Document:

[*] Designates portion of this document that has been omitted pursuant to a request for confidential treatment filed separately with the Commission.

         

         

        BINDING OFFER LETTER

         

         

        July 16, 2009

         

        Mr. Steve Akerfeldt

        Chief Executive Officer

        Firstgold Corp. 

        1055 Cornell Avenue

        Lovelock, Nevada

        89419

         

        
            	
                        Re:

                    	
                        Firstgold Corp: Proposed US$15 Million Restructuring Comprised of a US$5.5 Million Loan and US$9.5 Million Equity Investment 

                    

        

         

        Dear Gentlemen:

        We are pleased to submit this binding offer letter (this “Offer”), which outlines the terms and conditions pursuant to which Northwest Non-Ferrous International Investment Company Limited (“Northwest”), whether
        directly or via a wholly-owned subsidiary or affiliate of Northwest, is prepared to enter into a definitive loan agreement (the “Loan Agreement”) pursuant to which it will advance US$5.5 million (the “Loan”) to Firstgold Corp. (“Firstgold”) subject to the terms and conditions described below, and will
        enter into a subscription agreement (the “Subscription Agreement”) to purchase that number of common shares (the "Shares") of Firstgold (the “Subscription”) equal to 51% of the issued and outstanding Shares following completion of the Subscription, for cash of US$9.5 million upon the terms set forth herein.
        Concurrent with the acceptance of this Offer, Northwest will enter into an agreement (a "Note Purchase Agreement") with each of Platinum Long Term Growth, LLC and Lakewood Group LLC (collectively, the "Current Creditors") to acquire the Notes (as defined in the Note and Warrant Purchase Agreement dated August 7, 2008 between Firstgold and the Current Creditors (the
        "Note and Warrant Purchase Agreement")) for a purchase price of US$11.5 million. The Loan Agreement, the Subscription Agreement and the agreements with each of the Current Creditors are, collectively, referred to herein as the “Restructuring”.

        This Offer is intended to be binding; however, this Offer is not intended to set forth all of the terms of the Restructuring and the ancillary documents contemplated herein or thereby, which documents will contain additional terms agreed to by the respective parties and their legal counsel.

        1.          Loan. Northwest will advance to Firstgold the sum of US$5.5 million on or about August 31, 2009, to be secured by a fixed and floating first lien and mortgage against all of the assets and undertaking of Firstgold and its subsidiary corporation. Proceeds of the loan
        will be used to discharge indebtedness to unsecured creditors and for general working capital. The 

        

        

        

        Loan shall bear interest at a fixed rate of 10 per cent per annum, calculated and payable monthly in arrears. The principal amount of the loan shall be payable in 24 equal monthly installments commencing on September 1, 2010.

        2.          Subscription. On or about September 30, 2009, and subject to shareholder approval and regulatory approval, Northwest will subscribe for that number of Shares from authorized but unissued Shares as is necessary to equal 51% of the issued and outstanding Shares (after
        giving effect to such issuance) for cash in the amount of US$9.5 million. Firstgold acknowledges that failure of the Subscription to close on or before September 30, 2009 shall constitute a default under the Loan Agreement entitling Northwest to immediately accelerate repayment of all principal and unpaid interest thereon.

        3.          Pre-Loan Funding. On the date of this letter, Northwest will wire transfer to Stikeman Keeley Spiegel Pasternack LLP, Toronto, Canada, Barristers and Solicitors and counsel to Firstgold, as escrow agent (via wire transfer to TD Canada Trust, TD Centre Branch, 55 King
        Street West, Toronto, Canada/Swiftcode: TDOMCATTTOR/ Trust Account for Stikeman Keeley Spiegel Pasternack LLP #0690-7372044/Branch # 10202), the sum of US$500,000 in cash, which shall constitute a loan to Firstgold for immediate working capital purposes (the “Pre-Loan Funding”) The Pre-Loan Funding will be evidenced by an unsecured promissory note providing for repayment on the same terms as contemplated under Section 1
        hereof. At the time of completion of the Subscription, subject to regulatory approval, Northwest shall have the option to convert the Pre-Loan Funding into Shares at the issue price per Share for the Subscription under Section 2 hereof.

        4.          Purchase of Notes. Pursuant to agreements entered into this date between Northwest and the Current Creditors, Northwest will acquire the Notes for a purchase price payable, as to $500,000, by the deposit of such amount pursuant to separate escrow
        agreements (each, an "Escrow Agreement") dated this date between Northwest, each of the Current Creditors and the escrow agent named therein and, as to the balance of $11,000,000, by payment to the Current Creditors prior to September 1, 2009. 

