith efforts to comply, and the

 

  

  

B-24

Exhibit 10.43

	
(g)  

	
Operator has timely cured or disposed of such violation through performance, or payment of fines and penalties.

 

	
(h)  

	
The Operator shall prosecute and defend, but shall not initiate without consent of the Board of Directors, all litigation or administrative proceedings arising out of Operations.  The non-managing Shareholder shall have the right to participate, at its own expense, in such litigation or administrative proceedings.  The non-managing Shareholder shall approve in advance any settlement involving payments, commitments or obligations in excess of $100,000 in cash or value.

 

	
(i)  

	
The Operator shall obtain insurance for the benefit of Salu Siwa and PT Masmindo as provided in Exhibit C or as may otherwise be determined from time to time by the Board of Directors.

 

	
(j)  

	
The Operator may dispose of Assets, whether by abandonment, surrender or Transfer in the ordinary course of business, except that the Operator shall not: (i) dispose of Assets having a value in excess of $25,000; (ii) dissolve or begin a liquidation of Salu Siwa or PT Masmindo; or (iv) dispose of all or a substantial part of the Assets necessary to achieve the purposes of Salu Siwa or PT Masmindo.

 

	
(k)  

	
The Operator shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors.  [Note to draft: To be confirmed.]

 

	
(l)  

	
The Operator shall perform or cause to be performed during the term of this Agreement all assessment and other work required by law in order to maintain the Contract of Work  in good standing using reasonable best efforts.  The Operator shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration and development and continued actual occupancy of such claims and sites shall not be required.  The Operator shall not be liable on account of any determination by any court or governmental agency that the work performed by the Operator 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 in accordance with the adopted Program and Budget.  The Operator shall timely record with the appropriate county and file with the appropriate agency of the Government of Indonesia, quarterly reports in accordance with the Contract of Work as required by law. If authorized by the Board of Directors, the Operator may amend the boundary of the Contract of Work in accordance with the existing regulations governing such amendments.  The Operator shall keep and maintain all required accounting and financial records in accordance with customary cost accounting practices in the mining industry.

 

	
(m)  

	
The Operator shall keep the Board of Directors advised of all Operations by submitting in writing to the Board of Directors: (i) monthly progress reports which 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 30 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 the Board of Directors may reasonably request.  At all reasonable times the Operator shall provide the Board of Directors or the representative of any Shareholder, upon the request of any Representative, access to, and the right to inspect and copy all maps, drill logs, core tests, reports, surveys, assays, analyses, production reports, operations, technical, accounting

 

  

  

B-25

Exhibit 10.43

	
(n)  

	
and financial records, and other information acquired in Operations.  In addition, the Operator shall allow the non-managing Shareholder, at the latter’s sole risk and expense, and subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times, so long as the inspecting Shareholder does not unreasonably interfere with Operations.

 

	
(o)  

	
The Operator shall prepare an Environmental Compliance plan for all Operations consistent with the requirements of any 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 the Contract of Work and the regulations of the Government of the Republic of Indonesia.  To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Properties disturbed by Operations.

 

	
(p)  

	
The Operator shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of the Company.  The Operator shall have the right to delegate performance of Continuing Obligations to persons having demonstrated skill and experience in relevant disciplines.  As part of each Program and Budget submittal, the Operator shall specify in such Program and Budget the measures to be taken for performance of Continuing Obligations and the cost of such measures.  The Operator shall keep the other Shareholder reasonably informed about the Operator’s efforts to discharge Continuing Obligations.  Authorized representatives of each Shareholder 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.

 

	
(q)  

	
[In accordance with prevailing regulations from the Indonesian Government, PT Masmindo may be required to provide a Bond to the Indonesian Government for post-mining reclamation and re-vegetation. The Operator shall undertake all other activities reasonably necessary to fulfill the foregoing.  Note to draft: Indonesian counsel to re-draft.]

 

The Operator shall not be in default of any duty under this Section 7.2 if its failure to perform results from the failure of the non-managing Shareholder to perform acts or to contribute amounts required of it by this Agreement.

 

	
7.4  

	
Standard of Care

 

 – The Operator shall 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 the terms and provisions of leases, licenses, permits, contracts and other agreements pertaining to Assets.  Notwithstanding anything in this Agreement to the contrary, the Operator shall not be liable to the non-managing Shareholder, Salu Siwa or PT Masmindo for any breach of this Agreement or other act or omission resulting in damage or loss, except to the extent caused by or attributable to the Operator’s wilful misconduct, negligence or breach of this Section 7.3.

 

	
7.5  

	
Transactions With Affiliates

 

  

  

B-26

Exhibit 10.43

	
7.6  

	
 – If the Operator engages Affiliates to provide services hereunder, it shall do so on terms no less favorable than would be the case with unrelated persons in arm’s-length transactions or on terms that have been approved by the non-managing Shareholder.

 

	
7.7  

	
Activities During Deadlock

 

 – If the Board of Directors for any reason fails to adopt a Program and Budget, subject to the contrary direction of the Board of Directors and to the receipt of necessary funds, the Operator shall continue Operations at levels comparable with the last adopted Program and Budget.  For purposes of determining the required contributions of the Shareholders and their respective Percentage Interests, the last adopted Program and Budget shall be deemed extended.

 

ARTICLE VIII

 

PROGRAMS AND BUDGETS

 

	
8.1  

	
Initial Program and Budget

 

 – The initial Program and Budget, which has been adopted by the Shareholders, is attached as Exhibit D.

 

	
8.2  

	
Operations Pursuant to Programs and Budgets

 

 – Except as otherwise provided in Section 8.6 and Article XI, Operations shall be conducted, expenses shall be incurred, and Assets shall be acquired only pursuant to approved Programs and Budgets.

 

	
8.3  

	
Presentation of Programs and Budgets

 

 – Proposed Programs and Budgets shall be prepared by the Operator for a period of one year or any longer period.  Each adopted Program and Budget, regardless of length, shall be reviewed at least once a year at the annual meeting of the Board of Directors.  During the period encompassed by any Program and Budget, and at least two months prior to its expiration, a proposed Program and Budget for the succeeding period shall be prepared by the Operator and submitted to the Board of Directors.  Each such proposed Program and Budget shall be in a form and degree of detail substantially similar to Exhibit D.

 

	
8.4  

	
Review and Approval of Proposed Programs and Budgets

 

 – Within 15 days after submission of a proposed Program and Budget, each Shareholder shall submit to the Board of Directors:

 

	
(a)  

	
notice that the Shareholder approves the proposed Program and Budget; or

 

	
(b)  

	
proposed modifications of the proposed Program and Budget; or

 

	
(c)  

	
notice that the Shareholder rejects the proposed Program and Budget.

 

If a Shareholder fails to give any of the foregoing responses within the allotted time, the failure shall be deemed to be an approval by the Shareholder of the Operator’s proposed Program and Budget.  If a Shareholder makes a timely submission to the Board of Directors pursuant to Section [8.4(b) or (c)], then the Board of Directors shall seek to develop a Program and Budget acceptable to the Shareholders.

 

	
8.5  

	
Deadlock on Proposed Programs and Budgets

 

  

  

B-27

Exhibit 10.43

	
8.6  

	
 – If the Shareholders, acting through the Board of Directors, fail to approve a Program and Budget by the beginning of the period to which the proposed Program and Budget applies, the provisions of Sections 8.6 shall apply.

 

	
8.7  

	
Budget Overruns; Program Changes

 

 – The Operator shall immediately notify the Board of Directors of any material departure from an adopted Program and Budget.

 

	
8.8  

	
Emergency or Unexpected Expenditures

 

 – In case of emergency, the Operator may take any reasonable action it deems necessary to protect life, limb or property, to protect the Assets or to comply with law or government regulation.  The Operator may also make reasonable expenditures for unexpected events which are beyond its reasonable control and which do not result from a breach by it of its standard of care.  The Operator shall promptly notify the Shareholders of the emergency or unexpected expenditure.

 

ARTICLE IX

 

AUDITS

 

	
9.1  

	
Audits

 

 – Upon request made by any Shareholder within 24 months following the end of any calendar year (or, if the Board of Directors has adopted an accounting period other than the calendar year, within 24 months after the end of such period), the Operator shall order an audit of the accounting and financial records of Salu Siwa and PT Masmindo for such calendar year (or other accounting period).  All written exceptions to and claims upon the Operator for discrepancies disclosed by such audit shall be made not more than three months after receipt of the audit report.  Failure to make any such exception or claim within the three month period shall mean the audit is correct and binding upon the Shareholders, Salu Siwa and PT Masmindo.  The audits shall be conducted by a firm of certified public accountants selected by the Operator, unless otherwise agreed by the Board of Directors.

 

The Operator shall, at a Shareholder’s reasonable request and at the requesting Shareholder’s own expense, grant access during regular business hours to Salu Siwa’s and PT Masmindo’s books and records to satisfy the requesting Shareholder’s own audit, reporting and regulatory requirements.

 

ARTICLE X

 

RESTRICTIONS

 

	
10.1  

	
Area of Interest

 

 – If any Shareholder or any of its Affiliates (the “Acquiring Shareholder”) stakes, leases or otherwise acquires or becomes entitled to acquire any interest, directly or indirectly, alone or in concert with any other Person, in any mineral right, surface right, water right or other mining related assets within the Area of Interest (the “Acquired Property”), the following shall apply:

 

	
(a)  

	
the Acquiring Shareholder shall promptly give the other Shareholder written notice thereof (including with its notice all information and data in its possession or control regarding the Acquired Property and a statement of its acquisition costs for the Acquired Property) (the “Acquisition Notice”) and unconditionally offer to transfer and assign the Acquired Property to Salu Siwa or PT Masmindo, free and clear of all liens and

 

  

  

B-28

Exhibit 10.43

	
(b)  

	
encumbrances (other than those arising under the terms of the mineral rights or by law).  The other Shareholder may elect, by notice delivered within 30 days, to require the Acquiring Shareholder to assign and transfer all of its interest in the Acquired Property to Salu Siwa in consideration for a reimbursement of the Acquiring Shareholder’s acquisition costs by Salu Siwa (other than any land transfer or other real property taxes, fees or charges paid by the Acquiring Shareholder on the original acquisition that Salu Siwa will be required to pay on the acquisition from the Acquiring Shareholder).  If the other Shareholder does not elect to deliver such a notice, the Acquiring Shareholder shall be entitled to retain its interest in the Acquired Property;

 

	
(c)  

	
if the consideration paid by the Acquiring Shareholder was other than cash or a work commitment in respect of the Acquired Property, the Acquisition Notice shall specify the cash equivalent of such consideration.  The non-acquiring Shareholder may, within ten days of its receipt of the Acquisition Notice, if no mutual agreement between the Shareholders can be reached, require the determination of the cash equivalent of the consideration to be submitted to the dispute resolution process in Section 19.9, in which event the 30 day period specified in this Section 10.1 shall commence to run on the date of the binding resolution under such process.  The cash value so determined and communicated in writing to the Shareholders shall be deemed to be the cash equivalent of the consideration;

 

	
(d)  

	
if the Acquired Property to be assigned to Salu Siwa or PT Masmindo hereunder is subject to an agreement with a third party which provides for the operation (including by earn-in) of such Acquired Property then the Acquiring Shareholder shall use its reasonable best efforts to:

 

	
(i)  

	
have Salu Siwa or PT Masmindo, as the case may be, assigned or novated into such operating agreement as to its interest; and

 

	
(ii)  

	
if the Operator under this Agreement is not the operator pursuant to such operating agreement, to have the Operator appointed as operator pursuant to such Agreement.

