Document:

Exhibit 10.43

COMMON
STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is dated as of
November 29, 2005, among The SCO Group, Inc.,
a Delaware corporation (the “Company”), and the several purchasers named
on the signature pages hereto (individually a “Purchaser” and collectively, the
“Purchasers”).

Recital

The Company desires to issue and sell to Purchasers,
and Purchasers desire to purchase from the Company, an aggregate of up to
2,852,449 shares (the “Shares”) of Common Stock, $0.001 par value per share
(the “Common Stock”) at a price of $3.92 per Share for Mr. Darcy G. Mott and at
a price of $3.50 per Share for the remaining Purchasers (the “Per Share
Purchase Price”), and upon and subject to the terms and conditions of this
Agreement.

Agreement

The Company and each Purchaser, severally and not
jointly, agrees as follows:

1.             Purchase of Company Securities. 
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, will purchase from the Company the number of Shares set forth on the
signature page for each Purchaser at the aggregate purchase price set forth on
the signature page for each purchaser (the “Purchase Price”).

2.             Closing Matters.

2.1          The Closing. 
The closing (the “Closing”) of the purchase and sale of the Shares (the “Offering”)
will take place at the offices of Dorsey & Whitney LLP, at 10:00 A.M.,
Mountain Time, on November 30, 2005.  The
Closing may take place at another time, place or earlier date as is mutually
agreed upon by the Company and Purchasers. 
The date of the Closing is referred to as the “Closing Date.”  At the Closing, the Company will cause the
transfer agent to issue and to deliver to each Purchaser stock certificates
representing the Shares purchased by the Purchaser, against payment of each
Purchaser’s Purchase Price by wire transfer of immediately available United
States funds payable to the Company’s account pursuant to the wire transfer
instructions set forth on Exhibit A.  The Shares will be registered in each
Purchaser’s name or the name of the nominee of each Purchaser pursuant to
instructions delivered to the Company not less than two business days prior to
the Closing Date, and certificates that are not delivered prior to Closing will
be delivered to Purchasers within 3 business days after the Closing Date.

3.             Conditions to the Obligations of
Purchasers at Closing.  The obligation of each
Purchaser to purchase and pay for the Shares at Closing is subject to the
satisfaction on or prior to the Closing Date of the following conditions, each
of which may be waived by that Purchaser:

 

 

3.1          Representations and
Warranties.  The representations and warranties of the
Company contained in Section 6 must
be true and correct in all material respects on and as of the Closing Date
except to the extent that the representations and warranties relate to an
earlier date in which case the representations and warranties must be true and
correct in all material respects on and as of such earlier date.

3.2          Performance of
Covenants.  The Company will have performed or complied
in all material respects with all covenants and agreements required to be
performed by it on or prior to the Closing pursuant to this Agreement.

3.3          No Injunctions; etc. 
No court or governmental injunction, order or decree prohibiting the
purchase and sale of the Shares will be in effect.  There will not be in effect any law, rule or
regulation prohibiting or restricting the sale or requiring any consent or
approval of any person that has not been obtained which prohibits the
consummation of any of the transactions contemplated by this Agreement.

3.4          Closing Documents. 
The Company will have delivered to each Purchaser the following:

(a)           a
certificate of the Secretary of the Company, dated as of the Closing Date,
certifying (i) the attached are true and complete copies of the Certificate of
Incorporation and Bylaws of the Company, as in effect on the date of such
certification; (ii) the attached are true and complete copies of the
resolutions of the Board of Directors of the Company or a committee of the
Board of Directors, if applicable, authorizing the execution, delivery and
performance of this Agreement as in effect on the date of such certification;
and (iii) as to the incumbency and specimen signature of each officer of the
Company executing this Agreement and any other document delivered by it in
connection herewith (such certificate to contain a certification by another
officer of the Company as to the incumbency and signature of the officer
signing the certificate referred to herein).

(b)           certificates
of the Secretary of State of the State of Delaware and Utah Department of
Commerce, Division of Corporations and Commercial Code, dated a recent date, to
the effect that the Company is in good standing in the States of Delaware and
Utah.

3.5          Waivers and Consents. 
The Company will have obtained all consents and waivers, if any,
necessary to execute and deliver this Agreement and all related documents and
agreements and to issue and deliver the Shares, and all consents and waivers
will be in full force and effect.

4.             Conditions to the Obligations of the
Company at Closing.  The obligation of the Company to issue and
sell the Shares to a Purchaser at Closing is subject to the satisfaction on or
prior to the Closing Date of the following conditions, each of which may be
waived by the Company:

4.1          Representations and
Warranties.  The representations and warranties of such
Purchaser contained in this Agreement must be true and correct in all material
respects on and as of the Closing Date.

 

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4.2          No Injunctions. 
No court or governmental injunction, order or decree prohibiting the
purchase or sale of the Shares will be in effect.

4.3          Waivers and Consents. 
The Company will have obtained all consents and waivers necessary, if
any, to execute and deliver this Agreement and all related documents and
agreements and to issue and deliver the Shares, and all consents and waivers
will be in full force and effect.  In
particular, the Company shall have no obligation to sell any Shares to any
Purchaser hereunder if all Purchasers do not purchase the Shares they are to
purchase hereunder.

4.4          Board of Director
Approval.  The Board of Directors of the Company, or a
committee of the Board of Directors, if applicable, shall have approved the
Offering and the transactions contemplated herein.

4.5          Compliance with Laws. 
The parties shall have complied in all respects with (i) all federal
securities laws or other laws of the United States or any applicable state
laws, and (ii) the rules of The Nasdaq Stock Market.

5.             Representations and Warranties of
Purchasers.  Each Purchaser, severally and not jointly,
represents and warrants to the Company that:

5.1          Organization. 
Purchaser, if not a natural person, is duly organized and validly
existing and in good standing under the laws of the state of its organization.

5.2          Authority, etc. 
Purchaser has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.  The execution and delivery by Purchaser of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate or other action on the
part of Purchaser.  This Agreement
constitutes a legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy.

5.3          No Conflict. 
The execution and delivery by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in the
violation of any provision of the organizational documents of Purchaser, (ii)
result in any material violation of any law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority to
or by which the Purchaser is bound, or (iii) conflict with, or result in a
breach or violation of, any of the terms or provisions of, or constitute (with
due notice or lapse of time or both) a default under, any material lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement to
which Purchaser is a party or by which it is bound or to which any of its
properties or assets is subject (except for such breaches, violations and
defaults as would not, individually or in the aggregate, have a material
adverse effect on Purchaser), nor result in the creation or imposition of any
liens, adverse claims or encumbrances (collectively, “Liens”) upon any of the
properties or assets of Purchaser.

5.4          Accredited Investor. 
Purchaser is an “accredited investor” as defined in Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).  Purchaser is acquiring the Shares for its own
account and not with a present view to, or for sale 

 

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in
connection with, any distribution thereof in violation of the registration
requirements of the Securities Act.

5.5          Access to Information. 
Purchaser acknowledges that it has been afforded (i) the opportunity to
ask the questions it deemed necessary of, and to receive answers from,
representatives of the Company concerning the Company and the terms and
conditions of the Offering; and (ii) the opportunity to request such additional
information concerning the Company as the Company possesses or can acquire
without unreasonable effort or expense.  Purchaser has
been provided a copy of each SEC Document (as defined in Section 6.4(b) below), if any, that
Purchaser has requested from the Company (or has otherwise obtained copies of
the SEC Documents).  Purchaser
understands that its investment in the Shares involves a high degree of risk,
and Purchaser understands the risks and uncertainties associated with the Company
and the Shares. Purchaser understands that the market price of the Common Stock
is volatile and that the Company makes no representation as to the future value
of the Common Stock.

5.6          No General Solicitation. 
Purchaser is not purchasing the Shares as a result of any advertisement,
article, notice or other communication published in a newspaper or magazine or
similar media or broadcast over television or radio, whether closed circuit, or
generally available, or any seminar, meeting or other conference whose
attendees were invited by any general solicitation or general advertising.

5.7          Restricted Securities. 
Purchaser understands that the Shares may be considered “restricted
securities” under the federal securities law inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act and any applicable state securities laws, or the availability of
exemptions from registration thereunder, and that in the absence of an
effective registration statement covering the Shares or available exemptions
from registration, the Shares must be held indefinitely.

5.8          Further Limitation on
Disposition.  Without in any way limiting the
representations set forth above, Purchaser further represents that, in the
absence of an effective registration statement covering the Shares, it will not
sell, transfer or otherwise dispose of the Shares unless Purchaser shall have
notified the Company of the proposed disposition and shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such shares under the
Securities Act.

5.9          Legend. 
All certificates evidencing the Shares shall bear the following legend
until such time as the Shares are sold pursuant to an effective registration
statement or in compliance with Rule 144.

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR IN ANY
OTHER JURISDICTION.  THE SECURITIES
REPRESENTED 

 

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HEREBY MAY NOT BE OFFERED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS.

5.10        No Brokers or
Finders.  Except for amounts payable by the Company to Syntax
Partners, LLC, no agent, broker, investment banker or other firm or person is
or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any
of the transactions contemplated by this Agreement.

5.11        Individual
Participation.  Purchaser is participating in the Offering
and purchasing the Shares individually without consulting with any other
Purchasers.  Purchaser is not acting
together with the other Purchasers to acquire, hold, vote or dispose of the
Shares.

6.            Representations and
Warranties of the Company.  The Company
represents and warrants to each Purchaser that, except as set forth in the
Company’s Disclosure Schedule attached hereto as Exhibit B, as of the date hereof and the Closing Date:

6.1          Organization, Good
Standing and Qualification; Subsidiaries.  The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.  The Company
has full corporate power and authority to own and hold its properties and to
conduct its business.  The Company is
duly licensed or qualified to do business, and in good standing, in each
jurisdiction in which the nature of its business requires licensing,
qualification or good standing, except for any failure to be so licensed or
qualified or in good standing that would not, individually or in the aggregate,
have a material adverse effect on the Company or its business, properties,
results of operations, assets, financial condition, or on its ability to
perform its obligations under this Agreement (a “Material Adverse Effect”).  Except as set forth in the SEC Documents, the
Company has no subsidiary corporations or entities.

6.2          Capitalization. 
As of the date hereof, the authorized capital stock of the Company
consists of 45,000,000 shares of Common Stock, $0.001 par value per share, and
5,000,000 shares of Preferred Stock, $0.001 par value per share.  As of October 31, 2005, (i) 18,330,811
shares of Common Stock were issued and outstanding, (ii) no shares of
Preferred Stock were issued or outstanding, (iii) 235,000 shares of Common
Stock were reserved for issuance upon exercise of outstanding warrants issued
by the Company, and (iv) 1,537,250
shares of Common Stock were reserved for issuance upon exercise of options or
purchase rights issued or issuable under the Company’s 1998 Stock Option Plan,
1999 Omnibus Stock Incentive Plan, 2000 Employee Stock Purchase Plan, 2002
Omnibus Stock Incentive Plan and 2004 Omnibus Stock Incentive Plan
(collectively, the “Plans”).  As of
October 31, 2005, there were outstanding options under the Plans to purchase
3,824,122 shares of Common Stock.  All
the outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable and were not issued in violation
of, or subject to any preemptive, subscription or other similar rights of any
shareholder of the Company.  Except as
set forth in this Section 6.2,
there are no other options, warrants or other rights, convertible debt,
agreements, arrangements or commitments of any character obligating the Company
to issue or sell any shares of capital stock of or other equity interests in
the Company.  The Company is not 

 

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obligated
to retire, redeem, repurchase or otherwise reacquire any of its capital stock
or other securities.

6.3          Corporate Power,
Authorization; Enforceability.  The Company
has full corporate power and authority to execute, deliver and enter into this
Agreement and to consummate the transactions contemplated hereby.  All action on the part of the Company, its
directors or shareholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of the Shares contemplated hereby and the performance of
the Company’s obligations hereunder has been taken.  The Shares to be purchased on the Closing
Date have been duly authorized and, when issued in accordance with this
Agreement, will be validly issued, fully paid and nonassessable and will be
free and clear of all Liens imposed by or through the Company and will not be
subject to any preemptive rights or other similar rights of shareholders of the
Company, and the Purchaser will acquire good and marketable title to the
Shares.  This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy.

6.4          Financial Statements and
SEC Documents.

(a)           Included
in the Company’s Form 10-K for the year ended October 31, 2004, are true
and complete copies of the audited balance sheet (the “Balance Sheet”) of the
Company as of October 31, 2004, and the related audited statements of
operations, shareholders’ equity and cash flows for the years ended October 31,
2004 and 2003 (the “Audited Financial Statements”), accompanied by the report
of KPMG LLP with respect to the year ended October 31, 2004.  The Company’s Quarterly Reports on Form 10-Q
for the quarters ended January 31, 2005, April 30, 2005 and July 31, 2005 are
available to each Purchaser on the Securities and Exchange Commission’s (the “SEC”)
EDGAR System.  Included in the Quarterly
Reports are the requisite unaudited balance sheets of the Company and the
related unaudited statements of income and statements of cash flows (the “Unaudited
Financial Statements,” and together with the “Audited Financial Statements,”
the “Financial Statements”).  The
Financial Statements have been prepared in accordance with generally accepted
accounting principles, applied consistently with the past practices of the
Company (except as may be indicated in the notes thereto), and as of their
respective dates, fairly present, in all material respects, the financial
position of the Company and the results of its operations as of the time and
for the periods indicated therein.

(b)           A
copy of each report, schedule, effective registration statement and definitive
proxy statement filed by the Company with the SEC since October 31, 2003 (as
the documents may have been amended since the time of their filing, the “SEC
Documents”), has also been made available to each Purchaser via the SEC’s EDGAR
System.  The Company has provided to each
Purchaser who has requested the same a true and complete copy of each SEC
Document that the Company filed since October 31, 2003.  The SEC Documents, as amended, did not
contain any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.  As of their respective filing dates,

 

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the financial
statements of the Company included in the SEC Documents, as amended, complied
as to form in all material respects with then applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles, applied consistently with the past practices of the Company, and as
of their respective dates, fairly presented in all material respects the
financial position of the Company and the results of its operations as of the
time and for the periods indicated therein (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-Q and Regulations S-K and S-X of the SEC).

6.5          No Material Adverse Effect. 
Since October 31, 2004, except as disclosed in the SEC Documents filed
subsequent to that date, there has not been a Material Adverse Effect.

6.6          Absence of Certain
Developments.  Except as described in or contemplated by
this Agreement or the SEC Documents, since October 31, 2004, through the
Closing Date, the Company has not (a) borrowed any amount or incurred or become
subject to any liabilities, other than current liabilities incurred in the
ordinary course of business and liabilities under contracts entered into in the
ordinary course of business; (b) discharged or satisfied any lien or adverse
claim or paid any obligation or liability, other than current liabilities shown
on the Balance Sheet and current liabilities incurred in the ordinary course of
business; (c) declared or made any payment or distribution of cash or other
property to the shareholders of the Company or purchased or redeemed any
securities of the Company; (d) mortgaged, pledged or subjected to any lien or
adverse claim any of its properties or assets, except for liens for taxes not
yet due and payable or otherwise in the ordinary course of business or that
have not resulted in a Material Adverse Effect; (e) sold, assigned or
transferred any of its material assets, tangible or intangible, except in the
ordinary course of business; (f) suffered any extraordinary losses or waived
any rights of material value other than in the ordinary course of business; (g)
made any material capital expenditures or commitments therefor other than in
the ordinary course of business; (h) entered into any other material
transaction other than in the ordinary course of business; (i) suffered any
damages, destruction or casualty loss, whether or not covered by insurance,
affecting any of the properties or assets of the Company or any other
properties or assets of the Company which could, individually or in the
aggregate, have or result in a Material Adverse Effect; (k) made any material
change in the nature or operations of the business of the Company; or (l)
entered into any agreement or commitment to do any of the foregoing.

6.7          No Conflict;
Governmental Consents.

(a)           The
execution and delivery by the Company of this Agreement and the consummation of
the transactions contemplated hereby will not (i) result in the violation of
any provision of the Certificate of Incorporation or Bylaws of the Company,
(ii) result in any material violation of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental authority
to or by which the Company is bound, or (iii) conflict with, or result in a
breach or violation of, any of the terms or provisions of, or constitute (with
due notice or lapse of time or both) a default under, any material lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement to
which the Company is a party or by which it is bound or to which any of its
properties or assets is subject (except for such breaches, violations and
defaults as would not, individually or in the aggregate, have a Material 

 

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Adverse
Effect on the Company), nor result in the creation or imposition of any Lien
upon any of the properties or assets of the Company.

(b)           No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority remains to be obtained or is otherwise required to
be obtained by the Company in connection with the authorization, execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, including, without limitation the issue and sale of the Shares, except
filings as may be required to be made by the Company after the Closing with (i)
the SEC, (ii) The Nasdaq Stock Market, and (iii) state blue sky or other
securities regulatory authorities.