        Northwest and Firstgold agree to amend the terms of the Notes following the acquisition thereof by Northwest to provide that interest on the Notes shall be payable to Northwest at a fixed rate of 10 per cent per annum, calculated and payable monthly in arrears commencing on September 1, 2009.

        Upon completion of the Subscription, the Notes shall be deemed to have been amended effective as of September 1, 2009 so that (a) the aggregate principal amount of the Notes shall be reduced to US$11,500,000 as of such date and (b) all accrued and unpaid interest on the Notes up to such date shall be deemed to be extinguished. Any interest on the Notes paid from September 1, 2009 to completion of the
        Subscription in excess of 10% interest per annum calculated for such period on the deemed principal amount of $11,500,000 shall be refunded by Northwest to Firstgold.

        Firstgold acknowledges that it is in default of various covenants under the Notes, including with respect to the payment of principal and interest, and that no term of this Offer shall be construed in any way as a waiver by Northwest of any right or remedy that will be available to it as a 

        

        

        

        holder of the Notes in respect of any covenant or future Event of Default (as defined in the Notes).

        5.          Escrowed Funds Loan. In the event that a Current Creditor fails to consummate the sale to Northwest of the Notes held by such Current Creditor in accordance with the terms of the Note Purchase Agreement to which such Current Creditor is a party and the escrow agent
        named in the Escrow Agreement to which such Current Creditor is a party delivers to the Current Creditor the Escrowed Funds (as defined in the applicable Escrow Agreement) or fails to return to Northwest, in accordance with the provisions of the applicable Escrow Agreement, the Escrowed Funds, Firstgold shall become indebted to Northwest and hereby promises to pay to, or to the order of, Northwest, the amount of the Escrowed Funds under the relevant Escrow Agreement in the same form,
        and on substantially the same terms, as the promissory note referred to in Section 3 hereof, and Firstgold shall promptly deliver to Northwest an executed copy of such promissory note.

        6.          Pre-emptive Rights. In the event the Current Creditors exercise the Warrants (as defined in the Note and Warrant Purchase Agreement), Northwest shall have the right to subscribe for such additional number of Shares at the then maximum allowable discount to the market
        price as is necessary to maintain the percentage ownership of Shares held by Northwest prior to such Warrant exercise.

        7.          Conditions to Offer. This Offer is subject to (i) completion of confirmatory due diligence by Northwest to its satisfaction; (ii) no material breach of any provision of this Offer by Firstgold, (iii) negotiation and execution of all agreements and documents contemplated
        by this Offer; and (iv) approval of such agreements by the governing body of each party. 

        8.          Conditions to the Subscription. The Subscription will be subject to customary closing conditions, including the following: (i) to the extent required by law, affirmative vote of the shareholders of Firstgold by a special majority of votes cast in person or by proxy at a
        shareholders` meeting duly called (i.e., 66.67%) for the purpose of consolidating the outstanding Shares on a reverse split basis and increasing the authorized share capital of Firstgold; (ii) regulatory approvals; (iii) representations and warranties of each party are true and correct as of signing the Loan Agreement and Subscription Agreement and at the closing of the Subscription, in all material respects; (iv) no material breach of covenants by either party; (v) receipt of any
        material third party consents with respect to Firstgold to be identified during due diligence; and (vi) to the extent required by the Toronto Stock Exchange, shareholder approval of the Subscription.

        9.          Support Agreements. Simultaneous with the execution of the Subscription Agreement, Firstgold shall use its best efforts to obtain a support agreement from each director and officer of Firstgold pursuant to which such director and officer agrees to vote his Shares in
        favour of the Subscription and any other matter for which shareholder approval may be required and against all other matters and transactions that could adversely affect or impede the Restructuring, and will grant Northwest an irrevocable proxy to vote such Shares in accordance with the provisions of such voting agreements. 

        

        

        

        10.        Board of Directors Approval. The Board of Directors of Firstgold (the "Board") has unanimously approved this Offer. Furthermore, upon completion of final documentation consistent with the terms of this Offer the Board will approve
        and adopt the Restructuring, the Loan Agreement and the Subscription Agreement and will unanimously recommend the Subscription and that Firstgold’s shareholders vote in favour of the Subscription at a special meeting of shareholders, and will not change its recommendation in respect thereof. 

        11.        Firstgold Shareholder Approval. Firstgold will take all actions required to give notice of and hold a special shareholders meeting to approve all matters requiring shareholder approval as promptly as practicable following the execution of the Subscription Agreement.