 

Until such time as Salu Siwa or PT Masmindo, as the case may be,  is assigned or novated into such an existing operating agreement, the Acquiring Shareholder shall hold Salu Siwa’s or PT Masmindo’s interest, as the case may be, in such Acquired Property in trust for Salu Siwa.  During the period that such interest is held in trust, the Acquiring Shareholder shall promptly provide to the Operator any and all notices which the Acquiring Shareholder receives and the Operator, on behalf of Salu Siwa or PT Masmindo, as the case may be, shall have one-half of the time period set forth in the applicable operating agreement to advise the Acquiring Shareholder whether or not it elects to participate in the operations set forth in any such notice.  Failure to respond within the time period will be deemed to be an election not to join in the proposed operation; and

 

	
(e)  

	
each Shareholder shall cause any of its Affiliates which acquire or become entitled to acquire an Acquired Property to comply with this Section 10.1.

 

	
10.2  

	
Right to Acquire Shares

 

  

  

B-29

Exhibit 10.43

	
10.3  

	
– Pan Asia shall have the right to purchase all of Vista Barbado’s interests in Salu Siwa and PT Masmindo (including, for greater certainty, all Shares then owned by Vista Barbados) by delivering to Vista Barbados an offer in writing setting out the terms of its proposed acquisition (the “Offer Notice”).  If Vista Barbados does not accept the offer contained in the Offer Notice within 15 Business Days, Vista Barbados shall have the right to purchase all of Pan Asia’s interests in Salu Siwa and PT Masmindo (including, for greater certainty, all Shares then owned by Pan Asia) on the same terms as contained in the Offer Notice.  An acquisition by Pan Asia pursuant to an Offer Notice will have to be completed within 30 days of the date of the Offer Notice.  An acquisition by Vista Barbados pursuant to an Offer Notice will have to be completed within 45 Business Days of the date of the Offer Notice.

 

ARTICLE XI

 

NO OTHER SHAREHOLDERS

 

	
11.1  

	
No Other Shareholders

 

 – Salu Siwa shall not be entitled to issue Shares or instruments convertible, exercisable or exchangeable into Shares to any third party without the prior written approval of all Shareholders.

 

ARTICLE XII

 

DISTRIBUTIONS

 

	
12.1  

	
Distributions

 

 – From and after the date of commercial production from the Mine, each of the Shareholders will, and will cause its Representatives on the Board of Directors, to act in good faith and on a commercially reasonable basis to cause Salu Siwa, not less frequently than quarterly, to distribute its available cash, by way of dividends or, with written approval of the Representatives appointed by the Shareholder(s) holding not less than 75% of the Shares, other distributions (e.g., return of capital or contributed surplus) to the Shareholders pro rata in accordance with their Proportionate Shares.  Any distribution by Salu Siwa of proceeds from a Mine between the Shareholders (whether by return of capital or contributed surplus, dividend or such other method as the Shareholders may agree to) will be made at the same time and in amounts in accordance with each Shareholder’s respective Proportionate Share.

 

ARTICLE XIII

 

SHAREHOLDER MEETINGS

 

	
13.1  

	
Frequency of, Notice and Place of Meetings

 

 – The Shareholders shall meet at least once a year either on dates fixed at an earlier meeting or as called by the Chairman.  The Chairman shall give notice, specifying the time and place of, and the agenda for, each meeting of the Shareholders at least five days before the time appointed for the meeting, except for meetings called to deal with year-end results, in respect of which the Chairman shall give such notice at least 15 days before the time appointed for the meeting.  Notice of a meeting shall not be required if all of the Shareholders are present, waive notice and agree upon the agenda.  The Shareholders shall meet in a mutually agreeable place in [location], and failing agreement, at Salu Siwa’s principal office in [location].  Meetings of the Shareholders may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such communications equipment shall constitute presence in person at the meeting; provided, however, that all resolutions passed at any such meeting are unanimous and subsequently confirmed by all Shareholders in writing.

 

  

  

B-30

Exhibit 10.43

 

TAXATION

 

	
13.2  

	
General

 

 – The Parties agree that each Party shall be responsible for the tax payments, rights and other tax issues that legally correspond to each Party, in accordance with the applicable Indonesian tax legislation, Australian Tax legislation, [the ● Treaty and any applicable laws].

 

	
13.3  

	
Royalties, Production Taxes and Other Payments Based on Production

 

– All required payments of production royalties, taxes based on production of Products, and other payments out of production to private parties and governmental entities, shall be determined and made by PT Masmindo or Salu Siwa, as the case may be, in a timely manner and otherwise in accordance with applicable laws and agreements.  The Operator shall furnish to the Shareholders evidence of timely payment for all such required payments.  In the event PT Masmindo or Salu Siwa, as the case may be, fails to make any such required payment, any Shareholder shall have the right to make such payment and shall thereby become subrogated to the rights of such third party; provided, however, that the making of any such payment on behalf of PT Masmindo or Salu Siwa shall not constitute acceptance by the paying Shareholder of any liability to such third party for the underlying obligation.

 

ARTICLE XIV

 

ABANDONMENT AND SURRENDER OF PROPERTIES

 

	
14.1  

	
Surrender or Abandonment of Property

 

 – The Board of Directors may authorize the Operator to surrender or abandon part or all of the Properties.  If the Board of Directors authorizes any such surrender or abandonment over the written objection of a Shareholder, PT Masmindo shall assign to the objecting Shareholder or an Affiliate designated by the Shareholder, by appropriate legal documentation and without cost to the surrendering Shareholder, all of PT Masmindo’s interest in the part of the Property to be abandoned or surrendered, and the abandoned or surrendered part of the Property shall cease to be part of the Property for purposes of this Agreement and neither PT Masmindo nor Salu Siwa shall have a further right, title or interest therein.

 

ARTICLE XV

 

CONFIDENTIALITY

 

	
15.1  

	
General

 

 – Each Shareholder and Operator will keep confidential and not use, reveal, provide or transfer to any third party any Confidential Information it obtains or has obtained concerning Salu Siwa, PT Masmindo or the other Shareholder without the prior written consent of the other Shareholder, which consent shall not be unreasonably withheld.

 

	
15.2  

	
Exceptions

 

 – The consent required by Section 16.1 shall not apply to a disclosure:

 

	
(a)  

	
to a consultant, contractor, subcontractor, officer, director or employee of Salu Siwa, PT Masmindo, the Operator or any Shareholder or any of their respective Affiliates that has a bona fide need to be informed;

 

  

  

B-31

Exhibit 10.43

	
(b)  

	
to any third party to whom the disclosing Shareholder contemplates a Transfer of all or any part of its Shares;

 

	
(c)  

	
to any actual or potential lender, underwriter or investors for the sole purpose of evaluating whether to make a loan to or investment in the disclosing Shareholder or Salu Siwa; or

 

	
(d)  

	
to a governmental agency or to the public which the disclosing Shareholder or Operator believes in good faith is required by pertinent law or regulation or the rules of any stock exchange on which its (or its Affiliate’s) securities are listed.

 

In any case to which this Section 16.2 is applicable, the disclosing Shareholder or Operator shall give notice to the other Shareholder concurrently with the making of such disclosure.  As to any disclosure pursuant to Section 16.2(a), (b) or (c) [Note to draft: confirm.], only such Confidential Information as such third party shall have a legitimate business need to know shall be disclosed and such third party shall first agree in writing to protect the Confidential Information from further disclosure to the same extent as the Shareholders are obligated under this Article XVI, and the disclosing Shareholder or Operator 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.

 

	
15.3  

	
Duration of Confidentiality

 

 – The provisions of this Article XVI shall apply to a Shareholder or Operator until the earlier of: (i) the date that is two years after the winding-up or dissolution of Salu Siwa (notwithstanding the withdrawal of such Shareholder or Operator or the Transfer by such Shareholder of all of its Shares); and (ii) the date that is two years after the withdrawal of such Shareholder or Operator.

 

	
15.4  

	
Press Releases

 

 – Subject to its obligations under securities laws and stock exchange requirements, each Shareholder will consult with the other Shareholder before issuing any press release or other public statement disclosing information concerning this Agreement, Salu Siwa, the Properties or Operations, and will obtain the approval of the other Shareholder for any press release or other public disclosure containing the other Shareholder’s name, the name of any of the officers, directors or employees of the other Shareholder, or the name of the other Shareholder’s subsidiaries.  Such approval shall not be unreasonably withheld or delayed.  Failure of a Shareholder to comment within three Business Days of receipt of a draft press release or disclosure document will be deemed to constitute approval.  However, such approval shall not be considered certification by the other Shareholder of the accuracy of the information in such press release or public disclosure, or a confirmation by it that the content of such press release or public disclosure complies with the rules, policies, by-laws and disclosure standards of the applicable regulatory authorities or stock exchange.

 

ARTICLE XVI

 

SHAREHOLDER’S INSURANCE

 

	
16.1  

	
Shareholder’s Independent Insurance

 

 – Nothing in this Agreement shall preclude any Shareholder from placing, for its own account, insurance for greater or other coverage than that placed by the Operator.

 

  

  

B-32

Exhibit 10.43

 

DISSOLUTION AND WITHDRAWAL

 

	
16.2  

	
Dissolution

 

 – The Joint Venture and this Agreement shall be terminated upon the occurrence of any of the following:

 

	
(a)  

	
on the later of the date that is 20 years from the date of this Agreement and the date that Products are no longer being commercially produced from the Property, and all materials, supplies, equipment and infrastructure thereon have been salvaged and disposed of, and any required Environmental Compliance is completed and accepted;

 

	
(b)  

	
upon the unanimous written agreement of the Shareholders; or

 

	
(c)  

	
upon the withdrawal of the Shareholders from the Joint Venture pursuant to Section 18.2, upon the acquisition by one Shareholder of all of the Shares of the other Shareholder in accordance with Section 10.2, or upon the bankruptcy, insolvency, dissolution or assignment for the benefit of creditors of the Shareholders,

 

whereupon, unless otherwise agreed by the Shareholders, the Parties shall promptly proceed to dissolve (i) Salu Siwa in accordance with Australian Corporate Law and any other applicable law; and (ii) PT Masmindo in accordance with Indonesian Corporate Law and any other applicable law.