6.8          No Brokers. 
The Company has taken no action that would give rise to any claim by any
person for brokerage commissions, finder’s fees or similar payments by any
Purchaser relating to this Agreement or the transactions contemplated hereby,
except for dealings with its financial advisor, Syntax Partners, LLC, (the fees
of which will be borne solely by the Company).

6.9          Listing. 
The Company’s Common Stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is quoted
on the Nasdaq Capital Market.

6.10        Patents and Trademarks. 
The Company has, or has rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and know-how (including trade secrets or other unpatented and/or
unpatenable proprietary or confidential information, systems or procedures)
(collectively, the “Intellectual Property Rights”) that are necessary for use
in connection with its business as presently conducted or that the failure to
have would not have a Material Adverse Effect, and there is no existing
commercial infringement by another person or entity of any of the Intellectual
Property Rights that are necessary for use in connection with the Company’s
business as presently conducted, except as set forth in the SEC Documents.  Except as set forth in the SEC Documents, the
Company is not infringing on or in conflict with any right of any other person
with respect to any intangibles nor is there any claim of infringement made or
threatened by a third party against or involving the Company.

6.11        Taxes. Except as set forth in the financial
statements included in the filed SEC Documents, the Company has timely filed
all requisite United States of America federal, state and other tax returns or
extension requests for all fiscal periods in which such filings were required
to be made. There are no examinations in progress or claims pending against the
Company for United States of America federal, state and other taxes (including
penalties and interest) for any period or periods prior to and including
October 31, 2004, and no notice of any claim for taxes, whether pending or
threatened, has been received. All taxes due from the Company for any period
ended before the date hereof, including interest and penalties (whether or not
shown on any tax return) have been paid. The amounts shown as accruals for taxes
on the Financial Statements included in the filed SEC Documents are appropriate
under generally accepted accounting principles, consistently applied. The 

 

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Company
is not and has not during the last five years been a party to any tax sharing
agreement or agreement of similar effect. The Company is not and has not during
the last five years been a member of any consolidated group. Except as set
forth in the Financial Statements included in the filed SEC Documents, the
Company has not received, been denied, or applied for any private letter ruling
during the last five years.

6.12        Licenses and Permits. The Company has all Permits (as defined
below) required by law or governmental regulations from all applicable courts,
administrative agencies or commissions or other governmental authorities or
instrumentalities, whether in the United States of America (federal, state or
local) or outside of the United States of America that are necessary to operate
such businesses as presently conducted and all such Permits are in full force
and effect, except where the failure to have any such Permits in full force and
effect could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. To the Company’s knowledge, the Company is not
in default under, or in violation of or noncompliance with, any of such
Permits, except for any such default, violation of or noncompliance which could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Upon consummation of the transactions contemplated by
this Agreement, each such Permit will remain in full force and effect and will
not create a right of any other person to terminate or revoke, modify or
condition such Permit based on such consummation. “Permit” means any permit,
certificate, consent, approval, authorization, order, license, variance,
franchise or other similar indicia of authority issued or granted by any court,
administrative agency or commission or other governmental authority or
instrumentality, whether in the United States of America (federal, state or
local) or outside of the United States of America.

6.13        Litigation. Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, governmental agency or authority, or
self-regulatory organization or body pending or threatened against or affecting
the Company or any of its directors or officers in their capacities as such
that would have a Material Adverse Effect.

7.             Covenants of the Company. 
The Company covenants and agrees as follows:

7.1          Reporting Status. 
Prior to registration and until the Company’s obligations under this
Agreement are terminated, the Company will use commercially reasonable efforts
to file timely all reports required to be filed with the SEC pursuant to the
Exchange Act.

7.2          Maintenance of Quotation
on the Nasdaq Capital Market.  Prior to
registration and until the Company’s obligations under this Agreement are
terminated, the Company will use its reasonable best efforts to comply in all
material respects with all requirements to maintain the quotation of the
Company’s Common Stock on the Nasdaq Capital Market.

8.             Survival of Representations and Warranties. 
All representations and warranties made by the Company and the
Purchasers herein and in the certificates for the Shares delivered pursuant
hereto, shall survive for a period of two years in the case of the Company and
one year in the case of the Purchasers after the Closing Date and shall
thereupon expire together with the associated right to indemnification pursuant
to Section 10, unless a claim for
indemnification 

 

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(whether
or not fixed as to liability or liquidated as to amount) shall be made with
respect thereto prior to the end of such period, in which case such
representation or warranty with respect to which such claim has been made, and
the associated right to indemnification shall survive until such claim is
satisfied, settled or dismissed.

9.             Registration of Common Stock.

9.1          Registrable Securities. 
For the purposes of this Agreement, “Registrable Securities” means (a)
the Shares, and (b) any shares of Common Stock issued as a distribution with
respect to the Shares provided that (i) any shares of Common Stock will cease
to be Registrable Securities, and (ii) the Company will not be obligated to
maintain the effectiveness of the Shelf Registration Statement (as defined
below), and the Company’s obligations under this Section 9
will cease, with respect to a holder’s (a “Holder”) Registrable Securities
following the earliest of (x) the date on which all of the Registrable
Securities have been sold (y) the date on which all of the Registrable
Securities may be immediately sold to the public without registration or
restriction pursuant to Rule 144(k) under the Securities Act or any successor
provision, and (z) the third anniversary of the Closing Date.  The period of time during which the Company is
required to keep the Shelf Registration Statement effective is referred to as
the “Registration Period.”

9.2          Registration.

(a)           The
Company shall use its best efforts to file with the SEC, not later than the 30th
day after the Closing Date (the “Filing Deadline”), a shelf registration
statement on Form S-1 or successor form or another form selected by the Company
that is available to it under the Securities Act (the “Shelf Registration
Statement”) with respect to the Registrable Securities beneficially owned by
Purchasers following the Closing.

(b)           The
Company shall use its commercially reasonable efforts to have the Shelf
Registration Statement declared effective by the SEC on or before the 60th
day after the Filing Deadline.

9.3          Registration Procedures. 
In connection with the registration of any Registrable Securities under
the Securities Act as provided in this Section 9, the
Company will use its reasonable best efforts:

(a)           To
cause the Shelf Registration Statement (and any other related registrations,
qualifications or compliances as may be reasonably requested and as would
permit or facilitate the sale and distribution of all Registrable Securities
until the distribution thereof is complete) to become effective as soon as
reasonably practicable following the filing thereof;

(b)           Except
as set forth in Section 9.1, to prepare and file with the SEC the amendments
and supplements to the Shelf Registration Statement and the prospectus used in
connection therewith and take all other actions as may be necessary to keep the
Shelf Registration Statement continuously effective until the disposition of
all securities in accordance with the intended methods of disposition by the
Holder or Holders thereof set forth in the Shelf Registration Statement will be
completed, and to comply with the provisions of the Securities Act (to the
extent applicable to the Company) with respect to the dispositions;

 

10

 

(c)           To
furnish to each Holder of Registrable Securities a reasonable number of copies
of the Shelf Registration Statement and of each amendment and supplement
thereto, a number of copies of the prospectus included in the Shelf
Registration Statement (including each preliminary prospectus), in conformity
with the requirements of the Securities Act, and the other documents (including
exhibits to any of the foregoing), as the Holder may reasonably request, in
order to facilitate the disposition of the Registrable Securities owned by
Holder;

(d)           To
provide a transfer agent and registrar for the Registrable Securities covered
by the Shelf Registration Statement not later than the effective date of the
Shelf Registration Statement;

(e)           To
notify each Holder of Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in the
Shelf Registration Statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading, and, at
the request of any Holder, the Company will promptly prepare a supplement or
amendment to the prospectus so that, as thereafter delivered to the purchasers
of Registrable Securities, the prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading; and

(f)            To
enter into customary agreements (including, in the event the Holders elect to
engage an underwriter in connection with the Shelf Registration Statement, an
underwriting agreement containing customary terms and conditions) and take all
other actions as reasonably required in order to expedite or facilitate the
disposition of Registrable Securities; provided, however, that, except as
provided in Section 9.4 hereof, the Company will not be liable for any
expenses, including any underwriter’s fees, commissions and discounts or
counsel fees (other than its own counsel) with respect to the sale of
Registrable Securities.

9.4          Registration and Selling
Expenses.  All expenses incurred by the Company in
connection with the Company’s performance of or compliance with this Section 9, including (i) all SEC registration and filing
fees, (ii) all necessary printing and duplicating expenses, (iii) all fees and
disbursements of counsel and accountants retained on behalf of the Company, and
(iv) all reasonable fees and disbursements of counsel retained on behalf of
Purchasers will be paid by the Company. 
Each Holder may, at its election, retain its own counsel and other
representatives and advisors as it chooses at its own expense.  Notwithstanding anything herein to the
contrary, each Purchaser shall pay their own pro-rata share of underwriters’
discounts and commissions).

9.5          No Delay. 
No Holder will have a right to take any action to restrain, enjoin or
otherwise delay any registration pursuant to Section 9.2
hereof as a result of any dispute, controversy or other matter that may arise
with respect to the interpretation or implementation of this Agreement.

9.6          Certain Obligations of
Holders.

(a)           The
Company may voluntarily suspend the effectiveness of the Shelf Registration
Statement for a limited time, which in no event shall be longer than a total of
two 30-day periods in any 12-month period (excluding any period for which the
Shelf Registration 

 

11

 

Statement
is not effective between the time an amendment has been filed to the
registration statement and the time the amendment has been declared effective
by the SEC or state securities regulatory body and assuming the Company is
acting in good faith to obtain the effectiveness of that amendment).

(b)           As
a condition to the inclusion of its Registrable Securities, each Holder will
furnish to the Company the information regarding the Holder and the intended
method of distribution of the securities as the Company may from time to time
request or as will be required in connection with any registration,
qualification or compliance referred to in this Section 9.  Each Holder promptly will furnish to the
Company all information required to be disclosed in order to make the
information previously furnished by it to the Company not materially
misleading.

(c)           Each
Holder hereby covenants to the Company not to make any sale of the Registrable
Securities without effectively causing the prospectus delivery requirements
under the Securities Act to be satisfied and, if Registrable Securities are to
be sold by any method or in any transaction other than as set forth in the Plan
of Distribution in the prospectus included in the Shelf Registration Statement,
to deliver to the Company an opinion of counsel to the Holder of such
Registrable Securities to the effect that the sale may be effected in
accordance with the Securities Act.

(d)           The
rights to cause the Company to register Registrable Securities granted to the
Holders by the Company under Section 9.2 may
be assigned in whole or in part by a Holder, provided, that:  (i) the Company is furnished with an opinion
of counsel to the Holder of such Registrable Securities to the effect that the
transfer may be effected in accordance with the Securities Act; (ii) the
transfer involves not less than the lesser of all of the Holder’s Registrable
Securities or 50,000 shares of Common Stock; (iii) the Holder gives prior
written notice to the Company; and (iv) the transferee agrees to comply with
the terms and provisions of this Agreement in a written instrument satisfactory
in form and substance to the Company and its counsel.

10.          Indemnification.

(a)           The
Company will indemnify, to the extent permitted by law, each Holder of
Registrable Securities and each director, officer or controlling person of each
Holder within the meaning of Section 15 of the Securities Act against all losses,
claims, damages, liabilities and expenses, (or action in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on (i) any untrue statement or
alleged untrue statement of a material fact contained in, or information
incorporated by reference into, any registration statement or prospectus (or
any amendment or supplement thereto) or any preliminary prospectus prepared in
connection with the registration contemplated by Section 9,
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) any failure by the Company to fulfill and perform any
agreement, covenant or undertaking herein, or (iv) any failure or breach of the
representations and warranties of the Company set forth in Section 6
to be accurate in all material respects (excluding for this purpose all
references in Section 6 to material and Material Adverse Effect) as of the date
hereof and as of the Closing Date, and will promptly reimburse

 

12

 

 each Holder and each director, officer or
controlling person of each Holder for reasonable legal and other expenses incurred
in connection with investigating or defending any claim, loss, damage,
liability or action as incurred; provided however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises directly out of or is based upon an untrue statement
or alleged untrue statement or by any omission or alleged omission made in such
registration statement or prospectus made in reliance upon and in conformity
with written information furnished by any Holder specifically for use in the
preparation of the registration statement or prospectus, provided further,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises directly out of
or is based primarily upon an untrue statement or omission made in any
preliminary prospectus or final prospectus if (i) such Holder failed to send or
deliver a copy of the final prospectus or prospectus supplement with or prior
to the delivery of written confirmation of the sale of the Shares, and (ii) the
final prospectus or prospectus supplement would have corrected such untrue
statement or omission.  The
indemnification obligation of the Company with respect to clause (iv) above,
will survive for a period ending on the second anniversary of the Closing Date,
unless a claim for indemnification (whether or not fixed as to liability or
liquidated as to amount) is made with respect hereto prior to the end of such
period, in which case the right to indemnification shall survive until such
claim is satisfied, settled or dismissed.

(b)           Purchaser
will indemnify, to the fullest extent permitted by law, the Company, its
directors and officers and each person or entity, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities and expenses resulting from (i) any
failure by the Purchaser to fulfill and perform any agreement, covenant or
undertaking herein, or (ii) any failure or breach of the representations and
warranties of the Purchaser set forth in Section
5 to be accurate (excluding for this purpose all references, if any,
in Section 5 to material and Material Adverse Effect) as of the date hereof and
as of the Closing Date.  In connection
with the Shelf Registration Statement in which a Holder of Registrable
Securities is participating, each Holder will furnish to the Company in writing
the information as is reasonably requested by the Company for use in the Shelf
Registration Statement or prospectus and will severally, but not jointly,
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person or entity, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the Shelf Registration Statement or
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent the losses,
claims, damages, liabilities or expenses are caused by an untrue statement or
alleged untrue statement of a material fact or by an omission or alleged
omission of a material fact made in reliance upon and in conformity with the
written information specifically furnished by the Holder to the Company for use
in connection with the preparation of the Shelf Registration Statement or
prospectus; provided however, that the indemnity will not apply to the
extent that the loss, claim, damage, liability or expense arises out of or is
based upon a violation of this Agreement by the Company.  If the offering pursuant to any registration
is made through underwriters, each Holder agrees to enter into an underwriting
agreement in customary form with the underwriters and to indemnify the
underwriters, their officers and directors, if any, and each 

 

13

 

person
or entity who controls the underwriters within the meaning of the Securities
Act to the same extent as hereinabove provided with respect to indemnification
by the Holder.

(c)           Promptly
after receipt by an indemnified party under Section
10(a) or (b) of notice
of any claim as to which indemnity may be sought, including the commencement of
any action or proceeding, the indemnified party will, if a claim in respect
thereof may be made against the indemnifying party under this Section, promptly
notify the indemnifying party in writing of the commencement thereof; provided
that the failure of the indemnified party to so notify the indemnifying party
will not relieve the indemnifying party from its obligations under this Section
except to the extent that the indemnifying party is adversely affected by the
failure.  In case any action or
proceeding is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party and its
counsel will conduct the defense of any action with counsel approved by the
indemnified party (which approval will not be unreasonably withheld or delayed)
although the indemnified party will be entitled to participate therein at the
indemnified party’s expense, and after notice from the indemnifying party to
the indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to the indemnified party under that
Section for any legal or any other expenses subsequently incurred by the
indemnified party in connection with the defense thereof (other than reasonable
costs of investigation) unless incurred at the written request of the
indemnifying party. Notwithstanding the above, the indemnified party will have
the right to employ counsel of its own choice in any action or proceeding (and
be reimbursed by the indemnifying party for the reasonable fees and expenses of
the counsel and other reasonable costs of the defense) if representation of the
indemnified party by the counsel retained by the indemnifying party would be
inappropriate (as reasonably determined by the indemnified party) due to actual
or potential differing interests or conflicts between the indemnified party and
any other party represented by the counsel in the action or proceeding or
counsel to the indemnified party is of the opinion that it would not be
desirable for the same counsel to represent both the indemnifying party and the
indemnified party because the representation might result in a conflict of
interest; provided, however, that the indemnifying party will not
in connection with any one action or proceeding or separate but substantially
similar actions or proceedings arising out of the same general allegations, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all indemnified parties, except to the extent that
local counsel, in addition to regular counsel, is required in order to
effectively defend against the action or proceeding.  An indemnifying party will not be liable to
any indemnified party for any settlement or entry of judgment concerning any
action or proceeding effected without the consent of the indemnifying party.