        12.        Composition of Board of Directors; Management. Upon completion of the Subscription, as described in paragraph 2, the Board will appoint three directors designated by Northwest, with the remaining three directors being nominees of management, and the continuing officers of
        Firstgold will be Sun Feng, Chairman, Terry Lynch, Chief Executive Officer, and Jim Kluber, Chief Financial Officer. In the event of a deadlock in any decision requiring the approval of the Board, the Chairman shall have a casting vote. No severance or other termination payments will be owing to the directors of Firstgold in connection with any of their resignations, other than amounts owing for or director fees. 

        13.        Closing. Northwest anticipates executing the Loan Agreement and the Subscription Agreement within thirty (30) days of acceptance of this Offer, and completion of the Subscription as promptly as practicable, which is expected to be no more than thirty (30) days
        thereafter.

        14.        Other Required Approvals and Consents. No third party lender or creditor consents or authorizations are expected to be required to be obtained by Firstgold in order to consummate the Restructuring. 

        15.       Business Covenants. [*]Redacted and omitted pursuant to a request for confidential treatment. 

        16.       Due Diligence and Confidentiality. Firstgold will provide such information as to its legal affairs and financial condition as may reasonably be requested by Northwest, and Firstgold (including its officers, directors, employees, affiliates, agents and its professional 

        

        

        

        advisors) will provide all reasonable assistance and information to Northwest and its advisors as necessary for Northwest to complete its due diligence reviews as quickly and efficiently as possible. The parties, including their respective officers, directors, accountants, lawyers, agents and other representatives, acknowledge that all verbal and written information provided to either party in
        furtherance of the execution of this Offer and the terms of this Offer are subject to the terms and conditions of that certain Confidentiality Agreement executed in June 2009, between Northwest and Firstgold (the “Confidentiality Agreement”).

        17.       Preparation of Documents. Northwest's legal counsel will prepare initial drafts of the Loan Agreement and the Subscription Agreement. Firstgold's legal counsel shall prepare initial drafts of all Firstgold shareholder approval documents (including, without
        limitation, a Proxy, Proxy Statement, and Notice of Meeting prepared in accordance with applicable law and the policies of the U.S. Securities and Exchange Commission and the Toronto Stock Exchange). To the extent required by either party to fulfill its obligations in this section, the other party will use its best efforts to provide such financial and other company information as required by the party responsible for preparing the document.

        18.       Public Announcement. All press releases and public announcements relating to the Restructuring will be agreed to and prepared jointly by Northwest and Firstgold subject to applicable law and listing requirements. The parties will issue a joint press release upon Northwest entering a
        binding agreement with the Current Creditors to acquire the Notes. 

        19.       Governing Law. The interpretation of this Offer, the Loan Agreement and the Subscription Agreement will be governed by Nevada law and the laws of the United States of America applicable therein without reference to the conflict of laws provisions thereof.

        20.       Specific Performance. The parties agree that irreparable damage would occur in the event any provision of this Offer was not performed in accordance with the terms thereof and that, prior to the termination of this Offer pursuant to its terms, the parties will be entitled to specific
        performance of the terms hereof, in addition to any other remedy at law or equity.

        21.       Representations. The parties each represent and warrant that they have the corporate power and authority to enter into this Offer and that the execution and delivery of this Offer does not, (i) conflict with any provision of such party’s constating documents as currently in
        effect, (ii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under any contract or agreement of such party not otherwise being terminated pursuant to the Restructuring, or (iii) to each party’s knowledge, violate any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to such party.

        22.       Additional Representations. Firstgold represents and warrants to Northwest that (i) the Transaction Documents (as defined in the Note and Warrant Purchase Agreement), other than the Off-Take Agreement (as defined in the Note and Warrant Purchase Agreement), constitute all the material
        documents entered into between Firstgold and the Current Creditors in connection with the Note and Warrant Purchase Agreement, and (ii) Firstgold has not entered into the Off-Take Agreement with the Current Creditors.

        23.       Expenses. Each party will be responsible to pay all of its expenses, including the

        

        

        

        fees of their respective advisors and consultants, incurred in connection with the negotiation and preparation of this Offer, the Loan Agreement, Subscription Agreement and ancillary agreements thereto and any due diligence investigations conducted by Northwest in connection with the Restructuring.

        If you are in agreement with the terms of this Offer, please signify such agreement by executing and returning a copy of this Offer to counsel for Northwest. 

        

        

        

        	 	 
	Sincerely,	 
	 	 
	 	NORTHWEST NON-FERROUS INTERNATIONAL INVESTMENT COMPANY LIMITED
	 	 
	 	By:	/s/ Sun Feng  
	 	 
	Accepted and agreed on July 16, 2009:	 
	 	 
	 	FIRSTGOLD CORP.
	 	 