 

	
16.3  

	
Withdrawal from Joint Venture

 

 – A Shareholder may elect to withdraw from the Joint Venture by giving notice to the other Shareholder of the effective date of withdrawal, which shall be the later of the end of the then current Program period or 30 days after the date of the notice.  Subject to the foregoing sentence, 60 days following the withdrawal by a Shareholder, the withdrawing Shareholder shall be deemed to have Transferred to the remaining Shareholder all of its Shares.  The withdrawing Shareholder shall execute and deliver all instruments as may be necessary in the reasonable judgement of the other Shareholder to effect the transfer of its Shares in Salu Siwa to the other Shareholder.  If within a 60 day period both Shareholders elect to withdraw, then the Joint Venture shall instead be deemed to have been terminated by the written agreement of the Shareholders pursuant to Section 18.1 and the Parties shall proceed to take all necessary action to dissolve (i) Salu Siwa in accordance with Australian Corporate Law and any other applicable law; and (ii) PT Masmindo in accordance with Indonesian Corporate Law and any other applicable law.  [Note to draft: transfer price issues to be considered]

 

	
16.4  

	
Liquidation and Termination After Dissolution

 

 – Upon the dissolution of Salu Siwa and PT Masmindo in accordance with Section 18.1, the Shareholders give the Operator the authority to appoint in writing one or more liquidators who shall have the authority set forth in Section 18.5.  The liquidator shall take all action necessary to wind up the activities of Salu Siwa and PT Masmindo, and all costs and expenses incurred in connection with the liquidation and termination of Salu Siwa and PT Masmindo shall be expenses chargeable to Salu Siwa and PT Masmindo.  The liquidator may determine which Assets, if any, are to be distributed in kind, and shall sell or otherwise dispose of all other Assets of Salu Siwa and PT Masmindo.  The Assets of Salu Siwa and PT Masmindo shall first be paid, applied, or distributed in satisfaction of all liabilities of Salu Siwa and PT Masmindo, respectively to third parties (or to making reasonable provision for the satisfaction thereof) and then to satisfy any debts, obligations, or liabilities owed to the Shareholders.  Thereafter, any remaining cash and all other Assets shall be distributed to the Shareholders in accordance

 

  

  

B-33

Exhibit 10.43

with, in the case of Salu Siwa, the Amended Constating Documents and Australian Corporate Law, and in the case of PT Masmindo, Indonesian Corporate Law.  Each Shareholder shall have the right to designate another Person to receive any property that otherwise would be distributed in kind to that Shareholder pursuant to this Section 18.3.  Upon the completion of the winding up of Salu Siwa and PT Masmindo, the liquidator shall take such other actions as may be reasonably necessary to terminate the continued existence of Salu Siwa and PT Masmindo.

 

	
16.5  

	
Right to Data After Termination

 

 – After the termination of the continued existence of Salu Siwa and PT Masmindo pursuant to Section 18.3, each Shareholder shall be entitled to copies of all information acquired hereunder before the effective date of termination not previously furnished to it, but a resigning Shareholder, or a Shareholder that forfeits or Transfers all of its Shares, shall not be entitled to any such copies after any such withdrawal.

 

	
16.6  

	
Continuing Authority

 

 – From and after the dissolution of Salu Siwa and PT Masmindo under Section 18.1, the liquidator shall have the power and authority of the Operator and the Board of Directors to do all things on behalf of Salu Siwa and PT Masmindo which are reasonably necessary or convenient to: (i) wind up the Operations and Salu Siwa and PT Masmindo; (ii) continue to operate the Properties and other Assets of Salu Siwa and PT Masmindo during the winding up of the Operations and Salu Siwa and PT Masmindo; and (iii) complete any transaction and satisfy any obligation, unfinished or unsatisfied, at the time of such dissolution, if the transaction or obligation arises out of Operations prior to such dissolution.  The liquidator 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 Salu Siwa and PT Masmindo, mortgage Assets, and take any other reasonable action in any matter with respect to Salu Siwa and PT Masmindo or the Operations.

 

ARTICLE XVII

 

GENERAL PROVISIONS

 

	
17.1  

	
Notices

 

 – All notices or other communications to be given hereunder shall be delivered by hand, facsimile or electronic transmission, and, if delivered by hand, shall be deemed to have been given on the date of delivery or, if sent by facsimile or electronic transmission, on the date of transmission if sent before 5:00 p.m. (local time) and such time is Business Day or, if not, on the first Business Day following the date of transmission.

 

Notices to Vista Barbados shall be addressed to:

 

Vista Gold (Barbados) Corp.

c/o Vista Gold Corp.

7961 Shaffer Parkway, Suite 5

Littleton, Colorado  801127

 

Attention:                      Frederick H. Earnest

Facsimile:                      720-981-1186

Email:                      fhearnest@vistagold.com

 

  

  

B-34

Exhibit 10.43

With a copy (for informational purposes only) to:

 

Borden Ladner Gervais LLP

1200 Waterfront Centre

200 Burrard Street

P.O. Box 48600

Vancouver, British Columbia, Canada

V7X 1T2

 

Attention:                      Jason J. Brooks

Facsimile:                      604-622-5902

Email:                      jbrooks@blgcanada.com

 

Notices to Salu Siwa shall be addressed to:

 

Salu Siwa Ltd.

c/o Vista Gold Corp.

7961 Shaffer Parkway, Suite 5

Littleton, Colorado  801127

 

Attention:                      Frederick H. Earnest

Facsimile:                      720-981-1186

Email:                      fhearnest@vistagold.com

 

With a copy (for informational purposes only) to:

 

Borden Ladner Gervais LLP

1200 Waterfront Centre

200 Burrard Street

P.O. Box 48600

Vancouver, British Columbia, Canada

V7X 1T2

 

Attention:                      Jason J. Brooks

Facsimile:                      604-622-5902

Email:                      jbrooks@blgcanada.com

 

Notices to Pan Asia shall be addressed to:

 

Pan Asia Resources Corp.

Suite 1740 – 1177 West Hastings Street

Vancouver, British Columbia  V6E 2K3

 

Attention:                      Stephen Walters

Facsimile:                      ●

Email:                      stephen@panasiares.com

 

  

  

B-35

Exhibit 10.43

With a copy (for informational purposes only) to:

 

Tupper, Jonsson & Yeadon

Suite 1710 - 1177 West Hastings Street

Vancouver, British Columbia, Canada

V6E 2L3

 

Attention:                      Glenn R. Yeadon

Facsimile:                      604-681-0139

Email:                      yeadon@securitieslaw.bc.ca

 

Any Party may change its address for service aforesaid by notice in writing to the other Party specifying its new address for service hereunder.

 

17.2 Interpretation

 

.  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.

 

17.3 Currency

 

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

 

17.4 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.

 

17.5 Waiver

 

.  The failure of a Party 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 Party’s right thereafter to enforce any provision or exercise any right.

 

17.6 Modification

 

.  No modification of this Agreement shall be valid unless made in writing and duly executed by each of the Parties.

 

17.7 Force Majeure

 

.  Except for any obligation to make payments when due hereunder, the obligations of a Party 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, labour disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God; laws, regulations, orders, proclamations, 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 applicable environmental standards; acts of war or terrorism or conditions arising out of or attributable to war or terrorism, whether declared or undeclared; riot, civil strife, insurrection, insurgency or rebellion; fire, explosion, earthquake,

 

  

  

B-36

Exhibit 10.43

storm, flood, sink holes, drought, hurricane, tsunami 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, labour, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; or any other cause whether similar or dissimilar to the foregoing.  The affected Party shall promptly give notice to the other Party of the suspension of performance, stating therein the nature of the suspension, the reasons therefore, and the expected duration thereof.  The affected Party or Operator shall resume performance as soon as reasonably possible.

 

17.8 Governing Law

 

.  This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein, without regard to the conflicts of laws principles thereof.  Each of the Parties hereto irrevocably attorns to the jurisdiction of the courts of the Province of British Columbia and all appellate courts having jurisdiction thereover with respect to all disputes arising out of or in connection with this Agreement.

 

17.9 Disputes 

 

. All disputes arising out of or in connection with this Agreement will be determined by arbitration.  There will be three arbitrators.  The place of arbitration will be Vancouver, British Columbia.  The language of the arbitration will be English.  The arbitration will be administered by the British Columbia International Commercial Arbitration Centre (“BCICAC”) in accordance with its rules or, if the BCICAC no longer is operative or is unwilling or unable to administer the arbitration, then it will be unadministered and will be conducted under the UNCITRAL Arbitration Rules the ADR Institute of Canada, Inc. acting as appointing authority.

 

17.10 Rule Against Perpetuities

 

.  Any right or option to acquire any interest in real or personal property under this Agreement must be exercised, if at all, so as to vest such interest in the acquirer within 21 years after the Effective Date.

 

17.11 Further Assurances

 

.  Each Party agrees to take from time to time such 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.

 

17.12 No Third Party Beneficiaries

 

.  This Agreement is for the sole benefit of the Parties, and no other Person, including without limitation, any creditor of any Party, is intended to be a beneficiary of this Agreement or shall have any rights hereunder.

 

17.13 Entire Agreement; Successors and Assigns

 

.  This Agreement, together with the Exhibits hereto, contains the entire understanding of the Parties with respect to the subject hereof and supersedes all prior agreements and understandings 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 Parties.  In the event of any conflict between this Agreement and any Exhibit attached hereto, the terms of this Agreement shall be controlling.

 

  

  

B-37

Exhibit 10.43

Counterparts and Facsimile

 

.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.  This Agreement and any counterpart thereof may be delivered by facsimile and when so delivered shall be deemed to be an original.

 

~ Signature Page Follows ~

 

  

  

B-38

Exhibit 10.43

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

 

VISTA GOLD (BARBADOS) CORP.

 

By:           

Authorized Signatory

 

Name:

 

Position:

 

 

 

PAN ASIA RESOURCES CORP.

 

By:           

Authorized Signatory

 

Name:

 

Position:

 

SALU SIWA LTD.

 

By:           

Authorized Signatory

 

Name:

 

Position:

 

 

  

  

B-39

Exhibit 10.43

EXHIBIT A

 

PROPERTY DESCRIPTION AND AREA OF INTEREST

 

PART 1 - Property Description

 

See the description contained in the attached Decree of the Minister of Energy and Mineral Resource (Number: 352 K/30/DJB/2009), and the English translation thereof (attached for reference only), which form part of this Exhibit A.  In the event of any inconsistency between the description contained in the copy of such Decree in Bahasa and the English translation thereof, the copy in Bahasa shall govern.

 

PART 2 - Area of Interest

 

[Note to draft:  To be completed]

 

 

 

 

 

  

B-40

Exhibit 10.43

EXHIBIT B

 

NET SMELTER RETURNS PAYMENT

 

[Note to draft:  To be drafted]

 

 

 

  

B-41

Exhibit 10.43

EXHIBIT C

 

INSURANCE

 

The Operator shall, at all times while conducting Operations, comply fully with the applicable worker’s compensation laws and purchase, or provide through self-insurance, protection for the Shareholders comparable to that provided under standard form insurance policies for (i) comprehensive public liability and property damage with combined limits of $10,000,000 for bodily injury and property damage; (ii) automobile insurance with combined limits of $1,000,000; and (iii) adequate and reasonable insurance against risk of fire and other risks ordinarily insured against in similar operations.  Each Shareholder shall self-insure or purchase for its own account such additional insurance as it deems necessary.

 

 

 

 

 

  

B-42

Exhibit 10.43

EXHIBIT D

 

INITIAL PROGRAM AND BUDGET

 

Pan Asia proposes an initial budget of US$1,350,000 for the first 12 months of the option period. Central to the work program is the commencement of an AMDAL or Environmental Impact Statement by suitably qualified contractors. In addition the database will be modelled in light of current changes in the metals price and some resource drilling is planned principally concentrating on the further definition of vertical structures within the Awak Mas deposit due to their generally higher grade.

 

Some initial optimisation studies will be undertaken to gain some insight into the best mining scenario for the deposit for completion of the Feasibility Study in year 2.

 

Rehabilitation of the camp and core shed to bring the storage of drill core in aluminum trays is planned.

 

Detailed studies on two critical elements in the feasibility will be undertaken - costs to bring the road up to a standard for heavy equipment transport and alternatives to capital costs of a Power plant for the mine.