(d)           If
the indemnification provided for in Section 10(a)
or (b) is held by a court of competent
jurisdiction to be unavailable under applicable law to an indemnified party in
respect of any losses, claims, damages or liabilities referred to therein, then
each applicable indemnifying party, in lieu of indemnifying the indemnified
party, will contribute to the amount paid or payable by the indemnified party
as a result of the losses, claims, damages or liabilities in the proportion as
is appropriate to reflect the relative fault of the Company on the one hand and
of the indemnified party on the other in connection with the statements or
omissions which resulted in the losses, claims, damages, or liabilities, as
well as any other relevant equitable considerations including the relative
benefits to the parties.  The relative
fault of the Company on the one hand and of the indemnified party on the other
will be determined by reference to, among 

 

14

 

other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
Company or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the
statement or omission.  The amount paid
or payable by a party as a result of the losses, claims, damages and
liabilities referred to above will be deemed to include, subject to the
limitations set forth in Section 10(c),
any legal or other fees or expenses reasonably incurred by the party in
connection with investigating or defending any action or claim.  No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity that is not guilty
of fraudulent misrepresentation.

11.          Miscellaneous.

11.1        Notices. 
Any notice or other communication given hereunder will be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor, or
sent by confirmed facsimile, addressed to:

                If
to the Company:

                                                The SCO Group, Inc.

                                                355 South 520 West

                                                Lindon, UT  84042

                                                Attn:        Bert B. Young

                                                Facsimile:   (801) 932-1313

 

                With
a copy to:

                                                Dorsey
& Whitney LLP

                                                170 South Main
Street, Suite 900

                                                Salt Lake City, Utah
84101

                                                Attn:       Nolan S. Taylor, Esq.

                                                Facsimile:  (801) 933-7373

 

                If
to a Purchaser:

To the name and address or facsimile number of the
Purchaser set forth on Exhibit C hereto.

Notices will be deemed to have been given or delivered
on the date of mailing, except notices of change of address, which will be
deemed to have been given or delivered when received.

11.2        Successors and Assigns. 
Subject to Section 9.6(d),
this Agreement will be binding upon and inure to the benefit of the parties
hereto and to their respective heirs, legal representatives, successors and
assigns.

11.3        Confidentiality
Agreements.  Notwithstanding anything therein to the
contrary, the terms of the confidentiality agreements (the “Confidentiality
Agreements”) entered into 

 

15

 

between
the Company and each Purchaser shall survive the execution of this Agreement
and terminate twenty-four (24) months after the Closing Date.  The provisions of this Section 11.3 shall
amend each Confidentiality Agreement in accordance with its terms.

11.4        Entire Agreement. 
This Agreement and the Confidentiality Agreements set forth the entire
agreement and understanding among the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

11.5        Amendment. 
This Agreement may not be amended, modified or supplemented with respect
to a Holder unless the Company has obtained the consent of such Holder.

11.6        Governing Law. 
The terms and provisions hereof will be construed in accordance with and
governed by the laws of the State of Utah without regard to that State’s
conflicts of law principles.

11.7        Severability. 
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction will not affect any other
provision of this Agreement, which will remain in full force and effect.  If any provision of this Agreement is
declared by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part, the provision will be
interpreted so as to remain enforceable to the maximum extent permissible
consistent with applicable law and the remaining conditions and provisions or
portions thereof will nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provisions will be deemed dependent upon any other covenant or provision unless
so expressed herein.

11.8        No Waiver.  A
waiver by any party of a breach of any provision of this Agreement will not
operate, or be construed, as a waiver of any subsequent breach by that same
party.

11.9        Further Assurances. 
The parties agree to execute and deliver all further documents,
agreements and instruments and take further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.  Any documentary, stamp tax or similar
issuance or transfer taxes due as a result of the conveyance, transfer or sale
of the Shares between any of the Purchasers (or any of their permitted
transferees), on the one hand, and the Company, on the other hand, pursuant to
this Agreement will be borne by the Company.

11.10      Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which will together constitute the
same instrument.

11.11      No Third Party
Beneficiaries.  Nothing in this Agreement creates in any
person not a party to this Agreement any legal or equitable right, remedy or
claim under this Agreement, and this Agreement is for the exclusive benefit of
the parties hereto.  The parties
expressly recognize that this Agreement is not intended to create a
partnership, joint venture or other similar arrangement between any of the
parties or their respective affiliates.

 

16

 

11.12      Publicity Restrictions. 
No press release or other public disclosure relating to the transactions
contemplated by this Agreement may be issued or made by or on behalf of any
party without prior consultation with the other parties, except as required by
applicable law, court process or Nasdaq or other stock exchange rules, in which
case the Purchaser required to make the disclosure will allow the Company
reasonable time (to the extent practicable) to comment thereon in advance of
the issuance.  The Company may issue an
initial press release relating to the transactions contemplated by this
Agreement, but shall not identify any Purchaser in such press release.  The parties acknowledge that the Company may
file a copy of this Agreement with the SEC as an exhibit to its filings.

[Signature
Page Follows]

 

17

IN WITNESS WHEREOF, the undersigned have duly executed this Common Stock
Purchase Agreement as of the date first above written.

 

	
   

  	
  THE
  SCO GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bert B. Young

  
	
   

  	
  Name:

  	
  Bert B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  [Purchasers’ Signature Pages Follow]

  

 

 

 

 

	
   

  	
  JET CAPITAL INVESTORS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew Mark

  
	
   

  	
  Name:

  	
  Matthew Mark

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 285,714

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase
  Price:  $999,999

  

 

 

 

 

	
   

  	
  ETON PARK FUND, L.P.

  
	
   

  	
  By: Eton Park Capital
  Management, L.P., its

  
	
   

  	
  Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcy Engel

  
	
   

  	
  Name:

  	
  Marcy Engel

  
	
   

  	
  Title:

  	
  Senior Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 200,000

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $700,000

  

 

 

 

 

	
   

  	
  ETON PARK MASTER FUND, LTD.

  
	
   

  	
  By: Eton Park Capital
  Management, L.P., its Investment Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcy Engel

  
	
   

  	
  Name:

  	
  Marcy Engel

  
	
   

  	
  Title:

  	
  Senior Managing
  Director

  
	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 371,429

  
	
   

  	
   

  
	
   

  	
  Purchase Price:
  $1,300,001.50

  

 

 

 

 

	
   

  	
  GLENHILL CAPITAL LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GJK Capital Management,
  LLC

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Krevlin Advisors, LLC

  
	
   

  	
  Its:

  	
  Managing Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn J. Krevlin

  
	
   

  	
   

  	
  Name:

  	
  Glenn J. Krevlin

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 290,583

  
	
   

  	
   

  
	
   

  	
  Purchase Price:
  $1,017,040.50

  

 

 

 

 

 

	
   

  	
  GLENHILL CONCENTRATED LONG

  
	
   

  	
  MASTER FUND LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GJK Capital Management,
  LLC

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Krevlin Advisors, LLC

  
	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Glenn J. Krevlin

  
	
   

  	
   

  	
  Name:

  	
  Glenn J. Krevlin

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 285,000

  
	
   

  	
   

  
	
   

  	
  Purchase Price:
  $997,500.00

  
							

 

 

 

 

	
   

  	
  GLENHILL CAPITAL OVERSEAS
  MASTER FUND LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Glenhill Capital
  Overseas GP, Ltd.,

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn J. Krevlin

  
	
   

  	
   

  	
  Name: Glenn J. Krevlin

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 124,417

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $435,459.50

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

 

	
   

  	
  AMTRUST
  INTERNATIONAL INSURANCE

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jan Loeb

  
	
   

  	
  Name:

  	
  Jan Loeb

  
	
   

  	
  Title:

  	
  Portfolio Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 242,857

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $849,999.50

  
				

 

 

 

 

	
   

  	
  CHESAPEAKE
  PARTNERS LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Lerner

  
	
   

  	
  Name:

  	
  Mark Lerner

  
	
   

  	
  Title:

  	
  Member, C.P. Management
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 285,714

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $999,999.00

  
	
   

  	
   

  

 

 

 

 

	
   

  	
  CHESAPEAKE
  PARTNERS INTERNATIONAL LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Lerner

  
	
   

  	
  Name:

  	
  Mark Lerner

  
	
   

  	
  Title:

  	
  Member, C.P. Management
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 285,715

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $1,000,002.50

  
				

 

 

 

 

	
   

  	
  SCOGGIN
  CAPITAL MANAGEMENT, L.P. II

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  S&E Partners, LP

  
	
   

  	
  Its: 

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Scoggin, Inc.

  
	
   

  	
  Its: 

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Curtis Schenker

  
	
   

  	
  Name:

  	
  Curtis Schenker

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 187,000

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $654,500.00

  
					

 

 

 

 

	
   

  	
  SCOGGIN
  INTERNATIONAL FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Scoggin, LLC

  
	
   

  	
  Its: 

  	
  Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Curtis Schenker

  
	
   

  	
  Name:

  	
  Curtis Schenker

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 187,000

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $654,500.00

  
						

 

 

 

 

 

	
   

  	
  GUGGENHEIM
  PORTFOLIO COMPANY VII LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Scoggin, LLC

  
	
   

  	
  Its: 

  	
  Investment Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Curtis Schenker

  
	
   

  	
  Name:

  	
  Curtis Schenker

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 56,000

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase Price:
  $196,000

  
						

 

 

 

 

	
   

  	
  /s/ Darcy G. Mott

  
	
   

  	
  Darcy G. Mott

  
	
   

  	
   

  
	
   

  	
  Number of Shares
  Purchased: 51,020

  
	
   

  	
   

  
	
   

  	
  Purchase Price:
  $199,998.40Exhibit 4.23

 

GOLD FIELDS LIMITED

 

 

and

 

 

BOLIVAR GOLD CORP.

 

 

ARRANGEMENT AGREEMENT

 

December 1, 2005

 

 

 

STIKEMAN ELLIOTT LLP

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
  Singular, Plural, etc.

  	
  8

  
	
  Section 1.3

  	
  Deemed Currency

  	
  8

  
	
  Section 1.4

  	
  Headings, etc.

  	
  8

  
	
  Section 1.5

  	
  Date for any Action

  	
  8

  
	
  Section 1.6

  	
  Schedule and Exhibit

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  THE ARRANGEMENT AND RELATED MATTERS

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Implementation Steps by Target

  	
  8

  
	
  Section 2.2

  	
  Interim Order

  	
  10

  
	
  Section 2.3

  	
  Articles of Arrangement

  	
  11

  
	
  Section 2.4

  	
  Information Circular

  	
  11

  
	
  Section 2.5

  	
  Preparation of Filings

  	
  12

  
	
  Section 2.6

  	
  Dissenting Shareholders

  	
  13

  
	
  Section 2.7

  	
  Amendment

  	
  13

  
	
  Section 2.8

  	
  Cancellation of Certain Target Securities

  	
  13

  
	
  Section 2.9

  	
  Withholding

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  PUBLICITY

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Publicity and Press Releases

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Representations and Warranties of Target

  	
  14

  
	
  Section 4.2

  	
  Representations and Warranties of Parent

  	
  22

  
	
  Section 4.3

  	
  Survival

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  CONDUCT OF BUSINESS

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Conduct of Business by Target

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  COVENANTS

  
	
   

  	
   

  
	
  Section 6.1

  	
  Recommendation of Arrangement

  	
  27

  
	
  Section 6.2

  	
  Covenants Regarding Representations and Warranties

  	
  27

  

 

i

 

	
  Section 6.3

  	
  Notice of Changes

  	
  27

  
	
  Section 6.4

  	
  Access to Information

  	
  28

  
	
  Section 6.5

  	
  Transitional Matters

  	
  29

  
	
  Section 6.6

  	
  Other Filings

  	
  29

  
	
  Section 6.7

  	
  Additional Agreements

  	
  29

  
	
  Section 6.8

  	
  Mutual Covenants

  	
  30

  
	
  Section 6.9

  	
  Pre-Acquisition Reorganizations

  	
  30

  
	
  Section 6.10

  	
  Proxies Received and Dissent Notices

  	
  31

  
	
  Section 6.11

  	
  Privacy Matters

  	
  31

  
	
  Section 6.12

  	
  Form of Transaction

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  CONDITIONS

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Mutual Conditions Precedent

  	
  33

  
	
  Section 7.2

  	
  Additional Conditions Precedent to the Obligations of
  Parent

  	
  33

  
	
  Section 7.3

  	
  Additional Condition Precedent to the Obligations of Target

  	
  35

  
	
  Section 7.4

  	
  Satisfaction of Conditions

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  ACQUISITION PROPOSALS

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Covenants Regarding Non-Solicitation

  	
  36

  
	
  Section 8.2

  	
  Right to Accept a Superior Proposal

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  AMENDMENT AND TERMINATION

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Amendment

  	
  40

  
	
  Section 9.2

  	
  Termination

  	
  40

  
	
  Section 9.3

  	
  Effect of Termination

  	
  42

  
	
  Section 9.4

  	
  Termination Fee

  	
  42

  
	
  Section 9.5

  	
  Effect of Termination Fee Payment

  	
  43

  
	
  Section 9.6

  	
  Fees and Expenses

  	
  43

  
	
  Section 9.7

  	
  Waiver

  	
  43

  
	
  Section 9.8

  	
  Remedies.

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  GENERAL

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Notices

  	
  44

  
	
  Section 10.2

  	
  Assignment

  	
  45

  
	
  Section 10.3

  	
  Further Assurances

  	
  45

  
	
  Section 10.4

  	
  Severability

  	
  46

  
	
  Section 10.5

  	
  Entire Agreement

  	
  46

  
	
  Section 10.6

  	
  Counterpart Execution

  	
  46

  

 

ii

 

	
  Section 10.7

  	
  Governing Law

  	
  46

  
	
  Section 10.8

  	
  Attornment

  	
  46

  
	
  Section 10.9

  	
  Investigation by Parties

  	
  47

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  
	
  SCHEDULE ”A”

  	
  PLAN OF ARRANGEMENT

  	
   

  
	
  EXHIBIT ”I” COMMITMENTS

  	
   

  
				

 

iii

 

ARRANGEMENT AGREEMENT

 

THIS AGREEMENT is made as
of December 1, 2005, between GOLD FIELDS
LIMITED (“Parent”), a
company incorporated under the laws of South Africa, and BOLIVAR GOLD CORP. (“Target”),
a corporation continued under the laws of the Yukon Territory.

 

RECITALS:

 

WHEREAS Parent proposes to
acquire through one or more of its affiliates all of the outstanding securities
of Target (other than those held by Parent or its Affiliates unless they
otherwise elect);

 

AND WHEREAS the Parties
intend to carry out the proposed transaction by way of a plan of arrangement
and all related steps under the Business
Corporations Act (Yukon);

 

NOW THEREFORE in
consideration of the mutual covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each of the Parties, the Parties covenant and agree as
follows:

 

ARTICLE 1

INTERPRETATION

 

Section 1.1                                   Definitions

 

In this
Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms shall have the following meanings,
respectively:

 

“Acquisition Proposal” means,
other than from Parent or a subsidiary of Parent, any merger, amalgamation,
statutory arrangement, recapitalization, take-over bid, sale of material assets
(or any lease, long-term supply agreement or other arrangement having the same
economic effect as a sale of material assets), liquidation, winding-up, sale or
redemption of a material number of shares or rights or interests therein or
thereto or similar transactions involving Target and/or the Target
Subsidiaries, or a written proposal to do so, excluding the Arrangement;

 

“Act” means the Business Corporations Act (Yukon) as the
same has been and may hereafter from time to time be amended;

 

“Affiliate” has the meaning ascribed thereto in the Act;

 

 

“Agreement”, “this Agreement”, “herein”, “hereto”,
and “hereof” and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time, together with all schedules and exhibits hereto;

 

“Arrangement” means the
arrangement under Section 195 of the Act resulting in the direct acquisition
by Parent or one or more subsidiaries of Parent of all of the Target Shares
(other than those held by Parent or its Affiliates unless they otherwise
elect), the cancellation of all Target Warrants (other than those held by
Parent or its Affiliates unless they otherwise elect), the cancellation of all
Target Options and the repayment of the Target Debentures, all on the terms and
subject to the conditions set out in this Agreement and more particularly in
the Plan of Arrangement, subject to any amendments or variations thereto made
in accordance with the provisions of this Agreement and the Plan of Arrangement
or made at the direction of the Court;

 

“Arrangement Resolutions” means
the special resolutions of the holders of the Outstanding Securities approving
the Arrangement, such resolutions to be in form and substance acceptable to the
Parties, acting reasonably;

 

“Articles of Arrangement” means
the articles of arrangement of Target to be filed with the registrar under the
Act in connection with the Arrangement;

 

“Business Day” means any
day excepting a Saturday or Sunday or a day recognized as a holiday in
Johannesburg, South Africa, Toronto, Ontario, or Whitehorse, Yukon Territory;

 

“Completion Deadline”
means February 28, 2006 or such later date as may be agreed between the
Parties in writing;

 

“Confidentiality Agreement” means the confidentiality agreement between Target and Gold Fields
Chile Ltda., a subsidiary of Parent, dated December 13, 2004;

 

“Court” means Supreme Court of the Yukon Territory;

 

“Disclosed Information”
means all information disclosed in writing by each Party to the other (or to
the other’s representatives) in connection with each Party’s due diligence
review process;