	 	By:  	/s/ Steve AkerfeldtEXHBIT 10

EXHBIT 10.1

ELECTRO RENT CORPORATION

STOCK UNIT AWARD AGREEMENT

"Grantee":  [NAME]

"Grant Date":  July 16, 2009

Number of Units Covered:  [NUMBER]

 

 

       Grant of Units.  As an employee of Electro Rent Corporation ("Electro Rent"), you have been granted an award (your "Award") of the number of stock units set forth above (each a "Unit") upon and subject to the restrictions, terms and conditions set forth in Electro Rent's 2005 Equity Incentive Plan (the "Plan"), this letter and the attached Terms and Conditions (the "Terms") (capitalized terms not otherwise defined will be as defined in the Plan).

       Vesting of Units.  One third (1/3) of the Units will vest on each of July 16, 2010, July 16, 2011 and July 16, 2012 to the extent that a Termination of Employment for you has not occurred before the relevant vesting date.  In addition, all Units not otherwise vested will be vested in full if a Change of Control, your death or your Disability occurs before a Termination of Employment for you.

       Issuance of Shares.  Your Award represents the right to receive, and you will become the owner of, one Share for each vested Unit as of the first to occur (the "Issuance Date") of (a)  January 1, 2015; (b) a Change of Control; or (c) the date of your Termination of Employment.  Any Units not vested on or before the Issuance Date will be forfeited and be of no further force or effect.   

       Dividends.  Subject to applicable withholding obligations, Electro Rent will pay to you an amount per vested Unit equal to the amount of cash dividends paid per share of Common Stock since the Grant Date within ten (10) days after that vesting.  No payment will be made with respect to Units which never vest, or for dividends where the record date for the dividend is before the Grant Date or on or after the Issuance Date.

       Please review the Plan and the Terms carefully, as they control your rights under your Award.  Then sign (and if you are married, have your spouse sign) one copy of this letter and return it to Craig Jones.  If you have any questions, please call him.

 

Very truly yours,

Electro Rent Corporation

By:__________________________

Its:_________________________

 

 

 

 

 

 

 

 

 

       I hereby accept this Award and have reviewed the Plan and the Terms.  I understand that I will not receive anything for Units under certain circumstances, including my Termination of Employment before they vest.  I further understand that I may not transfer my Award except under circumstances described in this Award and the Plan.

 

_____________________________

"Grantee"

 

       I agree to be bound by all of the terms and conditions of the Award, including those set forth in the Plan and the Terms.

Grantee's Spouse

 

_____________________________

Name:________________________

 

 

Please read carefully the summary of certain tax information below, and discuss it with your tax advisor.  You have only 30 days from the Grant Date to make an election under IRC Section 83(b).  If you want to make an election under IRC  Section 83(b), you are responsible for preparing and filing the election.

 

 

TERMS AND CONDITIONS

       These Terms and Conditions are attached to a letter (the "Award Letter") from Electro Rent Corporation ("Electro Rent") granting an Award to you, and are intended to govern that Award.  All capitalized terms not specifically defined in these Terms and Conditions have the meanings set forth in the Award Letter or the Plan.

       1. Issuance of Certificate.   Electro Rent will issue to you (or following your death, your estate) a certificate of any Shares due under this Award promptly after the Issuance Date.  No consideration will be due for the issuance of Shares hereunder, although you will be responsible for any withholding taxes.  Electro Rent shall not be required to issue fractional shares of Common Stock upon settlement of this Award.  In  the  event  of  any  stock  split,  stock  dividend, recapitalization,  reorganization, merger, consolidation,  combination, exchange of shares,  liquidation,  spin-off or other similar change in  capitalization or event,  or any  distribution  to  holders  of Shares  other  than a cash dividend,  the number  and class of  securities  subject  to the Award  shall be appropriately adjusted by the Compensation Committee (the "Committee"). The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

       2. Restriction on Transfer; Voting Rights.  This Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered either voluntarily or by operation of law except (i) by will or the laws of descent and distribution or (ii) to your designated beneficiary to the extent permitted by the Committee.  If there is any other attempt to transfer this Award or any other right or privilege granted hereby, this transfer shall be null and void and be of no force or effect.  

       3. Shares to be Issued in Compliance with Applicable Laws and Exchange Rules.  By accepting the Award, you represent and agree that none of the Units are being acquired with a view to any sale, transfer or distribution in violation of the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder, any applicable state "blue sky" laws or any applicable foreign laws.  If required by the Committee, you shall furnish evidence satisfactory to Electro Rent to such effect (including a written representation and an indemnification of Electro Rent in the event of any violation of any applicable laws).  