 

Details of the budget are provided below including G&A costs.

 

	
Budget Awak Mas Project – 12 months

	  
	  	
IN US$

	
Resource Drilling & Modelling

	
400,000

	
Environmental Impact Study AMDAL

	
300,000

	
Metallurgical & Engineering

	
200,000

	
Rehabilitation Camp & Roads

	
200,000

	
General & Administration

	
250,000

	
TOTAL

	
1,350,000

 

 

 

 

  

B-43

Exhibit 10.43

EXHIBIT E

 

AMENDED CONSTATING DOCUMENTS

 

[Note to draft:  To be drafted by Australian Counsel ]

 

E-

 

  

B-44

Exhibit 10.43

 

 

EXHIBIT C

 

INITIAL PROGRAM AND BUDGET

 

(Please Also See Attached)

 

  

C-1

Exhibit 10.43

  

C-2

Exhibit 10.43

 

  

C-3

Exhibit 10.43

 

Pan Asia proposes an initial budget of US$1,350,000 for the first 12 months of the option period. Central to the work program is the commencement of an AMDAL or Environmental Impact Statement by suitably qualified contractors and public meetings to be held by PT Masmindo and its representatives in accordance with prevailing Indonesian regulations.

 

The geological database will be modelled in light of current changes in the metals price and potential mining scenarios of the deposit.  Some resource drilling is planned principally concentrating on the further definition of vertical structures within the Awak Mas deposit due to their generally higher grade.  A suitably-qualified project manager will be hired.

 

A scoping study and initial optimisation studies will be undertaken by recognized international consultants to gain some insight into the best mining scenario for the deposit for completion of the Feasibility Study in year two and to provide necessary technical information for the AMDAL.

 

Rehabilitation of the camp and facilities is planned due to planned increase in use throughout 2010.

 

Detailed studies on two critical elements in the feasibility will be undertaken - costs to bring the road up to a standard for heavy equipment transport and alternatives to capital costs of a Power plant for the mine.

 

Details of the budget are provided below including G&A costs and overhead.

 

	
PT Masmindo Budget 2010

	 	
In US Funds

	 
	  	 	 	 
	
Resource Drilling & Modelling

	 	$	350,000	 
	
Environmental Impact Study AMDAL

	 	$	250,000	 
	
Scoping Study & optimisation

	 	$	150,000	 
	
Camp & Infrastructure – Roads etc

	 	$	160,000	 
	
Overhead – Pan Asia

	 	$	130,000	 
	
Capex – Mining Software – Vehicles

	 	$	60,000	 
	
General and Administration

	 	$	250,000	 
	
TOTAL

	 	$	1,350,000	 

  

C-4

Exhibit 10.43

EXHIBIT D

 

FORM OF POWER OF ATTORNEY

 

 

The undersigned,

 

	
1.

	
Name:

	
[●]

	  	
Passport No.:

	
[●]

	  	
Address:

	
[●]

	
2.

	
Name:

	
[●]

	  	
Passport No.:

	
[●]

	  	
Address:

	
[●]

 

in this matter acting in their capacities as the President Director and Director, respectively, of and therefore are authorized to act for and on behalf of, PT MASMINDO DWI AREA, an Indonesian limited liability company  (the “Principal”) hereby make, appoint and authorize the person mentioned below:

 

	
Name  :

	
Stephen Walters

	
Passport No.  :

	
761264072  (UK Passport) Valid To 9/Nov/2019

	
Address  :

	
Bali View A4/7, Jl Cirendeu Raya 46, Jakarta, Indonesia

 

(hereinafter referred to as the “Attorney-in-Fact”), to act as the Principal’s true and lawful attorney in fact, with power and authority for the Principal and in the Principal’s name and on the Principal’s account and benefit, for and on behalf of the Principal:

 

SPECIFICALLY

 

To:

 

	
1.

	
complete the environmental impact management and assessment analysis/Analisis Manajemen Dampak Lingkungan (AMDAL) requirements, and to undertake such exploration and development work as is required to deliver a feasibility study with respect to the Awak Mas project area to satisfy the requirements of the Contract of Work, and to deliver such feasibility study; and

 

	
2.

	
undertake all necessary matters related to the implementation of the matters contemplated in paragraph 1 above in accordance with relevant programs and budgets, which programs and budgets are to be prepared by the Attorney-in-Fact and presented to the Board of Directors of the Principal (the “Programs and Budgets”).

 

	
  

	
3.

	
(a)

	
submit in writing to the Board of Directors of the Principal: (i) monthly progress reports which include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of periodical reports concerning operations; (iv) a detailed final report

 

  

D-1

Exhibit 10.43

	
  

	
within 30 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 the Board of Directors of the Principal may reasonably request;

 

	
  

	
(b)

	
maintain all required accounting and financial records in accordance with customary cost accounting practices in the mining industry;

 

	
  

	
(c)

	
at all reasonable times, provide the Board of Directors of the Principal or the representative of Vista Gold (Barbados) Corp., a shareholder of the Principal, upon the request of any member of the Board of Directors of the Principal, access to, and the right to inspect and copy all maps, drill logs, core tests, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other information acquired in operations; and

 

	
  

	
(d)

	
allow Vista Barbados (and/or its representatives, advisors and consultants) to inspect the Company’ assets and operations at all reasonable timesand with reasonable prior notification.

 

	
4.

	
In coordination with Vista Barbados, timely record and file with the appropriate agency of the Government of Indonesia, quarterly reports in accordance with the Contract of Work as required by Indonesian law.

 

	
5.

	
Subject to applicable law, carry out the matters set out above through agents or independent contractors.

 

	
6.

	
With the prior written consent of Vista Barbados, initiate any and all claims, litigation/arbitration proceedings or administrative proceedings arising out of or in connection with the activities of the Principal.

 

The Principal hereby acknowledges and ratifies any and all acts carried out under or pursuant to this Power of Attorney by the Attorney-in-Fact within the limits of such Power of Attorney, including the legal consequences arising therefrom in so far as any and all such acts are undertaken pursuant to and in compliance with applicable laws.

 

This Power of Attorney shall be effective as of the date mentioned below, and shall remain valid until the purpose of this Power of Attorney is completed or until [25 February 2010], whichever occurs the earlier.

 

This Power of Attorney is:

 

	
§

	
issued with the right of substitution or delegation and such substitution/delegation rights can only be undertaken with prior written approvals from the Principal after the Principal having been fully informed of the proposed substitution/delegation and having reviewed the related documentation;

 

	
§

	
governed by the laws of the Republic of Indonesia; and

 

  

D-2

Exhibit 10.43

	
§

	
effective as of  [●].

 

	
PT MASMINDO DWI AREA

	  	  
	
By:                                                      

Name: [●]

Title:           [●]

	  	
By:                                                      

Name: [●]

Title:           [●]

 

  

D-3

Exhibit 10.43exhibit10_13.htm

 

Exhibit 10.13

 

 

 

 

 

EMPLOYMENT AGREEMENT

 

 

BETWEEN

 

 

MARK W. HAUSHILL

 

 

AND

 

 

AMERICAN SAFETY ADMINISTRATIVE SERVICES, INC.

 

 

Dated: March 15, 2010

 

 

Effective as of September 8, 2009

 

 

 

 

 

 

 

 

 

  

  

  

 

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into on this 15th day of March, 2010, by and between American Safety Administrative Services, Inc., a Georgia corporation with its principal executive offices located in Atlanta, Georgia (the "Company"), and Mark W. Haushill, an individual resident of the State of Texas (“Executive"), to be effective as of the Effective Date, as defined in Section 1.

 

 

BACKGROUND

 

 

The Company desires to retain Executive as the Chief Financial Officer of the Company and its subsidiaries and affiliated entities.  Executive and the Company desire to enter into an employment arrangement pursuant to the terms of this Agreement.

 

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

 

1. Effective Date. The effective date of this Agreement (the "Effective Date") is September 8, 2009.

 

 

2. Employment. Executive is hereby employed as the Chief Executive Officer of the Company. In such capacity, Executive will have the duties and responsibilities commensurate with such position and as may be reasonably assigned to him by the Chief Executive Officer of American Safety Insurance Holdings, Ltd., the Company’s ultimate parent (the “CEO"). Executive's reporting responsibilities will be to the CEO.

 

 

3. Employment Period. Executive's employment hereunder began on the Effective Date and will end on the third anniversary of the Effective Date, unless extended as hereinafter provided in this Section 3 or terminated in accordance with the provisions of Section 7 (the "Employment Period"). As of the third anniversary of the Effective Date and on each succeeding anniversary of the Effective Date during the Employment Period, Executive's Employment Period will automatically be extended by one year so as to end on the next anniversary of the Effective Date, unless the Company otherwise provides Executive with written notice of non-renewal at least 120 days prior to the third anniversary of the Effective Date or, following any automatic extension, any succeeding anniversary of the Effective Date.

 

 

4. Extent of Service. During the Employment Period, Executive will render his services to the Company and its subsidiaries and affiliated entities (or to Parent’s successor following a Change in Control, as defined below) in conformity with professional standards, in a prudent and workmanlike manner and in a manner consistent with the obligations imposed on officers of corporations under applicable law. Executive will promote the interests of the Company and its subsidiaries and affiliated entities in carrying out Executive's duties and will not deliberately take any action that could, or fail to take any action which failure could, reasonably be expected to have a material adverse effect upon the business of the Company or any of its affiliates or any of their respective subsidiaries. Executive agrees to devote his business time, attention, skill and efforts exclusively to the faithful performance of his duties hereunder (both before and after a Change in Control),

 

  

  

  

 

provided, however, that it will not be a violation of this Agreement for Executive to (i) devote reasonable periods of time to charitable and community activities and, with the approval of the Company, industry or professional activities, and/or (ii) manage personal investments, so long as such activities do not materially interfere with the performance of Executive's responsibilities under this Agreement.

 

 

5. Compensation and Benefits.

 

 

(a)           Base Salary. During the Employment Period, Executive will be entitled to receive a base salary in the amount of $335,000.00 per year ("Initial Base Salary"), less normal withholdings, payable in equal semi-monthly installments or other installments (not less frequently than monthly) as are customary under the Company's payroll practices from time to time. The Compensation Committee of the Board will review Executive's then current Base Salary periodically, but no less frequently than annually, and in its sole discretion may increase Executive's Base Salary from time to time (as so increased, the “Base Salary”). The periodic review of Executive's salary by the Board will consider, among other things, Executive's own performance and the Company's performance.

 

 

(b)           Incentive and Savings Plans. During the Employment Period, Executive will be entitled to participate in incentive and savings plans, practices, policies and programs applicable generally to employees of the Company. Certain executive programs will be made available on a selective basis at the discretion of the Compensation Committee of the Board. Without limiting the foregoing, the following will apply:

 

 

(i)           Annual Bonus. Executive will have an annual bonus opportunity based on specific objectives established by the Compensation Committee. The annual bonus opportunity will be per an annual bonus plan as approved by the Compensation Committee.  Such annual bonus shall be paid, if at all, no later than the 15th day of the third month following the end of the year to which the annual bonus relates.