 

“Dissent Rights” means the
rights of dissent in favour of the holders of the Target Shares in respect of the Arrangement as shall be
described in the Plan of Arrangement;

 

2

 

“Effective Date” means the
date upon which the Arrangement becomes effective as established by the date of
issue shown on the certificate issued by the registrar pursuant to the Act;

 

“Effective Time” means
12:01 a.m. (Whitehorse, Yukon time) on the Effective Date;

 

“Encumbrance” includes any
mortgage, pledge, assignment, charge, lien, claim, security interest, adverse
interest, other third person interest or encumbrance of any kind, whether
contingent or absolute, and any agreement, option, right or privilege (whether
by law, contract or otherwise) capable of becoming any of the foregoing;

 

“Final Order” means the
order of the Court approving the Arrangement as such order may be amended at
any time prior to the Effective Date, or, if appealed, then unless such appeal
is withdrawn or denied, as affirmed;

 

“GAAP” means, for those
generally accepted accounting principles stated in the Handbook of the Canadian
Institute of Chartered Accountants, such principles so stated;

 

“Governing Documents” means, in respect of each Party, its certificate and articles of
incorporation, as amended, and its by-laws, as amended, and all similar
constating documents;

 

“Government Authority”
means any foreign, national, provincial, local or state government, any
political subdivision or any governmental, judicial, public or statutory
instrumentality, court, tribunal, agency (including those pertaining to health,
safety or the environment), authority, body or entity, or other regulatory
bureau, authority, body or entity having legal jurisdiction over the activity
or Person in question (including in Canada, Venezuela, Aruba and elsewhere);

 

“in writing” means written
information including documents, files, software, records and books made
available, delivered or produced to one Party by or on behalf of the other
Party;

 

“including”, “includes” or similar
expressions are not intended to be limiting and are deemed to be followed by
the expression “without limitation”;

 

“Information Circular” means
the notice of the Target Meeting and the accompanying management information
circular to be sent to holders of Outstanding Securities in connection with the
Target Meeting;

 

3

 

“Interim Order” means the
interim order of the Court made pursuant to the application made in accordance
with this Agreement (or any variation of such order);

 

“Laws” means all laws,
statutes, codes, ordinances, decrees, rules, regulations, by laws, statutory
rules, principles of law, published policies and guidelines, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgments, orders, decisions, rulings or awards, including general principles
of common and civil law, and terms and conditions of any grant of approval,
permission, authority or license of any Government Authority, statutory body or
self regulatory authority, and the term “applicable”
with respect to such Laws and in the context that refers to one or more
Persons, means that such Laws apply to such Person or Persons or its or their
business, undertaking, property or securities and emanate from a Government
Authority (or any other Person) having jurisdiction over the aforesaid Person
or Persons or its or their business, undertaking, property or securities;

 

“Lock-up Agreements” means
the irrevocable lock-up agreements between Parent and certain of the directors
and officers of Target (holding collectively approximately 1.3% of the Target
Shares) executed November 21, 2005, pursuant to which they agree to vote
their Target Securities in favour of the Arrangement;

 

“Material Adverse Change”, means any change, effect, event, circumstance or occurrence with
respect to the condition (financial or otherwise), properties, assets,
liabilities, obligations (whether absolute, accrued, conditional or otherwise),
businesses, operations, results of operations or prospects of Target and its subsidiaries,
taken as a whole, that, either alone or together with other such matters, is,
or could reasonably be expected to be, material and adverse to the current or
future business, operations, regulatory status, financial condition or results
of operations of Target and its subsidiaries taken as a whole;

 

“Material Adverse Effect” means
any effect that, either alone or together with other such matters, is, or could
reasonably be expected to be, material and adverse to the condition (financial
or otherwise), properties, assets, liabilities, obligations (whether absolute,
accrued, conditional or otherwise), businesses, operations, results of
operations or prospects of Target or any of its subsidiaries;

 

“material fact” has the meaning ascribed thereto in the Securities Act (Ontario) as the same has been and may
hereafter from time to time be modified;

 

4

 

“Meeting Date” means the date on which the Target Meeting occurs;

 

“Misrepresentation” has
the meaning ascribed thereto in the Securities
Act (Ontario);

 

“Outstanding Securities” means
the Target Shares, Target Options and Target Warrants outstanding as of the
date hereof as follows: 111,717,506 Target Shares; 8,949,332 Target Options; 10,936,668 Target Initial Warrants; 19,421,588
Target “A” Warrants; and 9,090,910 Target “B”
Warrants;

 

“Party” means each of Parent and Target;

 

“Person” includes any
individual, firm, partnership, joint venture, venture capital fund,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Government Authority, syndicate or other entity,
whether or not having legal status;

 

“Personal Information” means
information about an individual transferred to Parent by Target as a condition
of the Arrangement, but does not include an individual’s name, position name or
title, business telephone number, business address, business email or business
fax number;

 

“Personnel Obligations” means
any obligations or liabilities of a Party or any of its subsidiaries to pay any
amount to its or their officers, directors, employees and consultants for
salary, bonuses under its or their existing bonus arrangements and directors’
fees in the ordinary course, in each case in amounts consistent with historic
practices and obligations or liabilities in respect of insurance or
indemnification contemplated by this Agreement or arising in the ordinary and
usual course of business and, without limiting the generality of the foregoing,
Personnel Obligations shall include the obligations of such Party or any of its
subsidiaries to directors, officers, employees and consultants:

 

(a)                                  for payments on or in connection with any change in control of such Party
pursuant to any change in control agreements, policies or arrangements,
including the payments specified herein; and

 

(b)                                 for any special incentive bonus payments and commitments.

 

“Plan of Arrangement” means,
in relation to the Arrangement, the plan of arrangement substantially in the
form and having the content of Schedule A hereto, together with all
amendments or variations thereto made in accordance with the provisions of this
Agreement or made at the direction of the Court in the Final Order;

 

5

 

“Regulatory Approval”
means any approval, consent, waiver, permit, order or exemption from any
Government Authority having jurisdiction or authority over any Party or the
subsidiary of any Party which is required or advisable to be obtained in order
to permit the Arrangement to be effected and “Regulatory
Approvals” means all such approvals, consents, waivers, permits,
orders or exemptions;

 

“Representatives” means,
in respect of a party, its and its subsidiaries’ directors, officers,
employees, counsel, financial and other advisers and other authorized
representatives;

 

“Securities Authorities”
means the appropriate securities commissions, the TSX and similar regulatory
authorities in Canada and each of the applicable provinces and territories
thereof;

 

“subsidiary” has the
meaning ascribed thereto in the Act;

 

 “Superior Proposal” means any bona fide
written proposal, other than the Arrangement, by a third party, directly or
indirectly, to acquire all or substantially all of the assets of Target (on a
consolidated basis) or more than 50% of the Target Shares, whether by way of
merger, amalgamation, arrangement, share exchange, take-over bid,
recapitalization, sale of assets or otherwise, and that the board of directors
of Target determines in its good faith (based upon the written advice from its
financial advisors and outside legal counsel) (a) is reasonably capable of
being completed without undue delay, taking into account all legal, financial,
regulatory and other aspects of such proposal and the party making such
proposal, (b) is fully financed or is reasonably capable of being fully
financed, and (c) would, if consummated in accordance with its terms,
results in a transaction more favourable to Target’s shareholders from a
financial point of view than the terms of the Arrangement and provides for
consideration per Target Share that has a value that is greater than the
consideration per Target Share provided under the terms of the Arrangement by
more than 5% (including any adjustment to such terms proposed by Parent as
contemplated by Section 8.2(b));

 

“Target” means Bolivar
Gold Corp., a company continued under the laws of the Yukon Territory;

 

“Target Debentures” means
the $26 million principal amount of 6% convertible debentures of Target
maturing December 5, 2008, convertible into Target Shares at the option of
the holder at $2.85 per Target Share;

 

“Target Meeting” means the
extraordinary meeting or meetings of Target Securityholders (including any
adjournment thereof) that is to be convened to

 

6

 

consider
and, if deemed advisable, to approve the Resolutions and other matters of
business, as described in the Information Circular;

 

“Target Options” means the
share purchase options granted under the Target Stock Option Plan and being
outstanding and unexercised on the date hereof;

 

“Target’s Public Documents” has the meaning ascribed thereto in Section 4.1(q);

 

“Target Securityholders”
means the Target Shareholders together with the holders of the Target Options
and Target Warrants;

 

“Target Shareholder” means
a registered holder of Target Shares, from time to time, and “Target Shareholders” means all of such
holders;

 

“Target Shares” means the
common shares in the capital of Target;

 

“Target Stock Option Plan”
means the option plan of Target;

 

“Target Subsidiaries” means,
collectively, each of the subsidiaries of Target;

 

“Target Warrants” means,
collectively, the Target Initial Warrants, Target “A” Warrants and the Target “B”
Warrants;

 

“Target ‘A’ Warrants” means
the outstanding common share purchase warrants of Target expiring August 25,
2008, exercisable at $1.75 per Target Share;

 

“Target ‘B’ Warrants” means
the outstanding common share purchase warrants of Target expiring December 22,
2009, exercisable at $3.25 per Target Share;

 

“Target Initial Warrants” means
the outstanding common share purchase warrants of Target expiring March 17,
2008, exercisable at $1.10 per Target Share;

 

“Termination Fee” means $12,000,000; and

 

“Venezuelan Government Mining Law Review” means the review of the Venezuelan mining laws by the Venezuelan
government, under which formal licences and permits have been suspended and as
a result of which Target is conducting its operations pursuant to oral
assurances from Venezuelan government officials.

 

7

 

Section 1.2                                   Singular, Plural, etc.

 

Words
importing the singular number include the plural and vice versa and words
importing gender include the masculine, feminine and neuter genders.

 

Section 1.3                                   Deemed Currency

 

Unless
otherwise specified, all dollar amounts described in this Agreement are
expressed in Canadian dollars.

 

Section 1.4                                   Headings, etc.

 

The
division of this Agreement into Articles and Sections, the provision of a table
of contents hereto and the insertion of the recitals and headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement and, unless otherwise stated, all references
in this Agreement to Articles and Sections refer to Articles and Sections of
and to this Agreement in which such reference is made.

 

Section 1.5                                   Date for any Action

 

In the
event that any date on which any action is required to be taken hereunder by
any of the Parties hereunder is not a Business Day, such action shall be
required to be taken on the next succeeding day that is a Business Day.

 

Section 1.6                                   Schedule and Exhibit

 

The
following Schedule and Exhibit are annexed to this Agreement and is hereby
incorporated by reference into this Agreement and forms part hereof:

 

Schedule A
­                           Plan of Arrangement

 

Exhibit I
- Commitments

 

ARTICLE 2

THE ARRANGEMENT AND RELATED MATTERS

 

Section 2.1                                   Implementation Steps by Target

 

Target
covenants in favour of Parent that Target shall:

 

(a)                                  as soon as reasonably practicable, apply to the Court under Section 195 of the Act for the Interim
Order in a manner and form acceptable to Parent, acting reasonably, and
thereafter proceed with and diligently seek the Interim Order;

 

(b)                                 convene and after consultation with Parent, as promptly as is
reasonably practicable, hold the Target Meeting for the purpose of considering
the Arrangement Resolutions and for any other purpose as

 

8

 

may be set out in the
Information Circular with the prior written consent of Parent;

 

(c)                                  subject to Article 8, except as required for quorum purposes,
not postpone or cancel (or propose for adjournment, postponement or
cancellation) the Target Meeting without the prior written consent of Parent
except as required by applicable Laws, a court or Governmental Authority having
jurisdiction, or required in accordance with the terms of the Interim Order,
provided that Target shall adjourn the Target Meeting upon the request of
Parent;

 

(d)                                 solicit and take all steps necessary to allow Parent and any
subsidiary of Parent designated as a party to the Plan of Arrangement to
solicit from the Target Securityholders proxies in favour of the approval of
the Arrangement Resolutions and to take all other commercially reasonable
actions that are necessary or desirable to secure the approval of the
Arrangement Resolutions by the Target Securityholders, except to the extent
that Target’s Board of Directors has changed, modified or withdrawn its
recommendation in accordance with Article 8 of this Agreement, in which
case Target shall no longer be subject to such obligation to solicit proxies;

 

(e)                                  subject to obtaining such approvals as are required by the Interim
Order, bring an application, as soon as reasonably practicable after the Target
Meeting, before the Court pursuant to Section 195 of the Act for the Final Order in a manner and
form acceptable to Parent, acting reasonably, and thereafter proceed with and
diligently pursue the application to the Court for the Final Order in such
form;

 

(f)                                    instruct counsel acting for it to bring the applications referred to
in Sections 2.1 (a) and (e) in cooperation with counsel to Parent;

 

(g)                                 subject to obtaining the Final Order and the satisfaction or waiver
of the other conditions herein contained in favour of each Party, as soon as
reasonably practicable thereafter, send to the registrar under the Act, for
endorsement and filing by such registrar, the Articles of Arrangement and such
other documents as may be required in connection therewith under the Act to
give effect to the Arrangement;

 

(h)                                 permit Parent and its counsel to review and comment upon drafts of
all material to be filed by Target with the Court or any securities regulatory
authority in connection with the Arrangement (including the Information
Circular) prior to the service (if applicable) and/or printing and filing of
that material and give reasonable consideration

 

9

 

to such comments.  Target shall also provide to such counsel on
a timely basis copies of any notice of appearance or other court documents
served on Target or its counsel in respect of the application for the Final Order
or any appeal therefrom and of any notice, whether written or oral, received by
Target indicating any intention to appeal the Final Order; and

 

(i)                                     not file any material with the Court in connection with the
Arrangement or serve any such material, and not send any such material to the registrar
under the Act, for endorsement and filing by the registrar, and not agree to
modify or amend materials so filed or served except as contemplated by this
Agreement or with Parent’s prior written consent, such consent not to be
unreasonably withheld.

 

Section 2.2                                   Interim Order

 

The
notice of motion for the application for the Interim Order referred to in Section 2.1(a) shall
seek that the Interim Order provide:

 

(a)                                  for the classes of Persons to whom notice is to be provided in
respect of the Arrangement and the Target Meeting and for the manner in which
such notice is to be provided;

 

(b)                                 that the requisite approval for the Arrangement Resolutions shall be
two-thirds of the votes cast on the Arrangement Resolutions by:

 

(i)                                     Target Shareholders present in person or by proxy at the Target
Meeting; and

 

(ii)                                  the holders of the Target Warrants and Target Options, voting
together as a single class, on the basis of one vote for each underlying Target
Share,  present in person or by proxy at
the Target Meeting;

 

(c)                                  that, in all other respects, the terms, restrictions and conditions
of the Governing Documents of Target, including quorum requirements and all
other matters, shall apply in respect of the Target Meeting;

 

(d)                                 for the grant of the Dissent Rights in favour only of the holders of
Target Shares; and

 

(e)                                  for such other matters as Parent may reasonably require subject to
obtaining the prior consent of Target, such consent not to be unreasonably
withheld.

 

10

 

Section 2.3                                   Articles of Arrangement

 

(a)                                  The Articles of Arrangement shall, with such other matters as are
necessary to effect the Arrangement and subject to the provisions of the Plan
of Arrangement, consummate the Plan of Arrangement.  The Articles of Arrangement shall be in form
satisfactory to Parent and Target, each acting reasonably.  As set out more particularly in the Plan of
Arrangement, the Articles of Arrangement shall provide that the Target Securityholders
(other than those held by Parent or its Affiliates unless they otherwise elect)
shall receive the following consideration:

 

(i)                                     $3.00 in cash per Target Share;

 

(ii)                                  $1.90 in cash per Target Initial Warrant;

 

(iii)                               $1.25 in cash per Target “A” Warrant;

 

(iv)                              $0.40 in cash per Target “B” Warrant; and

 

(v)                                 an amount of cash per Target Option equal to the “in-the-money”
amount of each Target Option (being $3.00 less the exercise price per Target
Option).

 

(b)                                 The holders of the Target Debentures shall receive $1,095.25 in cash
per $1,000 principal amount of Target Debenture being the amount in cash that
is equal to the “Change of Control Amount” required under Article 7 of the
indenture governing the Target Debentures. The above payment is based upon the December 31,
2005 interest payment having been made prior to the Effective Time.

 

(c)                                  Parent shall have the right, in its sole discretion, but not the
obligation at any time prior to the Effective Time to increase the
consideration payable to any class or classes of Target Securities under the
Arrangement (including without limitation by adding additional consideration or
other forms of consideration).