       4. Withholding of Taxes.  Upon request by Electro Rent, the person entitled to the Shares shall pay Electro Rent the amount of any taxes which Electro Rent is required to withhold, including (if applicable) payment as of the time of any applicable election under Section 83(b) of the Code. If you shall fail to make any such payment when requested Electro Rent may, in its  discretion, refuse to issue the certificate for the Shares, deduct any such payment  from any amount then or thereafter payable by Electro Rent or a Subsidiary or pursue any available remedy available to it.

       5. Participation in Other Company Plans.  The grant of this Award will not affect any right you might otherwise have to participate in and receive benefits under the then current provisions of any pension, insurance, or profit sharing program of Electro Rent or its subsidiaries.

       6. Not an Employment or Service Contract.  Nothing in this Award is to be construed as an agreement, express or implied, by Electro Rent or its subsidiaries to employ you or contract for your services, nor will it restrict Electro Rent's or any subsidiary's right to discharge you or cease contracting for your services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between you and Electro Rent or its subsidiaries.

       7. Tax Effect of Payments.  In the event that it is determined that any Shares or payment under this Award would subject any payments to the excise tax imposed by Section 4999 or Section 409A of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then this Award shall be interpreted and modified by the Committee to provide as near as possible the same economic benefit to you hereunder but without triggering any Excise Tax, and any clause which the Committee determines would otherwise trigger such a tax will be null and void.

       8. Agreement Subject to Plan.  This Award is subject to, and Electro Rent and you agree to be bound by, all of the terms and conditions of the Plan, as it may be amended from time to time in accordance with its terms.  No future amendment to the Plan will adversely affect your rights under this Award in a material manner without your prior written consent. 

       9. Entire Agreement; Governing Law.  The Plan is incorporated herein by reference.  The Plan, the Award Letter and these Terms constitute our entire agreement with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of Electro Rent and you with respect to the subject matter hereof.  In the event of any conflict with the Plan, the Plan shall control.  The interpretation, performance and enforcement of this Agreement shall be governed by the internal substantive laws of the State of California, without regard to the conflict of laws provisions of that or any other State.  The Award can only be amended in a writing executed by a duly authorized Executive Officer of Electro Rent.

TAX MATTERS FOR US CITIZENS

The following is a summary of some current tax consequences of this Award:

If you decide NOT to make an "83(b) Election" 

Electro Rent will report compensation for you-and the related taxes will be due-as of the Issuance Date based on market price of those Shares at that time (which could be more or less than the price on the Grant Date).  As a result, you will have to write Electro Rent a check for any withholding tax, including without limitation, federal income, state income, Medicare and social security, based upon the tax rates at the time.  If you are not an employee, you must pay the tax through estimated taxes or other means.  Because of this out-of-pocket cash obligation, you may find it necessary to sell sufficient shares to cover this obligation (or request that Electro Rent withhold sufficient shares from the total Shares vested).  Sale of shares or withholding of shares to cover the tax obligation is subject to Electro Rent's blackout policy.  Our Chief Financial Officer should be consulted with respect to these restrictions.  It is possible to commit to sell or have Electro Rent withhold the necessary shares in advance to avoid blackout restrictions that may otherwise exist on the Issuance Date.  

If you decide to make an "83(b) Election" 

Electro Rent will report compensation for you-and the related taxes will be due-as of the Grant Date based on the value at that time, even if the Shares involved never vest (although you may have a capital loss).  Because of this acceleration of the taxable event, there should not be any tax incurred on the Issuance Date.  One consequence of this election is your out-of-pocket cash obligation is triggered without the ability to sell or have Electro Rent withhold the Shares to fund the obligation (since the Shares are not vested).

The 83(b) election is made with the Internal Revenue Service and is due thirty (30) days from the Grant Date of your Award.  The election may be made for part or all of your Units.  

We recommend that you consult with your own tax advisor regarding the advantages and disadvantages of making this election.  IF YOU WANT TO MAKE THIS ELECTION, IT IS YOUR RESPONSIBILITY TO PREPARE AND FILE THE PROPER DOCUMENTATION WITH THE I.R.S.

Payments on Account of Dividends:

Payments made to you on account of dividends declared before the Issuance Date should be taxable as ordinary income. 

Please note that this is a very brief summary of some current tax effects of the Award.  It is not intended to be tax advice to you and is not a complete discussion of all of the possible tax consequences to you related to your restricted stock.  It also does not address state, local, or non-United States tax implications.  Moreover, the tax consequences of this Award could change.  You should discuss your tax situation with your tax advisor rather than just relying on this summary.

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