 

 

(ii)           Incentive Awards. On or about the Effective Date, as consideration for entering into this Agreement, Parent will make a grant of stock options to purchase 10,000 shares of Parent’s common stock, vesting five years from the date of grant and with an exercise price equal to the closing price of Parent’s common stock on the New York Stock Exchange on the date of grant.  Executive will be eligible to receive further awards of stock options, restricted stock units, stock appreciation rights and/or similar stock-based awards as a long-term incentive for performance as determined by the Compensation Committee.

 

 

(c)           Vacation.  Executive will be entitled to 4 weeks of vacation during each fiscal year of employment hereunder.  Executive agrees that he will schedule such vacation time so as not to materially impair the performance of Executive’s duties hereunder.  During the term, up to a maximum of forty (40) hours of unused vacation time to which Executive shall become entitled in any given fiscal year may be carried over to the immediately next succeeding fiscal year, and such carried-over vacation time may be used in such immediately next succeeding fiscal year.  If such carried-over vacation time is not used within such immediately next succeeding fiscal year, such unused vacation time shall not accrue for use in any subsequent period.  Subject to the foregoing sentence, payment shall be made for accrued and unused vacation time through the date of termination of this Agreement as described herein.

 

  

2

  

 

(d)           Welfare Benefit Plans. During the Employment Period, Executive and Executive's family will be eligible for participation in, and will receive all benefits under, the welfare benefit plans, practices, policies and programs generally provided by the Company (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs), subject to the same terms that such benefits are made available to other senior executives of the Company generally.  During the Employment Period, the Company will provide a supplemental disability plan in addition to the disability plan available to employees generally, which supplemental disability plan will provide Executive with disability benefits that, when added to the disability benefits payable under the general disability plan, will equal 60% of Executive’s Base Salary as of the Disability Effective Date.

 

 

(e)           Expenses. During the Employment Period, Executive will be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the policies, practices and procedures of the Company.  In no event will such reimbursements be made, if at all, later than the last day of Executive’s taxable year next following Executive’s taxable year in which Executive incurs the expense.

 

 

(f)           Fringe Benefits. During the Employment Period, Executive will be entitled to a car allowance of $500.00 per month payable in equal semi-monthly or other installments (not less frequently than monthly) as are customary under the Company’s payroll practices from time to time.  In addition, the Company will pay up to $15,000.00 per calendar year for a Universal Life Insurance Policy on Executive’s life (or other instrument mutually agreed upon by Executive and the Company) and Executive will be entitled to such other fringe benefits as may be consistent with the plans, practices, programs and policies of the Company.

 

 

(g)           Relocation Assistance/Travel Expense.  Executive will be entitled to receive reimbursement for actual moving expenses related to a move from San Antonio, Texas to the Atlanta, Georgia metropolitan area up to $30,000.00 and to reimbursement for real estate closing costs not to exceed $3,175.00.  In addition, Executive will receive assistance from the Company’s relocation broker and temporary corporate executive housing pending Executive’s permanent move to Atlanta.  While residing in corporate executive housing, Executive will be entitled to receive round trip airline tickets for travel between Atlanta and San Antonio and reimbursement for miscellaneous fees (parking and taxi) associated with such travel.

 

 

6. Change in Control. For the purposes of this Agreement, a "Change in Control" means:

 

 

(a)           The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power of the then outstanding voting securities of American Safety Insurance Holdings, Ltd., a Bermuda corporation (“Parent”), entitled to vote generally in the election of directors (the "Outstanding Parent Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions will not constitute a Change in Control: (i) any acquisition directly from the Parent to the extent that the Parent’s board of directors expressly provides in a

 

  

3

  

 

resolution approving such issuance that such securities shall not be considered in determining whether a Change in Control occurs, (ii) any acquisition by the Parent which reduces the number of Outstanding Parent Voting Securities and thereby results in any Person having beneficial ownership of more than 35% of the Outstanding Parent Voting Securities provided that such Person does not acquire any additional Outstanding Parent Voting Securities, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any corporation controlled by the Parent, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (b) of this Section 6; or

 

 

(b)           Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Parent (a "Business Combination"), in each case, unless, following such Business Combination, (i) outstanding Parent common stock (or outstanding securities issued by a surviving entity in exchange therefore) constitutes more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination, and (ii) no Person (excluding the Parent or any employee benefit plan (or related trust) of the Parent or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; or

 

 

(c)           The election of a majority of the members of the board of directors of Parent, without the recommendation or approval by a majority of the existing members of the board of directors of Parent;

 

 

(d)           The shareholders of the Parent approve a plan of complete liquidation or dissolution of the Parent (other than by a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Parent); or

 

 

(e)           The failure of Parent, directly or indirectly, to own all or substantially all of the voting securities of the Company.

 

 

Notwithstanding anything in this definition to the contrary, a restructuring and/or separation of any line of business or business unit from the Parent will not of itself constitute a Change in Control;

 

 

For the avoidance of doubt, the term "Person" as used in this Section 6 includes the shareholders of a corporation or other entity that is a party to a merger, consolidation or business combination to which the Parent also is a party, including a forward or reverse subsidiary merger pursuant to which voting securities of the Parent are issued to such shareholders.

 

 

7. Termination of Employment.

 

 

(a)          Death, Disability or Retirement. Executive's employment and the Employment Period will terminate automatically upon Executive's death or Retirement. For purposes of this Agreement, "Retirement" means normal retirement as defined in the Company's then-current retirement plan, or if there is no such retirement plan, "Retirement"

 

  

4

  

 

means voluntary termination after age 65 with ten years of service. If the Company determines in good faith that a Disability of the Executive has occurred (pursuant to the definition of Disability set forth below), it may give Executive written notice of its intention to terminate Executive’s employment.  In such event, Executive’s employment with the Company will terminate effective on the 30th day after receipt of such written notice by Executive (the “Disability Effective Date”) provided that, within the 30 days after such receipt, Executive has not returned to full-time performance of Executive’s duties.  For purposes of this Agreement, “Disability” means a mental or physical disability as determined by the Board of Directors of the Parent (the “Board”) in accordance with standards and procedures similar to those under the Company's employee long-term disability plan, if any. At any time that the Company does not maintain such a long-term disability plan, Disability will mean the inability of Executive, as determined by the Board, to substantially perform the essential functions of his regular duties and responsibilities due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six consecutive months.

 

 

(b) Termination by the Company. The Company may terminate Executive's employment for Poor Performance, or with or without Cause. For purposes of this Agreement:

 

"Poor Performance" means the failure of Executive to meet reasonable and achievable performance expectations (other than any such failure resulting from incapacity due to physical or mental illness); provided, however, that termination for Poor Performance will not be effective unless at least 30 days prior to such termination Executive has received written notice from the Board which specifically identifies the manner in which the Board believes that Executive has not met performance expectations and Executive has failed after receipt of such notice to resume the diligent performance of his duties to the satisfaction of the Board; and

 

 

"Cause" means:

 

 

(i)          the continued failure of Executive to perform substantially Executive's duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness, and specifically excluding any failure by Executive, after reasonable efforts, to meet performance expectations), after a written demand for substantial performance is delivered to Executive by the Board which specifically identifies in detail the manner in which the Board believes that Executive has not substantially performed Executive's duties, or

 

 

(ii)          any act of fraud, misappropriation, embezzlement or similar dishonest or wrongful act by Executive, or

 

 

(iii)          Executive's abuse of alcohol or any substance which materially interferes with Executive's ability to perform services on behalf of the Company, or

 

 

(iv)          Executive's conviction for, or plea of guilty or nolo contendere to, a felony, or

 

 

(v)          Executive's acceptance of employment with an employer other than the Company or any affiliate or subsidiary of the Company, or

 

  

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(vi)          Executive’s conviction for any crime of moral turpitude.

 

 

 (c)           Termination by Executive. Executive's employment may be terminated by Executive for Good Reason or no reason. For purposes of this Agreement, "Good Reason" means:

 

 

(i)          a reduction by the Company in Executive's Base Salary or benefits as in effect on the Effective Date or as the same may be increased from time to time, unless a similar reduction is made in salary or benefits of substantially all senior executives of the Company (or any of its affiliates and any of their respective subsidiaries with respect to which the Company exerts control over compensation policies); or

 

 

(ii)          the Company's requiring Executive, without his consent, to be based at any office or location other than in the greater metropolitan area of the city in which his office is located at the Effective Date; or

 

 

(iii)          the Company’s changing the reporting structure so that Executive no longer reports directly to the CEO.

 

 

(d)           Notice of Termination. Any termination by the Company for Poor Performance, or Cause, or by Executive for Good Reason, will be communicated by Notice of Termination to the other party hereto given in accordance with Section 17(f) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date will be not more than 30 days after the giving of such notice). The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason, Poor Performance or Cause will not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting such fact or circumstance in enforcing Executive's or the Company's rights hereunder.

 

 

(e)           Date of Termination. "Date of Termination" means (i) if Executive's employment is terminated other than by reason of death or Retirement, the date of receipt of the Notice of Termination, or any later date specified therein (which will not be more than 30 days after the date of delivery of the Notice of Termination), or (ii) if Executive's employment is terminated by reason of death, Disability or Retirement, the Date of Termination will be the date of death or Retirement, or the Disability Effective Date, as the case may be. In no event will the Date of Termination be after the end of Executive's Employment Period, as provided for in Section 3 of this Agreement.

 

 

8. Obligations of the Company upon Termination.

 

 

(a)           Prior to or More than 24 Months after a Change in Control: Termination by Executive for Good Reason; Termination by the Company Other Than for Poor Performance, Cause or Disability; Expiration of Executive’s Employment Period. If, prior to or more than 24 months after a Change in Control and during the Executive's Employment Period, the Company terminates Executive's employment other than for Poor

 

  

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Performance, Cause or Disability, or Executive terminates his employment for Good Reason within a period of 90 days after the occurrence of the event giving rise to Good Reason, or upon the expiration of the Executive’s Employment Period, as described in Section 3, then, subject to Section 8(f) below (and with respect to the payments and benefits described in clauses (ii) through (vii) below, only if Executive executes a Release in substantially the form of Exhibit A hereto and the period for revoking such Release (the "Release") has expired before the 30th day after the Date of Termination):

 

 

(i)          the Company will pay to Executive in a lump sum in cash within 30 days after the Date of Termination (with Executive not having any right to designate the taxable year of the payment) the sum of (A) Executive's Base Salary through the Date of Termination to the extent not theretofore paid, and (B) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (A) and (B) will be hereinafter referred to as the "Accrued Obligations"); and

 

 

(ii)          for the longer of (A) 18 months from the Date of Termination or (B) the remaining term of Executive's Employment Period (the "Normal Severance Period"), the Company will continue to pay Executive an amount equal to his monthly Base Salary, payable in equal semi-monthly or other installments (not less frequently than monthly) as are customary under the Company's payroll practices from time to time, with the installments that otherwise would be paid within the first 30 days after the Date of Termination being paid in a lump sum on the 30th day after the Date of Termination and the remaining installments being paid as otherwise scheduled assuming payments had begun immediately after the Date of Termination; provided, however, that the Company's obligation to make or continue such payments will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement) and fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; and

 

 