 

Section 2.4                                   Information Circular

 

As
promptly as reasonably practicable with a view to completion of the Arrangement
by no later than January 31, 2006, Target, in consultation with the
Parent, will prepare the Information Circular together with any other documents
required by the Act or other Laws in connection with the Arrangement and the
Target Meeting with a view to mailing the Information Circular by no later than
December 20, 2005.  The Information Circular and such other
documents and amendments thereto shall be in form and substance satisfactory to
Parent and its

 

11

 

counsel acting reasonably. 
Target will file the Information Circular and any other documentation
required to be filed under applicable Laws in all jurisdictions where the
Information Circular is required to be filed by Target and mail or cause to be
mailed the Information Circular and any other documentation required to be
mailed under applicable Laws to the Target Shareholders, the directors of
Target, the auditors of Target and any other required Persons on or before December 20, 2005, except to the extent any
delay beyond such date is due to failure of Parent to comply on a timely basis
with their obligations under Section 2.5(b), all in accordance with the
terms of the Interim Order and applicable Laws. 
Parent will provide such assistance as Target may reasonably request in
such regard.

 

Section 2.5                                   Preparation of Filings

 

(a)                                  Each of Parent and Target shall proceed diligently, in a
co-ordinated fashion and use its commercially reasonable efforts to co-operate
in the preparation of the Information Circular as described in Section 2.4,
any exemption applications or orders and any other documents deemed reasonably
necessary by any of them to discharge their respective obligations under the
applicable Laws in connection with the Arrangement.

 

(b)                                 Parent shall furnish to Target and Target shall furnish to Parent,
on a timely basis, all information as may be reasonably required to effectuate
the foregoing actions, and each covenants that no information so furnished by
it in writing in connection with those actions or otherwise in connection with
the consummation of the Arrangement will contain any Misrepresentation.

 

(c)                                  Each of Parent and Target shall promptly notify the other of them
if, at any time before the Effective Time, it becomes aware that the
Information Circular or an application for an order described in Section 2.1,
2.2, or 2.5(a) contains a Misrepresentation or that otherwise requires an
amendment or supplement to the Information Circular or such application.  In any such event, each of the parties will
co-operate in the preparation of a supplement or amendment to the Information
Circular or such other document, as the case may be, that corrects that
Misrepresentation, and Target will cause the same to be distributed to the
Target Securityholders, the directors of Target, the auditors of Target and any
other required Persons and filed as required under applicable law.

 

(d)                                 Target shall ensure that the Information Circular complies with all
applicable Laws and, without limiting the generality of the foregoing, that the
Information Circular does not contain a Misrepresentation

 

12

 

(except that this covenant does not speak
with respect to any information relating to or provided by Parent).  Without limiting the generality of the foregoing,
Target shall ensure that the Information Circular provides the Target
Securityholders with information in sufficient detail to permit them to form a
reasoned judgment concerning the matters to be placed before them at the Target
Meeting.

 

Section 2.6                                   Dissenting Shareholders

 

Registered
Target Shareholders may exercise Dissent Rights with respect to their Target
Shares in connection with the Arrangement pursuant to and in the manner set
forth in the Plan of Arrangement.  Target
shall give Parent prompt notice of any written notice of a dissent, withdrawal
of such notice, and any other instruments served pursuant to such Dissent
Rights and received by Target.

 

Section 2.7                                   Amendment

 

Without
limiting the provisions of the Plan of Arrangement, the Plan of Arrangement
may, at any time and from time to time before and after the holding of the
Target Meeting, but not later than the Effective Time, be amended by mutual
written agreement of the Parties. 
Without limiting the generality of the foregoing, any such amendment
may:

 

(a)                                  change the time for the performance of any of the obligations or
acts of the Parties;

 

(b)                                 waive any inaccuracies or modify any representation or warranty
contained herein or in any document to be delivered pursuant hereto;

 

(c)                                  waive compliance with or modify any of the covenants contained
herein or waive or modify the performance of any of the obligations of the
Parties; and

 

(d)                                 waive compliance with and modify any conditions precedent herein
contained;

 

provided that, notwithstanding the foregoing, the terms of this
Agreement and the Plan of Arrangement shall not be amended in a manner
materially prejudicial to the Target Securityholders without the approval of
the Target Securityholders given in the same manner as required by law for the
approval of the Arrangement or as may be contemplated in the Arrangement
Resolutions or as may be ordered by the Court.

 

Section 2.8                                   Cancellation of Certain Target Securities

 

All
outstanding Target Warrants (other than those held by Parent or its Affiliates
unless they otherwise elect) and Target Options will be cancelled in

 

13

 

accordance with the terms of the Plan of Arrangement.  The Target Debentures shall be repaid in
accordance with the provisions of the indenture governing their terms.

 

Section 2.9                                   Withholding

 

Target,
Parent or one or more subsidiaries of Parent, as the case may be, shall be
entitled to directly or indirectly deduct and withhold from the amount
otherwise payable pursuant to this Agreement or the Plan of Arrangement to any
Target Securityholder or holder of Target Debentures  such amounts as are required to be deducted
and withheld with respect to the making of such payment under the Income Tax Act (Canada) or any other provision
of domestic or foreign (whether national, federal, provincial, state, local or
otherwise) Law relating to Taxes.  To the
extent the amounts are so deducted and withheld and paid to the appropriate
Government Authority directly or indirectly by Target, Parent or one or more
subsidiaries of Parent, as the case may be, such deducted and withheld amounts
shall be treated for all purposes of this Agreement and the Plan of Arrangement
as having been paid to the Target Securityholder or holder of Target Debentures
in respect of which such deduction and withholding was made by Target, Parent
or one or more subsidiaries of Parent, as the case may be.

 

ARTICLE 3

PUBLICITY

 

Section 3.1                                   Publicity and Press Releases

 

So long
as this Agreement is in effect, each of the Parties shall advise, consult and
cooperate with each other prior to issuing, or permitting any of its directors,
officers, employees or agents to issue, any press release or other written
public or private statement to the press with respect to this Agreement and the
Arrangement contemplated hereby from the date hereof until the Effective
Date.  The Parties shall not issue any
such press release or make any such written public or private statement prior
to such consultation, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with a stock exchange and only
after using its reasonable efforts to consult with the other Party taking into
account the time constraints to which it is subject as a result of such Law or
obligation.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

 

Section 4.1                                   Representations and Warranties of Target

 

Target
represents and warrants to Parent, and acknowledges that Parent is relying upon
such representations and warranties, as follows:

 

(a)                                  (i) Target has been duly continued and is validly existing
under the laws of the Yukon Territory and is current and up-to-date with all

 

14

 

filings required to be made by it in such
jurisdiction; and (ii) the Target Subsidiaries have been duly incorporated
and are validly existing under the applicable laws under which they are
organized, and are current and up-to-date with all filings required to be made
by it in each such jurisdiction, excepting only delays in filings which
individually and in the aggregate would not result in a Material Adverse
Effect;

 

(b)                                 Target has full corporate power, capacity and authority to carry out
the Arrangement and all related matters contemplated herein and to carry out
its obligations under this Agreement;

 

(c)                                  This Agreement has been duly authorized, executed and delivered by
Target and is enforceable against Target in accordance with its terms, except
as enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
except that equitable remedies may be granted only in the discretion of a court
of competent jurisdiction;

 

(d)                                 Each of Target and the Target Subsidiaries has all requisite
corporate capacity, power and authority to own its assets, and, other than as
necessitated by the Venezuelan Government Mining Law Review, possesses all
material certificates, authority, permits and licenses issued by the
appropriate state, provincial, municipal or federal regulatory agencies or
bodies necessary to conduct the business as now conducted by it as applicable,
and is in compliance in all material respects with such certificates,
authorities, permits or licenses.  Other
than in connection with the Venezuelan Government Mining Law Review, none of
Target or the Target Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate, authority,
permit or license which, singly or in the aggregate, if the subject of an
unfavourable decision, order, finding or ruling, would materially and adversely
affect the conduct of the business, operations, financial condition, income or
future prospects of Target and the Target Subsidiaries taken as a whole.  All effects of the Venezuelan Government
Mining Law Review on Target up to and including the date hereof have been
disclosed to Parent in the Disclosed Information;

 

(e)                                  The authorized capital of Target, consists of an unlimited number of
Target Shares of which 111,717,506
Target Shares are issued and outstanding at the date hereof;

 

15

 

(f)                                    Except as disclosed in Target’s Public Documents, all of the issued
and outstanding securities of the Target Subsidiaries are owned, directly or
indirectly, by Target.  Target is not a
party to nor has Target granted any agreement, warrant, option or right or
privilege capable of becoming an agreement, for the purchase, subscription or
issuance of any securities of the Target Subsidiaries or securities convertible
into or exchangeable for any securities of the Target Subsidiaries;

 

(g)                                 Target is not party to and has not granted any agreement, warrant,
option or right or privilege capable of becoming an agreement, for the
purchase, subscription or issuance of any Target Shares or securities
convertible into or exchangeable for Target Shares (including, for greater
certainty, any shareholder rights plan), other than the agreements, warrants
and options covering an aggregate of 57,521,305
Target Shares as follows: 8,949,332 Target Options; 10,936,668 Target Initial Warrants; 19,421,588 Target “A” Warrants; 9,090,910 Target “B”
Warrants; and the Target Debentures, convertible into 9,122,807 Target Shares;

 

(h)                                 Target has no associates (as defined in the Securities Act (Ontario)) and is not a
partner, co-tenant, joint venturer or otherwise a participant in any
partnership joint venture, co-tenancy or other similarly joint owned business
except as disclosed in Target’s Public Documents;

 

(i)                                     The entering into and the performance by Target and the Target
Subsidiaries of the Arrangement and all related matters contemplated herein:

 

(i)                                     do not require any consent, approval, authorization or order of any
court or governmental agency or body, except that which may be required under
applicable securities legislation and the Final Order;

 

(ii)                                  will not contravene any Law which is binding on Target or the Target
Subsidiaries where such contravention would have a Material Adverse Effect or
materially impair Target’s ability to complete the transactions contemplated in
this Agreement; and

 

(iii)                               will not result in the breach of, or be in conflict with, or
constitute a default under, or create a state of facts which, after notice or
lapse of time, or both, would constitute a default under any term or provision
of the Governing Documents or resolutions of Target or any mortgage, note,
indenture, contract or agreement instrument, lease or other document to which

 

16

 

Target is a party, or any judgment, decree or
order or any term or provision thereof, which breach, conflict or default would
have a Material Adverse Effect or materially impair Target’s ability to
complete the transactions contemplated in this Agreement;

 

(j)                                     Target’s board of directors has (i) received a fairness opinion
in respect of the Arrangement from its financial adviser to the effect that the
consideration to be received for the Target Shares under the Arrangement is
fair, from a financial point of view, to the Target Shareholders (ii) obtained
a formal valuation in compliance with the requirements of OSC Rule 61-501;
(iii) determined unanimously that the terms of the Arrangement are in the
best interests of Target and fair, from a financial point of view, to the
Target Securityholders, and (iv) resolved unanimously to recommend that
the Target Securityholders accept the Arrangement;

 

(k)                                  There are no legal or governmental proceedings pending or, to the
knowledge of Target, contemplated or threatened, to which Target or the Target
Subsidiaries is a party or to which the property of Target or the Target
Subsidiaries is subject which individually and in the aggregate could result in
a Material Adverse Effect;

 

(l)                                     Each of Target and each of the Target Subsidiaries has conducted and
is conducting its business in compliance with all applicable Laws, including,
without limitation, all applicable Tax Laws and all applicable Laws and all
Government Authority authorizations and instructions, whether in writing or
oral, relating to mining and/or mining claims, concessions, licenses or leases,
except to the extent necessitated by the Venezuelan Government Mining Law
Review and otherwise excepting only non-compliances which individually and in
the aggregate would not result in a Material Adverse Effect. Target has not nor
has any of the Target Subsidiaries received any notice of the revocation or
cancellation of, or any intention to revoke or cancel, any of the mining
claims, concessions, licenses, leases or other instruments conferring mineral
rights in respect of the properties in which Target and any of the Target
Subsidiaries has an interest.  Without
limiting the generality of the foregoing, Target and the Target Subsidiaries
have obtained all export and import licences and permits necessary for the
operation of the business of Target and the Target Subsidiaries in Venezuela,
have not taken any action which would impair the ability of Target or the
Target Subsidiaries to obtain necessary licences or permits in the future for
the continued operation of such business, and have otherwise taken all steps
necessary to permit the repatriation of

 

17

 

dividends and profits from Venezuela in
accordance with applicable Laws and requirements of all Government Authorities;

 

(m)                               All taxes (including income tax, capital tax, payroll taxes,
employer health tax, workers’ compensation payments, property taxes, sales,
goods and services, custom and land transfer taxes), duties, royalties, levies,
imposts, assessments, deductions, charges or withholdings and all liabilities
with respect thereto including any penalty and interest payable with respect
thereto (collectively, “Taxes”) due and payable by Target and the Target Subsidiaries have been
timely paid or withheld and remitted, as the case may be, except for where the
failure to pay or remit such taxes would not result in a Material Adverse
Effect. All liabilities for current and future Taxes have been properly accrued
and reflected in the Financial Statements or in the financial books and records
of Target and the Target Subsidiaries. 
With respect to any period for which Tax Returns (defined below) have
not yet been required to be filed or for which Taxes are not yet due and payable,
each of Target and the Target Subsidiaries has only incurred liabilities for
Taxes in the ordinary course of business and in a manner and at a level
consistent with prior periods. All tax returns, reports, elections, estimates,
declarations, remittances and filings (collectively, “Tax Returns”) required to
be filed by Target and the Target Subsidiaries have been filed on a timely
basis with all appropriate Government Authorities and all such Tax Returns are
complete and accurate and no such filing contains a misstatement and no fact or
facts have been omitted therefrom, in either case which would make any of such
filings misleading except where the such misstatement or omission would not
result in a Material Adverse Effect.  No
audit, investigation, examination or reassessment of any Tax Return of Target
or any of the Target Subsidiaries is currently contemplated or threatened by a
Government Authority, or in progress, and there are no audits, investigations,
appeals or disputes outstanding with any Government Authority respecting any
Taxes that have been paid, or may be payable, by Target or any of the Target
Subsidiaries, other than in the case of certain non-material assessment
disputes by Target in the aggregate amount of $100,000, which have been included
in the Disclosed Information.  Except as
related to the import of certain mining equipment to Venezuela, there are no
agreements, waivers or other arrangements with any Government Authority
providing for an extension of time with respect to the filing of any Tax Return
or the payment of any Tax by Target or any of the Target Subsidiaries, or for
any assessment or reassessment of Taxes with respect to Target or any of the
Target Subsidiaries;

 

18

 

(n)                                 Except as disclosed to Parent in the Disclosed Information prior to
the date hereof, Target has not implemented any changes to the corporate
structure of the Target Subsidiaries from that disclosed in its Annual
Information Form for the year ended December 31, 2004 dated March 30,
2005;

 

(o)                                 The audited annual financial statements of Target for the year ended
December 31, 2004 and the notes thereto and the unaudited interim
financial statements of Target for the period ended September 30, 2005
(collectively, the “Financial Statements”) have been prepared in accordance
with Canadian Generally Accepted Accounting Principles, consistently applied,
and represent fairly the consolidated financial position of Target as at such
dates, and do not omit to state any material fact that is required by Canadian
Generally Accepted Accounting Principles or by applicable law to be stated or
reflected therein or which is necessary to make the statements contained
therein not misleading;

 

(p)                                 There are no material liabilities of Target whether direct,
indirect, absolute, contingent or otherwise which are not disclosed or
reflected in the Financial Statements except those incurred in the ordinary
course of business since September 30, 2005 and there has been no Material
Adverse Change since December 31, 2004 other than has been publicly
disclosed prior to the date hereof;

 

(q)                                 Target’s public documents filed in accordance with applicable
securities Laws (“Target’s Public Documents”) contain no untrue statement of a
material fact and do not omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which made,
not misleading.  Without limiting the
generality of the foregoing, Target’s announcements on July 15, 2005 and July 17,
2005 fully and accurately disclose the current financial arrangements between
Target, Ministerio de Industrias Basicas y Mineria and CVG-Ferrominera del
Orinoco CA in respect of the Choco 4 and Choco 10 concessions in Venezuela,
there are no undisclosed or additional fees, payments or financial arrangements
with any Person in connection with such agreement (except for a US$1.5 million
agency fee, of which US$970,000 remains payable, disclosed to Parent) and
Target has no reason to believe that the formal licence referred to in such
announcements will not be granted;

 

(r)                                    Except as disclosed in Target’s Public Documents filed prior to November 20,
2005, there are no change of control, acceleration, forfeiture or other similar
provisions which would be triggered by the

 

19

 

entering into of this Agreement or the
completion of the Transactions contained in any contractual or regulatory
provisions of any Governmental Authority including, without limitation, in any
material licences, permits, claims, concessions or other properties of the
Target and the Target Subsidiaries;

 

(s)                                  Each of Target and the Target Subsidiaries has good and valid title
to all of its material properties and assets, including without limitation in
respect of all interests, rights, claims, leases, concessions, permits or other
property, mineral or proprietary interests in such properties, free and clear
of any material claims or Encumbrances, other than as publicly disclosed by
Target prior to November 20, 2005;

 

(t)                                    The cost to Target, on a consolidated basis, of all compensation
arrangements, benefit arrangements, severance payments, payments under phantom
share arrangements and all other payments and issuances to directors and
officers of Target in connection with or which may result from the Transaction
is accurately and completely set forth in Exhibit ”I” hereto.  The aggregate fees payable by Target to its
financial advisors are set out in Exhibit ”I” hereto except for the
reasonable fees of financial advisors to the independent committee that may be
required to prepare a valuation under OSC Rule 61-501.  Such fees and disbursements  are to be paid at closing of the Arrangement;

 

(u)                                 Except as disclosed in Exhibit ”I”, there is no Person, firm or
company acting or purporting to act at the request of Target, who is entitled
to any brokerage or finder’s fee in connection with the transactions
contemplated herein;

 

(v)                                 Target and the Target Subsidiaries have no responsibility or
obligation to pay any commission, royalty or similar payment to any person with
respect to its property rights in respect of the properties in which they have
an interest, other than as disclosed in Target’s Public Documents filed prior
to November 20, 2005;

 

(w)                               Except as disclosed to Parent in the Disclosed Information, any and
all material agreements pursuant to which Target and each of the Target
Subsidiaries holds any of its material assets are valid and subsisting
agreements in full force and effect, enforceable in accordance with their
respective terms, Target is not nor are any of the Target Subsidiaries in
default of any of the material provisions of any such agreements including
without limitation failure to fulfil any payment or work obligation thereunder
nor has any such default been alleged. Target is not aware of any material
disputes with respect thereto and

 

20

 

such assets are in good standing under the
applicable statutes and regulations of the jurisdictions in which they are
situated, all leases, licenses, concessions, patented and unpatented claims
pursuant to which Target and the Target Subsidiaries derive their interest in
such material assets are in good standing and there has been no material default
under any such leases, licenses, concessions, patented and unpatented claims
and all real or other property taxes required to be paid with respect to such
assets to the date hereof have been paid;

 

(x)                                   The assets of Target and the Target Subsidiaries are insured against
loss or damage on a basis consistent with insurance obtained by reasonably
prudent participants in businesses comparable to the business conducted by
Target;

 

(y)                                 Target and the Target Subsidiaries are in compliance in all material
respects with environmental Laws and Target does not have any knowledge of, and
has not received any notice of, any material claim, judicial or administrative
proceeding, which may affect either Target or any of the Target Subsidiaries or
any of the properties or assets of Target or the Target Subsidiaries, relating
to, or alleging any violation of environmental Laws, Target does not have any
knowledge of, and has not received any notice that Target or any of the Target
Subsidiaries or any of the assets thereof is the subject of any investigation,
evaluation, audit or review by any Government Authority to determine whether
any violation of environmental Laws has occurred or is occurring, and neither
Target nor any of the Target Subsidiaries is subject to any known environmental
liabilities not disclosed in Target’s Public Documents;

 

(z)                                   Other than in respect of the employees of Target or the Target
Subsidiaries employed in Target’s El Callao, Venezuela operations, Target is
not, nor are any of the Target Subsidiaries, bound by or party to any
collective bargaining agreement;

 

(aa)                            Since the date of its continuance Target has not, directly or
indirectly, declared or paid any dividend or declared or made any other
distribution on Target Shares or securities of any class, or, directly or
indirectly, redeemed, purchased or otherwise acquired any Target Shares or
securities or agreed to do any of the foregoing except for payments of interest
made to the holders of the Target Debentures in accordance with the provisions thereof;

 

(bb)                          Except as provided in applicable mining regulations under Venezuelan
mining Law and as disclosed in the Target’s Public Documents, none

 

21

 

of Target or the Target Subsidiaries is a
party to or bound or affected by any commitment, agreement or document
containing any covenant which expressly limits the freedom of Target to compete
in any line of business, or, to transfer or move any of its assets or
operations or which materially or adversely affects the business practices,
operations or condition of Target taken as a whole;

 

(cc)                            Target is not a party to any agreement nor is Target aware of any
agreement which in any manner affects the voting control of any of the
securities of Target, other than the Lock-Up Agreements; and

 

(dd)                          No representation, warranty or statement of Target in this Agreement
contains or will contain at the Effective Time any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which made, not misleading.

 

Section 4.2                                   Representations and Warranties of Parent

 

Parent
hereby represents and warrants to Target as follows and acknowledges that
Target is relying upon these representations and warranties in connection with
the entering into of this Agreement:

 

(a)                                  Parent has been duly incorporated and is validly existing under the
laws of South Africa and is current and up-to-date with all filings required to
be made by it in such jurisdiction;

 

(b)                                 Parent has full corporate power, capacity and authority to carry out
the Arrangement and all related matters contemplated herein, and to carry out
its obligations under this Agreement;

 

(c)                                  This Agreement has been duly authorized, executed and delivered by
Parent and is enforceable against Parent in accordance with its terms;

 

(d)                                 The entering into and the performance by Parent of the Arrangement
and all related matters contemplated herein:

 

(i)                                     do not require any consent, approval, authorization or order of any
court or governmental agency or body, except that which may be required under
applicable securities legislation and except as already obtained;

 

(ii)           will not contravene any Law which is
binding on Parent where such contravention would materially impair the ability
of

 

22

 

Parent to complete the
transactions contemplated in this Agreement; and

 

(iii)                               will not result in the breach of, or be in conflict with, or constitute
a default under, or create a state of facts which, after notice or lapse of
time, or both, would constitute a default under any term or provision of the
Governing Documents or resolutions of Parent or any mortgage, note, indenture,
contract or agreement instrument, lease or other document to which Parent is a
party, or any judgment, decree or order or any term or provision thereof, which
breach, conflict or default would materially impair the ability of Parent to
complete the transactions contemplated in this Agreement;

 

(e)                                  Adequate financing arrangements have been made to ensure that Parent
or any subsidiary of Parent designated as a party to the Plan of Arrangement
will have sufficient funds to take up and pay for all Target Securities subject
to the Plan of Arrangement and to satisfy all other financial obligations
required under this Agreement related to the completion of the Arrangement;

 

(f)                                    No representation, warranty or statement of Parent in this Agreement
contains or will contain at the Effective Time any untrue statement of a
material fact or omits or will omit to state any material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which made, not misleading; and

 

(g)                                 Parent has no knowledge of any material information concerning the
joint venture exploration projects between Parent and Target or the results
thereof that has not been disclosed to Target.

 

Section 4.3                                   Survival

 

For
greater certainty, the representations and warranties of each of Target and
Parent contained herein shall survive the execution and delivery of this
Agreement and shall terminate and be extinguished on the earlier of the
termination of this Agreement in accordance with its terms and the Effective
Time.

 

ARTICLE 5

CONDUCT OF BUSINESS

 

Section 5.1                                   Conduct of Business by Target

 

Except
as required by Law or as is otherwise expressly permitted or specifically
contemplated by this Agreement, Target covenants and agrees that, during the
period from the date of this Agreement until the earlier of either the

 

23

 

Effective Time or the time that this Agreement is terminated in
accordance with its terms, unless Parent shall otherwise agree in writing:

 

(a)                                  it shall, and shall cause the Target Subsidiaries to conduct
business in, and not take any action except in, the usual and ordinary course
of business and consistent with past practice, and it shall and shall cause the
Target Subsidiaries to use all commercially reasonable efforts to maintain and
preserve its business organization, assets, employees and advantageous business
relationships;

 

(b)                                 it shall not directly or indirectly do or permit to occur any of the
following:

 

(i)                                     amend its Governing Documents;

 

(ii)                                  declare, set aside or pay any dividend or other distribution or
payment (whether in cash, shares or property) in respect of Target Shares owned
by any Person;

 

(iii)                               issue, grant, sell or pledge or agree to issue, grant, sell or
pledge any Target Shares, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire Target Shares other
than the issuance of Target Shares upon the exercise of any Target Options
expiring prior to the Effective Time;

 

(iv)                              redeem, purchase or otherwise acquire any of the outstanding Target
Shares or other securities including, without limitation, under an issuer bid;

 

(v)                                 split, combine or reclassify any of its shares;

 

(vi)                              adopt resolutions or enter into any agreement providing for the
amalgamation, merger, consolidation, reorganization, liquidation, dissolution
or any other extraordinary transaction in respect  of itself or any of the Target Subsidiaries
or adopt any plan of liquidation;

 

(vii)                           reduce its stated capital; or

 

(viii)                        enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing, except as permitted above;

 

24

 

(c)                                  it shall not, and it shall cause the Target Subsidiaries not to,
other than in the ordinary course of business and consistent with past
practice, or as required or contemplated by this Agreement, without prior
consultation with and the consent of Parent, directly or indirectly do any of
the following:

 

(i)                                     sell, pledge, dispose of or encumber any assets;

 

(ii)                                  acquire (by merger, amalgamation, consolidation or acquisition of
shares or assets) any corporation, partnership or other business organization
or division thereof, or make any investment either by purchase of shares or securities,
contributions of capital or property transfer;

 

(iii)                               acquire any material assets;

 

(iv)                              incur any indebtedness for borrowed money or any other material
liability or obligation or issue any debt securities or assume, guarantee,
endorse or otherwise as an accommodation become responsible for, the
obligations of any other individual or entity, or make any loans or advances
(except as is necessary to fund the payment of the Termination Fee in
accordance with Section 8.2), other than the Personnel Obligations and
fees payable to legal and accounting advisors in the ordinary course and fees
payable to legal, accounting, engineering and financial advisors in connection
with the matters and transactions contemplated by this Agreement;

 

(v)                                 authorize, recommend or propose any release or relinquishment of any
material contractual right;

 

(vi)                              waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing license, lease, contract,
production sharing agreement, government land concession or other material
document;

 

(vii)                           enter into or terminate any hedges, swaps or other similar financial
instruments or transactions;

 

(viii)                        enter into any agreements with its directors or officers or their
respective Affiliates; or

 

(ix)                                authorize or propose any of the foregoing, or enter into or modify
any contract, agreement, commitment or arrangement to do any of the foregoing;

 

25

 

(d)                                 it shall not, and it shall cause the Subsidiaries not to, without
prior consultation with and the consent of Parent, enter into new commitments
of a capital expenditure nature or incur any new contingent liabilities other
than (i) ordinary course expenditures, (ii) expenditures required by
Law, (iii) expenditures made in connection with transactions contemplated
in this Agreement, and (iv) capital expenditures required to prevent the
occurrence of a Material Adverse Effect;

 

(e)                                  notwithstanding, for greater certainty, Section 5.1(c), in no
case shall Target or the Target Subsidiaries create any new Personnel
Obligations and, except for payment of existing Personnel Obligations and
reasonable directors’ fees to be paid to the directors forming an independent
committee of Target’s board of directors to oversee the formal valuation to be
obtained in connection with the Arrangement, such directors’ fees not to exceed
$30,000 in the aggregate,
without the written consent of Parent, such consent not to be unreasonably
withheld (from all of which Target shall make appropriate withholdings as
required by applicable Tax Laws), Target shall not, and it shall cause the
Target Subsidiaries not to:

 

(i)                                     grant to any officer or director an increase in compensation in any
form;

 

(ii)                                  grant any general salary increase other than in accordance with the
requirements of any existing collective bargaining or union contracts;

 

(iii)                               grant to any other employee any increase in compensation in any form
other than routine increases in the ordinary course of business consistent with
past practices;

 

(iv)                              make any loan to any officer or director;

 

(v)                                 or take any action with respect to the grant of any severance or
termination pay arising from the Arrangement or the entering into of any
employment agreement with, any senior officer or director or with respect to
any increase of benefits payable under its current severance or termination pay
policies;

 

(f)                                    it shall not, and it shall cause the Subsidiaries not to, without
prior consultation with and the consent of Parent, adopt or amend or make any
contribution to any bonus, profit sharing, option, deferred compensation,
insurance, incentive compensation, other compensation

 

26

 

or other similar plan, agreement, trust, fund
or arrangements for the benefit of employees, except as is necessary to comply
with the Law or with respect to existing provisions of any such plans,
programs, arrangements or agreements; and

 

(g)                                 it shall not, and it shall cause the Subsidiaries not to otherwise
take actions that could reasonably be expected to be prejudicial to Parent’s
interest in the business, property or assets of Target and the Subsidiaries
following the Effective Time.

 

ARTICLE 6

COVENANTS

 

Section 6.1                                   Recommendation of Arrangement

 

The
board of directors of Target shall recommend to the Target Securityholders the
approval of the Arrangement and shall not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to Parent such
recommendation, or take any action or make any statement in connection with the
Information Circular, the Target Meeting or the obtaining of Target Shareholder
approval that is inconsistent with such recommendation, except as expressly
permitted by Article 8.

 

Section 6.2                                   Covenants Regarding Representations and Warranties

 

(1)                                  Target covenants and agrees that from the date hereof until the
termination of this Agreement it shall not take any action, or fail to take any
action, which would or may reasonably be expected to result in the
representations and warranties set out in Section 4.1 being untrue in any
material respect.

 

(2)                                  Parent covenants and agrees that, from the date hereof until the
termination of this Agreement it shall not take any action, or fail to take any
action, which would or may reasonably be expected to result in the
representations and warranties set out in Section 4.2 being untrue in any
material respect.

 

Section 6.3                                   Notice of Changes

 

(1)                                  From the date hereof until the termination of this Agreement, each
Party shall promptly notify the other Parties in writing of any change in the
facts relating to any representation or warranty set out in Section 4.1 or
Section 4.2 hereof, as applicable, which change is or may be of such a
nature as to render any such representation or warranty misleading or untrue in
a material respect.

 

(2)                                  From the date hereof until the termination of this Agreement, Target
shall notify Parent in writing of any material fact which arises and which
would

 

27

 

have
been required to be stated herein had the fact arisen on or prior to the date
of this Agreement.

 

(3)                                  From the date hereof until the termination of this Agreement, Target
shall promptly notify Parent in writing of any material change (actual,
anticipated, contemplated or, to the knowledge of Target or any of the
Subsidiaries, threatened, financial or otherwise) in the business, affairs,
operations, assets, liabilities (contingent or otherwise) or capital of Target
or any of the Target Subsidiaries.

 

(4)                                  Each of Target and Parent shall in good faith discuss with the other
any change in the circumstances of Target or any of the Subsidiaries (actual,
anticipated, contemplated or, to its knowledge of its or any of the
Subsidiaries, threatened, financial or otherwise) which is of such a nature
that there may be a reasonable question as to whether notice need to be given
to the other pursuant to this Section 6.3.

 

Section 6.4                                   Access to Information

 

(1)                                  Subject to Section 6.4(2) and applicable Laws, upon
reasonable notice, Target shall (and shall cause each of the Subsidiaries to)
afford Parent’s Representatives access, during normal business hours from the
date hereof and until the earlier of the Effective Date or the termination of
this Agreement, to its and the Target Subsidiaries’ properties, books,
contracts and records as well as to its management personnel, and, during such
period, Target shall (and shall cause each of the Subsidiaries to) furnish
promptly to Parent all information concerning the Target’s and the Subsidiaries’
businesses, properties and personnel as Parent may reasonably request.

 

(2)                                  Parent acknowledges that certain information provided to it under Section 6.4(1) above
will be non-public and/or proprietary in nature and will be subject to the
terms of the Confidentiality Agreement. 
For greater certainty, the provisions of the Confidentiality Agreement
shall survive the termination of this Agreement, provided that the
Confidentiality Agreement and Section 6.4(1) shall terminate at the
Effective Time notwithstanding anything to the contrary contained therein.

 

(3)                                  In the event that Target is provided with any confidential
information concerning Parent or its subsidiaries, such information will be
subject to obligations of confidentiality on the part of Target identical to
those imposed on Parent under the Confidentiality Agreement, mutatis mutandis. Upon reasonable notice,
Parent shall afford representatives of Target the opportunity, upon reasonable
notice and during normal business hours from the date hereof and until the
earlier of the Effective Date or termination of this

 

28

 

 

Agreement,
to speak to appropriate management personnel of Parent as Target may reasonably
request.

 

Section 6.5                                   Transitional Matters

 

Target
acknowledges that it is Parent’s intent to assume control of the board of
directors, management and operations of Target upon completion of the
Arrangement.  The existing management and
employees of Target may be replaced at the discretion of Parent upon completion
of the Arrangement and the existing board of directors of Target shall tender
letters of resignation upon completion of the Arrangement.  Parent acknowledges that the commitments
disclosed in Exhibit ”I” are in full force and effect and agrees to honour
or cause to be honoured all such commitments in accordance with their
terms.  The Parties acknowledge, for
greater certainty, that the advisory and M&A fee, the warrant conversion
break fee and the phantom share payments set out in Exhibit ”I” are
payable and will be paid at closing of the Arrangement.  Parent shall have the right to cause one or
more of its Affiliates to make a loan to Target effective at the Effective Time
to fund the phantom share payments prior to the effective time of the
transactions described in Sections 3.1(e) and (f) of the Plan of
Arrangement.