(iii)          during the Normal Severance Period, if and to the extent Executive timely elects COBRA continuation coverage and such coverage remains available, the Company no less frequently than monthly will pay for the full premium amount of such COBRA continuation coverage and will impute taxable income to the Executive equal to the full premium amount; with Executive being required to pay the amount of such premiums for the first 30 days after the Date of Termination and having the right to reimbursement from the Company on the 30th day after the Date of Termination for the payments made during that time and the balance of the premiums being paid as otherwise scheduled assuming payment of the premiums had begun immediately after the Date of Termination; provided, however that the Company's obligation to provide such benefits will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement) and fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; provided further, that to the extent Executive continues COBRA continuation coverage beyond his Normal Severance Period, Executive will be responsible for paying the full cost of the COBRA continuation coverage in accordance with the procedures of the Company generally applicable to all qualified beneficiaries receiving COBRA continuation coverage; and

 

 

(iv)          on the 30th day after the Date of Termination, Executive will be paid a bonus for the year in which the Date of Termination occurs in a lump sum in cash an amount equal to 100% of his Bonus Opportunity (prorated through the Date of Termination)

 

  

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adjusted up or down by reference to his year-to-date performance at the Date of Termination in relation to the prior established performance objectives under Executive's bonus plan for such year; provided, however that the bonus payment described in this Section 8(b)(iv) will be reduced by the amount (if any) of the Bonus Opportunity that Executive had previously elected to receive in the form of restricted stock of the Company; and

 

 

(v)          all grants of restricted stock, restricted stock units and similar Company stock-based awards ("Restricted Stock") held by Executive as of the Date of Termination will become immediately vested as of the Date of Termination; and

 

 

(vi)          all of Executive's options to acquire Common Stock of the Company, stock appreciation rights in Common Stock of the Company and similar Company stock-based awards ("Options") that would have become vested (by lapse of time) within the 24-month period following the Date of Termination had Executive remained employed during such period will become immediately vested as of the Date of Termination; and

 

 

(vii)          notwithstanding the provisions of the applicable Option agreement, all of Executive's vested but unexercised Options as of the Date of Termination (including those with accelerated vesting pursuant to Section 8(a)(vi) above) will remain exercisable through the earlier of (A) the original expiration date of the Option, (B) the 90th day following the end of the Normal Severance Period or (C) 10 years from the date of grant of the options; and

 

 

(viii)          to the extent not theretofore paid or provided, the Company will timely pay or provide to Executive his Other Benefits pursuant to the plans, policies, practices and programs under which such Other Benefits are provided.

 

 

(b)           Prior to or More than 24 Months after a Change in Control: Termination by the Company for Poor Performance. If, prior to or more than 24 months after the occurrence of a Change in Control, the Company terminates Executive's employment for Poor Performance, then, subject to Section 8(f) below (and with respect to the payments and benefits described in clauses (ii) through (vi) below, only if Executive executes the Release and the period for revoking such Release expires before the 30th day after the Date of Termination):

 

 

(i)          the Company will pay to Executive the Accrued Obligations in a lump sum in cash within 30 days after the Date of Termination (with Executive not having any right to designate the taxable year of the payment); and

 

 

(ii)          for a period of 12 months after the Date of Termination (the "Poor Performance Severance Period"), the Company will continue to pay Executive an amount equal to his monthly Base Salary, payable in equal semi-monthly installments or other installments (not less frequently than monthly) as are customary under the Company's payroll practices from time to time, with the installments that otherwise would be paid within the first 30 days after the Date of Termination being paid in a lump sum on the 30th day after the Date of Termination and the remaining installments being paid as otherwise scheduled assuming payments had begun immediately after the Date of Termination; provided, however that the Company's obligation to make or continue such payments will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement) and

 

  

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fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; and

 

 

(iii)          during the Poor Performance Severance Period, if and to the extent Executive timely elects COBRA continuation coverage and such coverage remains available, the Company no less frequently than monthly will pay for the full premium amount of such COBRA continuation coverage and will impute taxable income to the Executive equal to the full premium amount; with Executive being required to pay the amount of such premiums for the first 30 days after the Date of Termination and having the right to reimbursement from the Company on the 30th day after the Date of Termination for the payments made during that time and the balance of the premiums being paid as otherwise scheduled assuming payment of the premiums had begun immediately after the Date of Termination; provided, however that the Company's obligation to provide such benefits will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement) and fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; provided further, that to the extent Executive continues COBRA continuation coverage beyond his Poor Performance Severance Period, Executive will be responsible for paying the full cost of the COBRA continuation coverage in accordance with the procedures of the Company generally applicable to all qualified beneficiaries receiving COBRA continuation coverage; and

 

 

(iv)          all grants of Restricted Stock held by Executive as of the Date of Termination that would have become vested (by lapse of time) within the 12-month period following the Date of Termination had Executive remained employed during such period will become immediately vested as of the Date of Termination; and

 

 

(v)          subject to the specific approval of the Compensation Committee, all of Executive's Options that would have become vested (by lapse of time) within the 12-month period following the Date of Termination had Executive remained employed during such period will become immediately vested and exercisable as of the Date of Termination; and

 

 

(vi)          notwithstanding the provisions of the applicable Option agreement, all of Executive's vested but unexercised Options as of the Date of Termination (including those with accelerated vesting pursuant to the Section 8(b)(v) above) will remain exercisable through the earlier of (A) the original expiration date of the Option, (B) the 90th day following the end of the later of (1) six months from the Date of Termination, or (2) the end of the Poor Performance Severance Period or (C) 10 years from the date of grant of the options; and

 

 

(vii)          to the extent not theretofore paid or provided, the Company will timely pay or provide to Executive his Other Benefits pursuant to the plans, policies, practices and programs under which such Other Benefits are provided.

 

 

(c)           After or in Connection with a Change in Control: Termination by Executive for Good Reason; Termination by the Company Other Than for Cause or Disability. If a Change in Control occurs and, within 24 months following such Change in Control (or if Executive can reasonably show that such termination by the Executive or by the Company was in anticipation of the Change in Control in which case this Section 8(c)

 

  

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will apply in lieu of Sections 8(a) or (b)), the Company terminates Executive's employment other than for Cause or Disability or upon the expiration of the Employment Period, as described in Section 3, or Executive terminates employment for Good Reason, then, subject to Section 8(f) below (and with respect to the payments and benefits described in clauses (ii) through (vii) below, only if Executive executes the Release and the period for revoking the Release expires before the 30th day after the Date of Termination):

 

 

(i)          the Company (or its successor) will pay to Executive the Accrued Obligations in a lump sum in cash within 30 days after the Date of Termination (with Executive not having any right to designate the taxable year of the payment); and

 

 

(ii)          the Company (or its successor) will pay to Executive a lump sum cash amount equal to 36 times his monthly Base Salary on the 30th day after the Date of Termination if the Change in Control qualifies as a change in ownership or effective control of the Parent or the Company, or in the ownership of a substantial portion of their assets, within the meaning of Section 409A(a)(2)(A)(v); otherwise, payment will be made in equal semi-monthly installments or other installments (not less frequently than monthly) as are customary under the Company’s payroll practices from time to time, with the installments that otherwise would be paid within the first 30 days after the Date of Termination being paid in a lump sum on the 30th day after the Date of Termination and the remaining installments being paid as otherwise scheduled assuming payments had begun immediately after the Date of Termination; provided, however, that the Company’s obligation to make or continue such payments will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement), other than the Restrictive Covenant contained in Section 13(c)(iv), and fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; and

 

 

(iii)          for 18 months after the Date of Termination, if and to the extent Executive timely elects COBRA continuation coverage and such coverage remains available, the Company no less frequently than monthly will pay for the full premium amount of such COBRA continuation coverage and will impute taxable income to the Executive equal to the full premium amount, with Executive being required to pay the amount of such premiums for the first 30 days after the Date of Termination  and having the right to reimbursement from the Company on the 30th day after the Date of Termination for the payments made during that time and the balance of the premiums being paid as otherwise scheduled assuming payment of the premiums had begun immediately after the Date of Termination; provided, however that the Company's obligation to provide such benefits will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement), other than the Restrictive Covenant contained in Section 13(c)(iv), and fails to remedy such violation to the satisfaction of the Board within 10 days of notice of such violation; and

 

 

(iv)          on the 30th day after the Date of Termination, Executive will be paid a lump sum cash amount equal to 100% of his Bonus Opportunity for the year in which the Date of Termination occurs (as defined in Section 5(b)(i)); provided, however that the total bonus payment described in this Section 8(c)(iv) will be reduced by the amount (if any) of the Bonus Opportunity that Executive had previously elected to receive in the form of restricted stock of the Company; and

 

  

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(v)          all grants of Restricted Stock held by Executive as of the Date of Termination will become immediately vested as of the Date of Termination; and

 

 

(vi)          all of Executive's Options held by Executive as of the Date of Termination will become immediately vested and exercisable as of the Date of Termination; and

 

 

(vii)          notwithstanding the provisions of the applicable Option agreement, all of Executive's vested but unexercised Options as of the Date of Termination (including those with accelerated vesting pursuant to the Section 8(c)(vi) above) will remain exercisable through the earlier of (A) the original expiration date of the Option, (B) the 90th day following the end of the 36-month period beginning on the Date of Termination or (C) 10 years from the date of grant of the options; and

 

 

(viii)          to the extent not theretofore paid or provided, the Company will timely pay or provide to Executive his Other Benefits pursuant to the plans, policies, practices and programs under which such Other Benefits are provided; and

 

 

(ix)          the restrictions on Executive's conduct contained in Section 13(c)(iv) of this Agreement will cease to apply.

 

 

(d)           Death, Disability or Retirement. Regardless of whether or not a Change in Control has occurred, if Executive's employment is terminated by reason of Executive's death, Disability or Retirement, this Agreement will terminate without further obligations to Executive or his estate or legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits.  The Accrued Obligations will be paid to Executive or Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the Date of Termination (with no recipient having any right to designate the taxable year of the payment).  With respect to the provision of Other Benefits, the term Other Benefits as used in this Section 8(e) will include, without limitation, and Executive or his estate and/or beneficiaries will be entitled to receive, benefits under such plans, programs, practices and policies relating to death or retirement benefits, if any, as are applicable to Executive on the Date of Termination.

 

 

(e)           Cause or Voluntary Termination without Good Reason. Regardless of whether or not a Change in Control has occurred, if Executive's employment is terminated for Cause, or if Executive voluntarily terminates employment without Good Reason, this Agreement will terminate without further obligations to Executive, other than for payment of Accrued Obligations within 30 days after the Date of Termination (with Executive not having any right to designate the taxable year of the payment) and the timely payment or provision of Other Benefits pursuant to the plans, policies, practices and programs under which such Other Benefits are provided.

 

 

(f)           Effect of Section 409A.  It is expressly contemplated by the parties that this Agreement will conform to, and be interpreted to comply with, Section 409A of the Internal Revenue Code, as amended (the “Code”).  Notwithstanding any other provision of this Agreement, if Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code, then the payment of any amount or the provision of any benefit under this Agreement which is considered deferred compensation subject to Section 409A of

 

  

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the Code shall be deferred for six (6) months after Executive’s “separation from service” or, if earlier, Executive’s death as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”).  In the event payments are otherwise due to be made in installments or periodically during the 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled.  In the event benefits are required to be deferred, any such benefit may be provided during the 409A Deferral Period at Executive’s expense, with Executive having the right to reimbursement from the Company once the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled.  If Executive incurs any additional tax, interest or penalties under Section 409A of the Code as a result of the violation thereof, the Company at that time will pay Executive an additional amount so that, after all taxes on such amount, Executive has an amount remaining equal to such additional taxes, interest or penalties. Such gross-up payment shall be made, if at all, no later than the end of Executive’s taxable year next following the Executive’s taxable year in which the related taxes, interest or penalties are remitted.  For purposes of this Agreement, Executive shall not be deemed to have terminated employment unless Executive has a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive will perform after that date (whether as an employee or independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed by Executive over the immediately preceding 36-month period.  All rights to payments and benefits under this Agreement shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.

 

 

9. Non-exclusivity of Rights. Nothing in this Agreement will prevent or limit Executive's continuing or future participation in any plan, program, policy or practice provided by the Company and for which Executive may qualify, nor, subject to Section 16(d), will anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or under any contract or agreement with the Company at or subsequent to the Date of Termination will be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 

 

10. Certain Additional Payments by the Company.

 

 

(a)           Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it will be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any

 

  

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interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it is determined that Executive is entitled to a Gross-Up Payment, but that Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $25,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount (the "Reduced Amount") such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment will be made to Executive and the Payments, in the aggregate, will be reduced to the Reduced Amount. In that event, the order of reduction shall be first all cash payments on a pro rata basis, then any equity compensation on a pro rata basis and lastly any benefits on a pro rata basis.

 

 

(b)           Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, will be made by BDO Seidman LLP or such other certified public accounting firm reasonably acceptable to the Company as may be designated by Executive (the "Accounting Firm") which will provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the accounting firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, or in the event that serving as the Accounting Firm for purposes of this Section 10(b) would jeopardize the accounting firm's status as the Company's independent auditor, Executive will appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm will then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm will be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, will be paid by the Company to Executive within five days of the receipt of the Accounting Firm's determination but must be paid in any event by the end of Executive’s taxable year next following the Executive’s taxable year in which the related taxes are remitted.  Any determination by the Accounting Firm will be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine the amount of the Underpayment that has occurred and any such Underpayment will be promptly paid by the Company to or for the benefit of Executive.

 

 

(c)           The Executive will notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification will be given as soon as practicable but no later than ten business days after Executive is informed in writing of such claim and apprises the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive will not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period

 

  

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ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive will:

 

 

(i)          give the Company any information reasonably requested by the Company relating to such claim,

 

 

(ii)          take such action in connection with contesting such claim as the Company reasonably requests in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

 

 

(iii)          cooperate with the Company in good faith in order effectively to contest such claim, and

 

 

(iv)          permit the Company to participate in any proceedings relating to such claim;

 

 

provided, however, that the Company will bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and will indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 10(c), the Company will control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company will advance the amount of such payment to Executive, on an interest-free basis and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.  All payments to be made hereunder must be made by the end of Executive’s taxable year next following Executive’s taxable year in which the taxes are remitted or, if no taxes are remitted, the taxable year in which the matter is resolved, and all reimbursements to be made hereunder must be made by the end of Executive’s taxable year next following Executive’s taxable year in which the expenses are incurred.

 

 

(d)           If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 10(c), Executive becomes entitled to receive any refund with

 

  

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respect to such claim, Executive will (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 10(c), a determination is made that Executive is not entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance will be forgiven and will not be required to be repaid and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

 

11. Costs of Enforcement. Unless otherwise provided by the arbitrator(s) in an arbitration proceeding pursuant to Section 14 hereof, in any action taken in good faith relating to the enforcement of this Agreement or any provision herein, Executive will be entitled to be paid any and all costs and expenses incurred by him in enforcing or establishing his rights thereunder, including, without limitation, reasonable attorneys' fees, whether suit be brought or not, and whether or not incurred in trial, bankruptcy or appellate proceedings, but only if Executive is determined to be the substantially prevailing party in the enforcement proceeding.  Such reimbursement shall be paid as soon as administratively practicable after any final judgment, decision or settlement of such suit or proceedings.

 

 

12. Representations and Warranties. Executive hereby represents and warrants to the Company that Executive is not a party to, or otherwise subject to, any covenant not to compete with any person or entity, and Executive's execution of this Agreement and performance of his obligations hereunder will not violate the terms or conditions of any contract or obligation, written or oral, between Executive and any other person or entity.

 

 

13. Restrictions on Conduct of Executive.

 

 

(a)           General. Executive and the Company understand and agree that the purpose of the provisions of this Section 13 is to protect legitimate business interests of the Company, as more fully described below, and is not intended to eliminate Executive's post-employment competition with the Company per se, nor is it intended to impair or infringe upon Executive's right to work, earn a living, or acquire and possess property from the fruits of his labor. Executive hereby acknowledges that the post-employment restrictions set forth in this Section 13 are reasonable and that they do not, and will not, unduly impair his ability to earn a living after the termination of this Agreement. Therefore, subject to the limitations of reasonableness imposed by law, Executive will be subject to the restrictions set forth in this Section 13.

 

 

(b)           Definitions. The following terms used in this Section 13 have the meanings assigned to them below, which definitions apply to both the singular and the plural forms of such terms:

 

 

"Competitive Position" means any employment with a Competitor in which Executive will use or is likely to use any Confidential Information or Trade Secrets, or in which Executive has duties for such Competitor that relate to Competitive Services and that are the same or similar to those services actually performed by Executive for the Company;

 

  

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"Competitive Services" means the provision of specialty insurance and insurance services in the excess and surplus and alternative risk transfer markets in the United States and Bermuda.

 

 

"Competitor" means any Person engaged, wholly or in part, in Competitive Services in active and direct competition with the Company.

 

 

"Confidential Information" means all information regarding the Company, its activities, business or clients that is the subject of reasonable efforts by the Company to maintain its confidentiality and that is not generally disclosed by practice or authority to persons not employed by the Company, but that does not rise to the level of a Trade Secret. "Confidential Information" includes, but is not limited to, financial plans and data concerning the Company; management planning information; business plans; operational methods; market studies; marketing plans or strategies; product development techniques or plans; lists of current or prospective customers; details of customer contracts; current and anticipated customer requirements; past, current and planned research and development; business acquisition plans; and new personnel acquisition plans. "Confidential Information" does not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company. This definition will not limit any definition of "confidential information" or any equivalent term under state or federal law.

 

 

"Determination Date" means the date of termination of Executive's employment with the Company for any reason whatsoever or any earlier date of an alleged breach of the Restrictive Covenants by Executive.

 

 

"Person" means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.

 

 

"Principal or Representative" means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or consultant.

 

 

"Protected Customers" means any Person to whom the Company has sold its products or services or solicited to sell its products or services during the twelve (12) months prior to the Determination Date; provided, however, that Protected Customers shall not include brokers or agents.

 

 

"Protected Employees" means employees of the Company who were employed by the Company at any time within six (6) months prior to the Determination Date.

 

 

"Restricted Period" means the Employment Period plus the period extending for the longer of: (i) twelve (12) months from the termination of Executive's employment with the Company or (ii) the end of the applicable severance period.

 

 

"Restricted Territory" means the state of Georgia, any other state in which the Company or one of its affiliates writes insurance coverage.

 

 

"Restrictive Covenants" means the restrictive covenants contained in Section 13(c) hereof.

 

  

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"Trade Secret" means all information, without regard to form, including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, distribution lists or a list of actual or potential customers, advertisers or suppliers which is not commonly known by or available to the public and which information: (A) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Without limiting the foregoing, Trade Secret means any item of Confidential Information that constitutes a "trade secret(s)" under the common law or applicable state law.

 

 

(c)           Restrictive Covenants.

 

 

(i)          Restriction on Disclosure and Use of Confidential Information and Trade Secrets. Executive understands and agrees that the Confidential Information and Trade Secrets constitute valuable assets of the Company and its affiliated entities, and may not be converted to Executive's own use. Accordingly, Executive hereby agrees that Executive will not, directly or indirectly, at any time during the Restricted Period reveal, divulge, or disclose to any Person not expressly authorized by the Company any Confidential Information, and Executive will not, directly or indirectly, at any time during the Restricted Period use or make use of any Confidential Information in connection with any business activity other than that of the Company. Throughout the term of this Agreement and at all times after the date that this Agreement terminates for any reason, Executive will not directly or indirectly transmit or disclose any Trade Secret of the Company to any Person, and will not make use of any such Trade Secret, directly or indirectly, for himself or for others, without the prior written consent of the Company. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company's rights or Executive's obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.

 

 

Anything herein to the contrary notwithstanding, Executive will not be restricted from disclosing or using Confidential Information that is required to be disclosed by law, court order or other legal process; provided, however, that in the event disclosure is required by law, Executive will provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Executive.

 

 

(ii)          Nonsolicitation of Protected Employees. Executive understands and agrees that the relationship between the Company and each of its Protected Employees constitutes a valuable asset of the Company and may not be converted to Executive's own use. Accordingly, Executive hereby agrees that during the Restricted Period Executive will not directly or indirectly on Executive's own behalf or as a Principal or Representative of any Person or otherwise solicit or induce any Protected Employee to terminate his or her employment relationship with the Company or to enter into employment with any other Person.

 

 

(iii)          Restriction on Relationships with Protected Customers. Executive understands and agrees that the relationship between the Company and each of its

 

  

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Protected Customers constitutes a valuable asset of the Company and may not be converted to Executive's own use. Accordingly, Executive hereby agrees that, during the Restricted Period, Executive will not, without the prior written consent of the Company, directly or indirectly, on Executive's own behalf or as a Principal or Representative of any Person, solicit, divert, take away or attempt to solicit, divert or take away a Protected Customer for the purpose of providing or selling Competitive Services; provided, however, that the prohibition of this covenant will apply only to Protected Customers with whom Executive had Contact on the Company's behalf during the twelve (12) months immediately preceding the termination of his employment hereunder. For purposes of this Agreement, Executive had "Contact" with a Protected Customer if (a) he had business dealings with the Protected Customer on the Company's behalf; (b) he was responsible for supervising or coordinating the dealings between the Company and the Protected Customer; or (c) he obtained Trade Secrets or Confidential Information about the Protected Customer as a result of his association with the Company.

 

 

(iv)           Noncompetition with the Company. The parties acknowledge: (A) that Executive's services under this Agreement require special expertise and talent in the provision of Competitive Services and that Executive will have substantial contacts with customers, suppliers, advertisers and vendors of the Company; (B) that pursuant to this Agreement, Executive will be placed in a position of trust and responsibility and he will have access to a substantial amount of Confidential Information and Trade Secrets and that the Company is placing him in such position and giving him access to such information in reliance upon his agreement not to compete with the Company during the Restricted Period; (C) that due to his management duties, Executive will be the repository of a substantial portion of the goodwill of the Company and would have an unfair advantage in competing with the Company; (D) that due to Executive's special experience and talent, the loss of Executive's services to the Company under this Agreement cannot reasonably or adequately be compensated solely by damages in an action at law; (E) that Executive is capable of competing with the Company; and (F) that Executive is capable of obtaining gainful, lucrative and desirable employment that does not violate the restrictions contained in this Agreement. In consideration of the compensation and benefits being paid and to be paid by the Company to Executive hereunder, Executive hereby agrees that, during the Restricted Period, Executive will not, without prior written consent of the Company, directly or indirectly seek or obtain a Competitive Position in the Restricted Territory with a Competitor; provided, however, that the provisions of this Agreement will not be deemed to prohibit the ownership by Executive of any securities of the Company or its affiliated entities or not more than five percent (5%) of any class of securities of any corporation having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended.