 

Section 6.6                                   Other Filings

 

Target
shall, as promptly as practicable hereafter, prepare and file all filings
required under any securities Laws, the rules of the TSX and any other
applicable Laws relating to the Arrangement and all related matters
contemplated hereby.

 

Section 6.7                                   Additional Agreements

 

Target
shall use commercially reasonable efforts to:

 

(a)                                  obtain all necessary waivers, consents and approvals from other
parties to material agreements, leases and other contracts or agreements;

 

(b)                                 defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the Arrangement or any other related matters
contemplated hereby;

 

(c)                                  cause to be lifted or rescinded any injunction or restraining order
or other order adversely affecting the ability of the Parties to consummate the
Arrangement or any other related matters contemplated hereby; and

 

(d)                                 effect all necessary registrations and other filings and submissions
of information requested by Governmental Authorities.

 

29

 

Section 6.8                                   Mutual Covenants

 

Subject
to the terms and conditions of this Agreement and subject to fiduciary
obligations under applicable Laws, each of the Parties agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the Arrangement and
all related matters contemplated by this Agreement and to cooperate with each
other in connection with the foregoing, including using commercially reasonable
efforts:

 

(a)                                  to obtain all appropriate Regulatory Approvals;

 

(b)                                 not take any action or permit any of its subsidiaries to take any
action that would render, or may reasonably be expected to render, any
representation or warranty made by it in this Agreement untrue in any material
respect at any time prior to the Effective Date or termination of this
Agreement, whichever is first; and

 

(c)                                  to fulfill all conditions and satisfy all provisions of this
Agreement.

 

For
purposes of the foregoing, the obligation to use “commercially
reasonable efforts” to obtain waivers, consents and approvals to
loan agreements, leases and other contracts shall not include any obligation to
agree to a materially adverse modification of the terms of such documents or to
prepay or incur additional material obligations to such other Parties.

 

Section 6.9                                   Pre-Acquisition Reorganizations

 

Target
will agree to effect such reorganization of its business, operations and assets
or such other transactions (each, a “Pre-acquisition
Reorganization”) as the Parent may reasonably request prior to the
Effective Date, and the Plan of Arrangement, if required, shall be modified
accordingly. Provided, however, that Target need not effect a Pre-acquisition
Reorganization which in the opinion of Target, acting reasonably, (i) would
require Target to obtain the approval of the Target Securityholders in respect
of such Pre-Acquisition Reorganization other than at the Target Meeting, (ii) would
prejudice the Target Securityholders, or (iii) would impede or materially
delay the consummation of the transactions contemplated hereby or (iv) cannot
either be (A) completed following the approval of the Arrangement by the
Target Securityholders at the Meeting or (B) reversed or unwound without
resulting in a Material Adverse Effect for Target and the Target Subsidiaries.

 

30

 

Section 6.10                            Proxies Received and Dissent Notices

 

Target
shall advise Parent:

 

(a)                                  as reasonably requested, and on a daily basis on each of the last
seven business days prior to the Target Meeting, as to the aggregate tally of
the proxies and votes received in respect of the Target Meeting; and

 

(b)                                 of any written notice of dissent, withdrawal of such notice, and any
other instruments received by Target pursuant to the Dissent Rights.

 

Section 6.11                            Privacy Matters

 

(a)                                  Parent and Target acknowledge and agree that certain information
provided by Target to Parent in connection with the transactions contemplated
hereunder constitutes Personal Information (the “Disclosed Personal Information”)
which is necessary for the purposes of determining if Parent shall proceed with
the Arrangement, that the disclosure of the Disclosed Personal Information
relates solely to the carrying on of the business, or the completion of the
Arrangement and that, as contemplated by the terms of the Confidentiality
Agreement, such Disclosed Personal Information:

 

(i)                                     may not be used for any purpose other than those related to the
performance of this Agreement;

 

(ii)                                  must be kept strictly confidential and Parent shall ensure that
access to such Personal Information shall be restricted to those
Representatives of Parent who have a bona fide need to have access to such information and shall instruct those
Representatives to protect the confidentiality of such information in a manner
consistent with Parent’s obligations hereunder; and

 

(iii)                               upon the expiry or termination of this Agreement, or otherwise upon
the request of Target, Parent shall forthwith cease all use of the Disclosed
Personal Information acquired by Parent in connection with this Agreement and
will return to Target or, at Target s request, destroy in a secure manner the
Disclosed Personal Information (and any copies).

 

(b)                                 In addition to the foregoing obligations contained in the
Confidentiality Agreement:

 

(i)            Parent agrees to employ appropriate
technology and procedures to prevent accidental loss or corruption of such

 

31

 

Personal Information, unauthorized input or
access to the Disclosed Personal Information, or unauthorized or unlawful
collection, storage, disclosure, recording, copying, alteration, removal,
deletion, use or other processing of the Disclosed Personal Information;

 

(ii)                                  each of Target and Parent agrees to promptly notify the other of all
inquiries, complaints, requests for access, and claims of which the Party is
made aware in connection with the Disclosed Personal Information. The Parties
shall fully co-operate with one another, with the persons to whom the Disclosed
Personal Information relates, and any Governmental Entity charged with
enforcement of applicable privacy laws, in responding to such inquiries,
complaints, requests for access, and claims; and

 

(iii)                               if the Arrangement is completed Target may disclose additional
Personal Information of its employees, customers, directors and officers to
Parent and its Representatives on condition that:

 

(A)                              Parent and its Representatives must only use or disclose such
Personal Information for the same purposes for which it was collected, used or
disclosed by Target, and

 

(B)                                the employees, customers, directors, officers and shareholders whose
Personal Information is disclosed are notified that:

 

(I)                                    the Arrangement has taken place, and

 

(II)                                the
personal information about them has been disclosed to Parent and its
Representatives.

 

(c)                                  Without limiting the foregoing, each of Target and Parent
acknowledge and agree that their respective disclosure letters and all
information contained in them is confidential and may not be disclosed to any
Person other than their Representatives unless (i) such disclosure is
required under applicable Law, unless such Law permits it to refrain from
disclosing such information for confidentiality or other reasons or (ii) such
disclosure is required in order to enforce its rights under this Agreement.

 

32

 

Section 6.12                            Form of Transaction

 

Target
agrees and acknowledges that without limitation of Target’s obligations
hereunder in respect of the Arrangement, Parent shall have the right, in its
sole discretion, to make directly or through one or more subsidiaries an offer
(a “Contemporaneous Offer”) by means of take-over bid circular to Target
Securityholders to acquire the outstanding Target Securities (or any of them)
and the obligations of Target hereunder to co-operate with Parent in connection
therewith (including without limitation those set forth in Article 8)
shall apply to such Contemporaneous Offer provided the consideration offered is
not less than is provided in Section 2.3(a).

 

ARTICLE 7

CONDITIONS

 

Section 7.1                                   Mutual Conditions Precedent

 

The
respective obligations of the Parties hereto to complete the Arrangement shall
be subject to the satisfaction, on or before the Effective Date, of the
following conditions precedent, each of which may be waived only by the mutual
consent of the Parties:

 

(a)                                  the Arrangement Resolutions shall have been approved in accordance
with the Interim Order and the Final Order shall have been obtained on terms
satisfactory to the Parent, acting reasonably; and

 

(b)                                 no orders or decrees restricting the Arrangement shall have been
issued, no proceedings in relation to the Arrangement shall have been taken or
threatened, and no other similar legal impediments to the Arrangement shall
exist.

 

Section 7.2                                   Additional Conditions Precedent to the Obligations of Parent

 

The
obligations of Parent and any subsidiary it may designate as a party to the
Plan of Arrangement to complete the transactions contemplated by this Agreement
shall also be subject to the satisfaction, on or before the Effective Date, of
each of the following conditions precedent (each of which is for the exclusive
benefit of Parent and any such subsidiary and may be waived by Parent and any
one or more of which, if not satisfied or waived, will relieve Parent and any
such subsidiary of any obligation under this Agreement):

 

(a)                                  the representations and warranties of Target in this Agreement (read
as if no such representations and warranties contain a materiality
qualification) shall be true and correct in all material respects and there
shall not have been any material breach by Target of any of its covenants or
other obligations in this Agreement;

 

33

 

(b)                                 Parent shall have determined, in its sole discretion acting
reasonably, that there shall have occurred no material change in the business,
assets or condition (financial or otherwise) of Target and no property,
subsidiary or legal right of any kind of Target or the Target Subsidiaries
shall have been lost, impaired or materially adversely affected that might make
it inadvisable for Parent to proceed with the Arrangement, provided that
changes to the  price of gold, changes to
Canadian and United States financial markets or changes to the gold mining
industry generally (and which do not disproportionately affect Target and the
Target Subsidiaries) shall not be considered to constitute such a material
change;

 

(c)                                  all applicable Regulatory Approvals shall have been obtained on
terms and conditions satisfactory to Parent in its sole discretion and all
waiting periods (if any) under applicable Laws shall have terminated or
expired;

 

(d)                                 there shall not be any action taken, any Law enacted, entered,
enforced or deemed applicable by any Government Authority or pending or
threatened any suit, action or proceeding by any Government Authority seeking
to prohibit or materially limit the ownership or operation by Parent, Target,
or any of their respective subsidiaries of any material portion of the business
or assets of Parent, Target or any of their respective subsidiaries or seeking
to prohibit or limit the ability of Parent or any of its subsidiaries from
effectively controlling in any material respect the business or operations of
Target and the Target Subsidiaries or imposing any condition or restriction
that in the judgment of Parent, acting reasonably, would be materially
burdensome to the future operations or business of any business unit of Target
or any of the Target Subsidiaries after the closing of the Transaction;

 

(e)                                  holders of no more than·10% of the Target Shares  shall have exercised Dissent Rights;

 

(f)                                    the Chairman and Chief Executive Officer of Target or another
officer satisfactory to Parent shall have certified as to the items in
paragraph 7.2(g) below immediately prior to the Effective Date;

 

(g)                                 the Target board and the Target Securityholders shall have adopted
all necessary resolutions and all other necessary corporate actions shall have
been taken by Target to permit the consummation of the Arrangement;

 

34

 

(h)                                 from the date of this Agreement until the date upon which the Target
Securityholders approve the Arrangement, the board of directors of Target shall
not have withdrawn, modified or changed in a manner adverse to Parent its
recommendation to Target Securityholders to vote in favour of the Arrangement;

 

(i)                                     Target shall have mailed the Information Circular no later than December 20,
2005 and the Effective Time shall occur no later than the Completion Deadline;

 

(j)                                     any Pre-acquisition Reorganizations as referred to in Section 6.9
shall have been completed; and

 

(k)                                  without prior consultation with and the consent of Parent, there
shall not have occurred any reorganization of Target and its affiliates and
subsidiaries or any other action or inaction that would have the effect of
preventing Parent or any subsidiary of Parent party to the Plan of Arrangement
from obtaining a full tax cost “bump” pursuant to paragraph 88(1)((d) of
the Income Tax Act (Canada) in respect of shares of Affiliates or subsidiaries
and other non-depreciable capital property owned by Target immediately before
the Effective Time.

 

Section 7.3                                   Additional Condition Precedent to the Obligations of Target

 

The
obligations of Target to complete the transactions contemplated by this
Agreement shall also be subject to the satisfaction, on or before the Effective
Date, to the following condition precedent (which is for the exclusive benefit
of Target and may be waived by Target and any one or more of which, if not
satisfied or waived, will relieve Target of any obligation under this
Agreement):

 

(a)                                  the representations and warranties of Parent in this Agreement (read
as if no such representations and warranties contain a materiality
qualification) shall be true and correct in all material respects and there
shall not have been any material breach by Parent of any of its covenants or
other obligations in this Agreement; and

 

(b)                                 all applicable Regulatory Approvals shall have been obtained and all
waiting periods (if any) under applicable Laws shall have terminated or
expired.

 

Section 7.4                                   Satisfaction of Conditions

 

The
conditions precedent set out in Sections 7.1, 7.2 and 7.3 shall be conclusively
deemed to have been satisfied, waived or released at the Effective Time.

 

35

 

ARTICLE 8

ACQUISITION PROPOSALS

 

Section 8.1                                   Covenants Regarding Non-Solicitation

 

(a)                                  Target shall, and shall direct and cause its Representatives to
immediately cease and cause to be terminated any solicitation, encouragement,
activity, discussion or negotiation with any parties that may be ongoing with
respect to an Acquisition Proposal whether or not initiated by Target and in
connection therewith, Target shall request (and exercise all rights it has to
require) the return of information regarding Target and the Target Subsidiaries
previously provided to such parties and shall request (and exercise all rights
it has to require) the destruction of all materials including or incorporating
any confidential information regarding Target and the Target Subsidiaries.

 

(b)                                 Subject to Section 8.2, Target agrees that it shall not, and
shall not authorize or permit any its Representatives, directly or indirectly,
to (i) solicit, initiate, encourage or facilitate, including by way of
furnishing information or entering into any form of agreement, arrangement or
understanding, any inquiries or the making of any proposals regarding an
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal, (iii) withdraw, modify, qualify or
change in a manner adverse to Parent, or publicly propose to withdraw, modify,
qualify or change in a manner adverse to Parent the approval, recommendation or
declaration of advisability of the board of directors of Target of the
transactions contemplated hereby (it being understood that failing to affirm
the approval or recommendation of the board of directors of Target of the
transactions contemplated hereby after an Acquisition Proposal has been
publicly announced shall be considered an adverse modification), (iv) approve
or recommend any Acquisition Proposal or (v) enter into any agreement,
arrangement or understanding related to any Acquisition Proposal or requiring
Target to abandon, terminate or fail to consummate the Arrangement or providing
for the payment of any break, termination or other fees or expenses to any
person in the event that Target or any of the Target Subsidiaries completes the
transactions contemplated hereby or any other transaction with Parent or any of
its affiliates agreed to prior to any termination of this Agreement.  Notwithstanding the preceding sentence and
any other provisions of this Agreement, the board of directors of Target may,
prior to the approval of the Arrangement by the Target Securityholders,
consider, participate in any discussions or negotiations with, or provide

 

36

 

information in accordance with the last
sentence of this paragraph to, any person who has delivered a bona fide written Acquisition Proposal
which was not solicited or encouraged after the date of this Agreement and did
not otherwise result from a breach of this Section 8.1 and that the board
of directors of Target determines in good faith, after consultation with its
financial advisors and outside legal counsel, is a Superior Proposal; provided,
however, that prior to taking any such action, (i) the board of directors
of Target must receive written advice of outside counsel that it is necessary
for the board of directors of Target to take such action in order to discharge
properly its fiduciary duties, and (ii) Target must obtain a
confidentiality agreement from the person making such Acquisition Proposal that
is substantively the same as the Confidentiality Agreement, and on terms no
more favourable to such person than the Confidentiality Agreement including a
standstill provision at least as stringent as was contained in the
Confidentiality Agreement; provided further that Target shall not commence or
participate in discussions or negotiations with, or provide information to any
person who has delivered an unsolicited bona
fide written Acquisition Proposal until 48 hours after Target shall
have advised Parent of its determination that such Acquisition Proposal would,
if completed, constitute a Superior Proposal and of its intention to take such actions.
Target shall not consider, negotiate, accept, approve or recommend an
Acquisition Proposal or provide information to any person proposing an
Acquisition Proposal, in each case after the date of the approval of the
Arrangement by the Target Securityholders. If Target receives a request for
material non-public information from a person who has made an unsolicited bona fide written Acquisition Proposal and
Target is permitted, as contemplated under the second sentence of this Section 8.1(b),
to negotiate the terms of such Acquisition Proposal, then, and only in such
case, the board of directors of Target may, subject to the execution by such
person of the confidentiality agreement as described in (ii) above,
provide such person with access to information regarding Target; provided that
Target sends a copy of any such confidentiality agreement to Parent promptly
upon its execution and Parent is provided with a list of, and copies of, the
information provided to such person and is immediately provided with access to
similar information to which such person was provided.

 

(c)                                  From and after the date of this Agreement, Target shall promptly
(and in any event within 24 hours) notify Parent, at first orally and then in
writing, of any inquiries, proposals or offers relating to or constituting an
Acquisition Proposal, or any request for non-public information

 

37

 

relating to Target or any of the Target
Subsidiaries. Such notice shall include a description of the terms and
conditions of any proposal, inquiry or offer, the identity of the person making
such proposal, inquiry or offer and provide such other details of the proposal,
inquiry or offer as Parent may reasonably request. Target shall keep Parent
fully informed on a prompt basis of the status, including any change to the
material terms, of any such inquiry, proposal or offer.