 

 

(v)           Cooperation.

 

 

A) Executive.  Throughout the term of this Agreement and at all times after the date that this Agreement terminates for any reason, Executive will not make statements detrimental to the interests of nor engage in any activities detrimental to the Company or its officers, directors, stockholders, trustees, employees, agents, parent corporations, subsidiaries, affiliates, estates, successors, assigns and attorneys, nor will Executive make any statements about any of the aforementioned parties to the press (including without limitation any newspaper, magazine, radio station or television station) without the prior written consent of the Company, except as may be required by applicable

 

  

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law or regulation. Executive will also cooperate with the Company and its affiliates as a witness in all matters about which he has knowledge as a result of his position with the Company and its affiliates if the Company requests his testimony.

 

 

(B) Company. The Company will not at any time make derogatory statements or statements detrimental to the interests of nor engage in any activities detrimental to the Executive, nor will the Company make any statements about the Executive to the press (including without limitation any newspaper, magazine, radio station or television station) without the prior written consent of the Executive, except as may be required by applicable law or regulation.

 

 

(d)           Enforcement of Restrictive Covenants.

 

 

(i)          Rights and Remedies Upon Breach. In the event Executive breaches, or threatens to commit a breach of, any of the provisions of the Restrictive Covenants, the Company will have the following rights and remedies, which will be independent of any others and severally enforceable, and will be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity:

 

 

(A)           the right and remedy to enjoin, preliminarily and permanently, Executive from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company; and

 

 

(B)           the right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive hereunder after his Date of Termination, excluding any Accrued Obligations.

 

 

(ii)          Severability of Covenants. Executive acknowledges and agrees that the Restrictive Covenants are reasonable and valid in time and scope and in all other respects. The covenants set forth in this Agreement will be considered and construed as separate and independent covenants. Should any part or provision of any covenant be held invalid, void or unenforceable in any court of competent jurisdiction, such invalidity, voidness or unenforceability will not render invalid, void or unenforceable any other part or provision of this Agreement. If any portion of the foregoing provisions is found to be invalid or unenforceable by a court of competent jurisdiction because its duration, the territory, the definition of activities or the definition of information covered is considered to be invalid or unreasonable in scope, the invalid or unreasonable term will be redefined, or a new enforceable term provided, such that the intent of the Company and Executive in agreeing to the provisions of this Agreement will not be impaired and the provision in question will be enforceable to the fullest extent of the applicable laws.

 

 

14. Arbitration. Any claim or dispute arising under this Agreement (other than under Section 13) will be subject to arbitration, and prior to commencing any court action, the parties agree that they will arbitrate all such controversies. The arbitration will be conducted in Atlanta, Georgia in accordance with the Employment Dispute Rules of the American Arbitration Association and the Federal Arbitration Act, 9 U.S.C. § 1, et. seq. The

 

  

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arbitrator(s) will be authorized to award both liquidated and actual damages, in addition to injunctive relief, but no punitive damages. The arbitrator(s) may also award attorney's fees and costs, without regard to any restriction on the amount of such award under Georgia or other applicable law. Such an award will be binding and conclusive upon the parties hereto, subject to 9 U.S.C. §10. Each party will have the right to have the award made the judgment of a court of competent jurisdiction. By initialing below, each of Executive and Company specifically acknowledge and agree to arbitration pursuant to this Section 14.

 

 

Executive ______

 

 

Company ______

 

 

15. Assignment and Successors.

 

 

(a)           This Agreement is personal to Executive and without the prior written consent of the Company will not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive's legal representatives.

 

 

(b)           This Agreement will inure to the benefit of and be binding upon the Company and its successors and assigns.

 

 

(c)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

 

16. Miscellaneous.

 

 

(a)           Waiver. Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement will not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.

 

 

(b)           Severability. If any provision or covenant, or any part thereof, of this Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement, all of which will remain in full force and effect.

 

 

(c)           Other Agents. Nothing in this Agreement is to be interpreted as limiting the Company from employing other personnel on such terms and conditions as may be satisfactory to it.

 

  

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(d)           Entire Agreement. Except as provided herein, this Agreement contains the entire agreement between the Company and Executive with respect to the subject matter hereof and, from and after the Effective Date, this Agreement will supersede any other agreement between the parties with respect to the subject matter hereof.

 

 

(e)           Governing Law. Except to the extent preempted by federal law, and without regard to conflict of laws principles, the laws of the State of Georgia will govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

 

 

(f)           Notices. All notices, requests, demands and other communications required or permitted hereunder will be in writing and will be deemed to have been duly given if delivered or three days after mailing if mailed, first class, certified mail, postage prepaid:

 

 

	
     To Company:

	
100 Galleria Parkway

Suite 700

Atlanta, Georgia 30339

 

 

 To Executive:         the address of the Executive in the Company’s records

 

 

Any party may change the address to which notices, requests, demands and other communications will be delivered by giving notice thereof to the other party in the same manner provided herein.

 

 

(g)           Amendments and Modifications. This Agreement may be amended or modified only by a writing signed by both parties hereto, which makes specific reference to this Agreement.

 

 

(h)           Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement will bind and inure to the benefit of each party's respective successors, transferees and permitted assigns.

 

 

(i)           Construction. In construing and enforcing this Agreement, the following rules will be followed:

 

 

(1)           Each provision of this Agreement will be construed simply according to its fair meaning and not strictly for or against any party. No consideration will be given to the fact or presumption that any party had a greater or lesser hand in drafting this Agreement.

 

 

(2)           In construing and enforcing this Agreement, no consideration will be given to the captions of the articles, sections, subsections, and clauses of this Agreement, which are inserted for convenience in organizing and locating the provisions of this Agreement, not as an aid in its construction.

 

 

(3)           Plural words will be understood to include their singular forms, and vice versa.

 

  

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(4)           The word "include" and its syntactical forms mean "include, but are not limited to," and corresponding syntactical forms. The principal of ejusdem generis will not be used to limit the scope of the category of things illustrated by the items mentioned in a clause introduced by the word "including."

 

 

(5)           A defined term has its defined meaning through this Agreement, regardless of where in this Agreement the term is defined.

 

 

(6)           Except as otherwise provided in this Agreement, a reference to an Article, Section, or clause means an article, section, or clause of this Agreement and may be understood to mean, for example, "Section 5.1 of this Agreement" or "Section 5.1 hereof." The term "Section" may be used variously to identify entire Sections (as in "Section 6.8"), subsections (as in "Section 6.8(a)"), and clauses (as in "Section 6.8(h)(iii)").

 

 

(j)           Incorporation by Reference. The exhibits to this Agreement are incorporated in this Agreement by reference.

 

 

(k)           Time. Time is of the essence in this Agreement.

 

 

(1)           Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all of the parties had signed the same document. All counterparts will be construed together and will constitute one agreement.

 

 

* * * * * * * *

 

 

(signatures appear on next following page)

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Employment Agreement as of the date first above written, effective as of the Effective Date specified in Section 1.

 

 

AMERICAN SAFETY ADMINISTRATIVE SERVICES, INC.

 

 

 

By: /s/ Randolph L. Hutto

Name: Randolph L. Hutto

Title:   President

 

 

EXECUTIVE:

 

 

 

 

/s/ Mark W. Haushill

                      Mark W. Haushill

 

  

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EXHIBIT A

 

 

Form of Release

 

 

This Release is granted effective as of the _ day of __________, ____, by Mark W. Haushill ("Executive") in favor of American Safety Administrative Services, Inc. and its affiliates (collectively, the "Company"). This is the Release referred to in that certain Employment Agreement dated as of by and between the Company and Executive (the `Employment Agreement"). Executive gives this Release in consideration of the Company's promises and covenants as recited in the Employment Agreement, with respect to which this Release is an integral part.

 

 

1. Release of the Company. Executive, for himself, his successors, assigns, attorneys, and all those entitled to assert his rights, now and forever hereby releases and discharges the Company and its respective officers, directors, stockholders, trustees, employees, agents, parent corporations, subsidiaries, affiliates, estates, successors, assigns and attorneys ("the Released Parties"), from any and all claims, actions, causes of action, sums of money due, suits, debts, liens, covenants, contracts, obligations, costs, expenses, damages, judgments, agreements, promises, demands, claims for attorney's fees and costs, or liabilities whatsoever, in law or in equity, which Executive ever had or now has against the Released Parties, including any claims arising by reason of or in any way connected with any employment relationship which existed between the Company or any of its parents, subsidiaries, affiliates, or predecessors, and Executive. It is understood and agreed that this Release is intended to cover all actions, causes of action, claims or demands for any damage, loss or injury, which may be traced either directly or indirectly to the aforesaid employment relationship, or the termination of that relationship, that Executive has, had or purports to have, from the beginning of time to the date of this Release, whether known or unknown, that now exists, no matter how remotely they may be related to the aforesaid employment relationship including but not limited to claims for employment discrimination under federal or state law, except as provided in Paragraph 2; claims arising under Title VII of the Civil Rights Act, 42 U.S.C. § 2000(e), et seq. or the Americans With Disabilities Act, 42 U.S.C. § 12101 et seq.; claims for statutory or common law wrongful discharge, including any claims arising under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.; claims for attorney's fees, expenses and costs; claims for defamation; claims for wages or vacation pay; claims for benefits, including any claims arising under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq.; and provided, however, that nothing herein will release the Company of its obligations to Executive under the Employment Agreement or any other contractual obligations between the Company or its affiliates and Executive, or any indemnification obligations to Executive under the Company's bylaws, certificate of incorporation, Delaware law or otherwise.

 

 

2. Release of Claims Under Age Discrimination in Employment Act. Without limiting the generality of the foregoing, Executive agrees that by executing this Release, he has released and waived any and all claims he has or may have as of the date of this Release for age discrimination under the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. It is understood that Executive is advised to consult with an attorney prior to executing this Release; that he in fact has consulted a knowledgeable, competent attorney regarding this Release; that he may, before executing this Release, consider this Release for a period of twenty-one (21) calendar days; and that the consideration he receives for this Release is in addition to amounts to which he was already entitled. It is further understood that this

 

  

  

  

 

Release is not effective until seven (7) calendar days after the execution of this Release and that Executive may revoke this Release within seven (7) calendar days from the date of execution hereof.

 

 

3. Executive agrees that he has carefully read this Release and is signing it voluntarily. Executive acknowledges that he has had twenty one (21) days from receipt of this Release to review it prior to signing or that, if Executive is signing this Release prior to the expiration of such 21-day period, Executive is waiving his right to review the Release for such full 21-day period prior to signing it. Executive has the right to revoke this release within seven (7) days following the date of its execution by him. However, if Executive revokes this Release within such seven (7) day period, no severance benefit will be payable to him under the Employment Agreement and he will return to the Company any such payment received prior to that date.

 

 

EXECUTIVE HAS CAREFULLY READ THIS RELEASE AND ACKNOWLEDGES THAT IT CONSTITUTES A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE COMPANY UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD A FULL OPPORTUNITY TO CONSULT WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOOSING CONCERNING HIS EXECUTION OF THIS RELEASE AND THAT HE IS SIGNING THIS RELEASE VOLUNTARILY AND WITH THE FULL INTENT OF RELEASING THE COMPANY FROM ALL SUCH CLAIMS.

 

 

 

 

EXECUTIVE:

 

 

__________________________

 

 

Mark W. Haushill

 

  

2

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