 

(d)                                 Nothing contained in Section 6.1 or Section 8.1(b) shall
prohibit the board of directors of Target from withdrawing, modifying, qualifying
or changing its recommendation to the Target Securityholders in respect of the
transactions contemplated hereby prior to the approval of the Arrangement by
the Target Securityholders, if the board of directors of Target determines, in
good faith (after receiving written advice of outside counsel) that such
withdrawal, modification, qualification or change is necessary for the board of
directors of Target to act in a manner consistent with its fiduciary duties or
applicable Laws; provided that (i) not less than 48 hours before the board
of directors of Target considers any proposal in respect of any such
withdrawal, modification, qualification or change, Target shall give Parent
written notice of such proposal and promptly advise Parent of the proposed
consideration of such proposal, including a summary of the reasons for the
proposal withdrawal, modification, qualification or change, a copy of the
written opinion of outside counsel and all other materials to be presented to
the board of directors of Target in respect of its consideration of such
proposal, and (ii) the foregoing shall not relieve Target from its
obligation to proceed to call and hold the Target Meeting and to hold the vote
on the Arrangement Resolutions, except in circumstances where this Agreement is
terminated in accordance with the terms hereof.

 

(e)                                  Target shall ensure that its Representatives are aware of the
provisions of this Section 8.1, and it shall be responsible for any breach
of this Section 8.1 by such officers, directors, employees, financial
advisors or other advisors or representatives.

 

Section 8.2                                   Right to Accept a Superior Proposal

 

(a)                                  If Target has complied with Section 8.1 with respect thereto,
Target may accept, approve, recommend or enter into any agreement, understanding
or arrangement in respect of a Superior Proposal prior to the approval of the
Arrangement by the Target Securityholders and terminate this Agreement if, and
only if (with the exception of a confidentiality agreement the execution of
which shall not be subject to

 

38

 

the conditions of this Section 8.2), (i) Target
has provided Parent with a copy of the Superior Proposal document, (ii) seven
Business Days shall have elapsed from the later of (x) the date Parent received
written notice (a “Section 8.2 Notice”) advising Parent that Target’s
board of directors has resolved, subject only to compliance with this Section 8.2,
to accept, approve, recommend or enter into an agreement in respect of such
Superior Proposal, specifying the terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, and (y) the
date Parent received a copy of such Superior Proposal, (iii) Target s
board of directors has determined in good faith (based upon the written opinion
of its outside legal counsel) that it is necessary for the board of directors
of Target to take such action in order to discharge properly its fiduciary
duties and thereby withdrawing or modifying its approval or recommendation of
this Agreement and approving or recommending such Superior Proposal, (iv) such
Superior Proposal does not provide for the payment of any break, termination or
other fees or expenses to the other party in the event that Target or any of
the Target Subsidiaries completes the transactions contemplated by this
Agreement or any similar other transaction with Parent or any of its affiliates
agreed to prior to any termination of this Agreement, (v) taking into
account any revised proposal made by Parent since receipt of the Section 8.2
Notice, such Superior Proposal remains a Superior Proposal and the Target board
of directors has again made the determinations referred to in this Section 8.2(a) and
(vi) Target has previously or concurrently will have paid to Parent the
Termination Fee, if any, payable under Section 9.4. In the event that
Target provides Parent with a Section 8.2 Notice on a date that is less
than seven Business Days prior to the Target Meeting, Target shall adjourn the
Target Meeting (without notice on the Arrangement or any related matters) to a
date that is not less than five Business Days and not more than 10 Business
Days after the date of the Section 8.2 Notice.

 

(b)                                 During the seven Business Day period referred to in Section 8.2(a)(ii),
Target agrees that Parent shall have the right, but not the obligation, to
offer to amend the terms of this Agreement. The board of directors of Target
will review any proposal by Parent to amend the terms of this Agreement in good
faith in order to determine, in its discretion in the exercise of its fiduciary
duties, whether Parent’s amended proposal upon acceptance by Target would
result in such Superior Proposal ceasing to be a Superior Proposal. If the
board of directors of Target so determines, it will enter into an amended
agreement with Parent reflecting Parent’s amended proposal. If the board of
directors of

 

39

 

Target continues to believe, in good faith
and after consultation with financial advisors and outside counsel, that such
Superior Proposal remains a Superior Proposal and therefore rejects Parent’s
amended proposal, Target may, on termination of this Agreement in accordance
with Section 9.2(c)(iv) and payment of the termination fee as required
pursuant to Section 9.4, accept, approve, recommend or enter into an
agreement, understanding or arrangement in respect of such Superior Proposal.

 

(c)                                  Target also acknowledges and agrees that each successive material
modification of any Acquisition Proposal shall constitute a new Acquisition
Proposal for purposes of Section 8.1 and the requirement under clause (ii) of
Section 8.2(a) to initiate an additional seven Business Day notice
period.

 

ARTICLE 9

AMENDMENT AND TERMINATION

 

Section 9.1                                   Amendment

 

This
Agreement may, at any time and from time to time before or after the holding of
the Target Meeting but not later than the Effective Time, be amended by mutual
written consent of the Parties and any such amendment may, without limitation:

 

(a)                                  change the time for performance of any of the obligations or acts of
the Parties, including an extension of the Completion Deadline;

 

(b)                                 waive any inaccuracies or modify any representation or warranty
contained in this Agreement or in any document delivered pursuant hereto;

 

(c)                                  waive compliance with or modify any of the covenants contained in
this Agreement and waive or modify performance of any of the obligations of the
Parties; and

 

(d)                                 waive compliance with or modify any conditions precedent contained
in this Agreement.

 

Section 9.2                                   Termination

 

(a)                                  If any condition contained in Sections 7.1 or 7.2 is not satisfied
at or before the Completion Deadline to the satisfaction of Parent, then Parent
may, by notice to Target terminate this Agreement and the obligations of the
Parties (except as otherwise herein provided) but

 

40

 

without detracting from the rights of Parent
arising from any breach by Target but for which the condition would have been
satisfied.

 

(b)                                 If any condition contained in Sections 7.1 or 7.3 is not satisfied
at or before the Completion Deadline to the satisfaction of Target, then Target
may by notice to Parent terminate this Agreement and the obligations of the
Parties (except as otherwise herein provided) but without detracting from the
rights of Target arising from any breach by Parent but for which the condition
would have been satisfied.

 

(c)                                  This Agreement may:

 

(i)                                     be terminated by the mutual written agreement of Target and Parent
(without any action on the part of the Target Securityholders);

 

(ii)                                  be terminated by either Target or Parent, if there shall be passed
any Law that makes consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited;

 

(iii)                               be terminated by Parent if (A) the board of directors of Target
shall have failed to recommend in the Information Circular, withdrawn,
modified, qualified or changed in a manner adverse to Parent, its approval or
recommendation of the Arrangement or the Arrangement Resolutions (including as
contemplated by Section 8.2) or (B) the board of directors of Target
shall have approved or recommended an Acquisition Proposal;

 

(iv)                              be terminated by Target in order to enter into a definitive written
agreement with respect to a Superior Proposal, subject to compliance with Section 8.2
and the payment of the Termination Fee required to be paid pursuant to Section 9.4
and subject further to Section 9.3;

 

(v)                                 be terminated by Target or Parent if the approval of the Target
Securityholders shall not have been obtained by reason of the failure to obtain
the required vote on the Arrangement Resolutions at the Target Meeting;

 

(vi)          be terminated by Parent if Target
shall have failed to hold the Target Meeting on or before January 27, 2006
unless such failure results from:  (A) an
adjournment of the Target Meeting for not more than seven Business Days due to
its obligation to adjourn the Target Meeting in the circumstances described in Section 8.2;
or (B) for reasons beyond the control of Target so long as

 

41

 

Target is in compliance with the terms and
conditions of this Agreement and it has been and continues to be using all
reasonable best efforts to hold the Target Meeting as soon as practicable after
January 27, 2006; or

 

(vii)                           be terminated by Parent if there is an intentional breach of the
covenants in Article 8 by Target, any of the Target Subsidiaries or any of
their respective directors, officers, employees, agents, consultants or any
other representative, in each case, prior to the Completion Deadline.

 

(d)                                 If the Effective Time does not occur on or prior to end of business
on the Completion Deadline, then this Agreement shall terminate.

 

Section 9.3                                   Effect of Termination

 

If this
Agreement is terminated in accordance with the provisions of Section 9.2,
no party shall have any further liability to perform its obligations hereunder
except for the provisions of this Section 9.3, and Sections 6.4(2),
6.4(3), 9.4, 9.5, 9.6 and 9.8, provided that neither the termination of this
Agreement nor anything contained in this Section 9.3 shall relieve any
Party from any liability for any breach by it of this Agreement, including from
any inaccuracy in its representations and warranties and any non-performance by
it of its covenants and agreements made herein. Notwithstanding the foregoing,
no termination of this Agreement by the Target pursuant to Section 9.2(c)(iv) shall
relieve the Target of its obligations under Article 2, except the
obligation of Target to solicit proxies in favour of the Arrangement in Section 2.1(c).

 

Section 9.4                                   Termination Fee

 

If:

 

(a)                                  Parent shall terminate this Agreement as a result of any action or
inaction of the board of directors of Target pursuant to Section 9.2(c)(iii);

 

(b)                                 Target shall terminate this Agreement in order to enter into a
definitive written agreement with respect to a Superior Proposal pursuant to Section 9.2(c)(iv);

 

(c)                                  either Target or Parent shall terminate this Agreement pursuant to Section 9.2(c)(v) in
circumstances where the Arrangement Resolutions have not received the required
Target Securityholder approval at the Target Meeting and: (A) a bona fide Acquisition Proposal has been
publicly announced or made by any Person other than Parent prior to the Target
Meeting and not publicly withdrawn more than five

 

42

 

Business Days prior to the Target Meeting,
and (B) Target enters into an agreement with respect to an Acquisition
Proposal, or an Acquisition Proposal is consummated, after the date of this
Agreement and prior to the expiration of 12 months following termination of
this Agreement; or

 

(d)                                 Parent shall terminate this Agreement pursuant to Section 9.2(c)(vi) or
(vii),

 

then in any such case Target shall pay to Parent the
Termination Fee in immediately available funds to an account designated by
Parent. Such payment shall be due (A) in the case of a termination
specified in clauses (a) or (d) above, within five Business Days
after written notice of termination by Parent or (B) in case of a
termination specified in clause (b) above, on or prior to the termination
of this Agreement or (C) in the case of a termination specified in clause (c) above,
at or prior to the earlier of the entering into of the agreement and the
consummation of the transaction referred to therein. Target shall not be
obligated to make more than one payment pursuant to this Section 9.4.

 

Section 9.5                                   Effect of Termination Fee Payment

 

For
greater certainty, the parties hereto agree that if Target pays the Termination
Fee to Parent pursuant to the provisions of Section 9.4, Parent shall have
no other remedy for any breach of this Agreement by Target, unless Target makes
a claim against Parent for breach of a provision of this Agreement, in which
circumstances the liability of Target to Parent for damages for claims in
respect of breaches of this Agreement shall be subject to a maximum limit equal
to the liability of Parent to Target for damages for claims in respect of
breaches of this Agreement plus the Termination Fee.

 

Section 9.6                                   Fees and Expenses

 

Subject
to Section 9.4, the Parties shall be responsible for the payment of their
own professional fees (including but not limited to legal, financial advisory
and accounting fees) and other expenses incurred by them in connection with the
Arrangement.

 

Section 9.7                                   Waiver

 

Target,
on the one hand, and Parent, on the other hand, may (i) extend the time
for the performance of any of the obligations or other acts of the other, (ii) waive
compliance with any of the other’s agreements or the fulfillment of any
conditions to its own obligations contained herein or (iii) waive
inaccuracies in any of the other’s representations or warranties contained
herein or in any document delivered by the other Party hereto; provided,
however, that any such extension or

 

43

 

waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such Party.

 

Section 9.8                                   Remedies.

 

Subject
to Section 9.5, the Parties acknowledge and agree that an award of money
damages would be inadequate for any breach of this Agreement by any Party or
its representatives and any such breach would cause the non-breaching Party
irreparable harm. Accordingly, the Parties agree that, in the event of any
breach or threatened breach of this Agreement by one of the Parties, the
non-breaching Party will also be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive relief and
specific performance. Such remedies will not be the exclusive remedies for any
breach of this Agreement but will be in addition to all other remedies
available at law or equity to each of the Parties.

 

ARTICLE 10

GENERAL

 

Section 10.1                            Notices

 

All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered or sent if delivered personally or sent by facsimile or sent by
prepaid overnight courier to the Parties at the following addresses (or at such
other addresses as shall be specified by the Parties by like notice):

 

if to Parent:

GOLD FIELDS LIMITED

24 St. Andrews Rd.

Parktown, Johannesburg, 2193

South Africa

Attention:                                         Ian Cockerill 

Facsimile:                                            (27) 11 484-0682

 

44

 

with a copy to:

STIKEMAN ELLIOTT LLP

5300 Commerce Court West

199 Bay Street

Toronto, Ontario  M5L 1B9

Attention:                      Robert W.A. Nicholls

Facsimile:                         (416) 947-0866

 

if to Target:

 

BOLIVAR GOLD CORP.

110 Yonge Street, Suite 1502

Toronto, Ontario M5C 1T4
 

Attention:                      Robert Doyle

Facsimile:                         (416) 360-7783

 

with a copy to:

 

WILDEBOER DELLELCE LLP

Suite 810, P.O. Box 4

1 First Canadian Place

Toronto, Ontario, M5X 1A9

Attention:                      Vaughn MacLellan

Facsimile:                         (416) 361-1790

 

Section 10.2                            Assignment

 

Parent
may assign this Agreement or any of the rights, interests or obligations
hereunder to an affiliate, provided that in the case of any such assignment
Parent shall remain liable for any default by such affiliate and provided
further that without assigning this Agreement, Parent may stipulate and require
that the party to the Plan of Arrangement which acquires the Target Securities
be such subsidiary of Parent as it shall designate to Target.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by Target.

 

Section 10.3                            Further Assurances

 

Each
Party hereto shall, from time to time, and at all times hereafter, at the
request of the other Party hereto, but without further consideration, do all
such further acts and execute and deliver all such further documents and
instruments as

 

45

 

shall be reasonably required in order to fully perform and carry out
the terms and intent hereof.

 

Section 10.4                            Severability

 

Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable Law. Any provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such invalidity or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

Section 10.5                            Entire Agreement

 

This
Agreement, the agreements and other documents herein referred to and the
Confidentiality Agreement constitute the entire agreement between the Parties
pertaining to the terms of the Arrangement and supersede all other prior
agreements, understandings, negotiations and discussions, whether oral or
written, between the Parties with respect to the terms of the Arrangement.

 

Section 10.6                            Counterpart Execution

 

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.

 

Section 10.7                            Governing Law

 

This
Agreement shall be governed by and interpreted in accordance with the Laws of
the Province of Ontario and the Laws of Canada applicable therein.

 

Section 10.8                            Attornment

 

The
Parties hereby irrevocably and unconditionally consent to and submit to the
courts of the Province of Ontario for any actions, suits or proceedings arising
out of or relating to this Agreement or the matters contemplated hereby (and
agree not to commence any action, suit or proceeding relating thereto except in
such courts) and further agree that service of any process, summons, notice or
document by single registered mail to the addresses of the Parties set forth in
this Agreement shall be effective service of process for any action, suit or
proceeding brought against either Party in such court. The Parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the matters
contemplated hereby in the courts of the Province of Ontario and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding so brought has been brought
in an inconvenient forum.

 

46

 

Section 10.9                            Investigation by Parties

 

No
investigations made by or on behalf of either Party or any of their respective
authorized agents at any time shall have the effect of waiving, diminishing the
scope of or otherwise affecting any representation, warranty or covenant made
by the other Party in or pursuant to this Agreement.

 

IN WITNESS WHEREOF,
the Parties have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.

 

	
   

  	
   

  	
  GOLD FIELDS LIMITED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Craig Nelsen

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BOLIVAR GOLD CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Robert Doyle

  
					

 

47

 

SCHEDULE ”A”

 

FORM OF PLAN OF ARRANGEMENT

 

PLAN OF ARRANGEMENT UNDER SECTION 195

OF THE BUSINESS CORPORATIONS ACT (YUKON)

 

INTERPRETATION

 

Definitions

 

In this
Plan of Arrangement, unless there is something in the subject matter or context
inconsistent therewith, the following terms shall have the respective meanings
set out below and grammatical variations of those terms shall have corresponding
meanings:

 

“Acquisitionco” means
38978 Yukon Inc., a corporation exisiting under the laws of the Yukon Territory
and a direct or indirect wholly-owned subsidiary of Parent;

 

“Affiliate” has the
meaning ascribed thereto in the OSA;

 

“Arrangement” means an
arrangement under the provisions of section 195 of the YBCA, on the terms
and conditions set forth in this Plan of Arrangement and any amendment,
variation or supplement thereto made (i) in accordance with Section 9.1
of the Arrangement Agreement, (ii) in accordance with Section 6.1 hereof,
or (iii) at the direction of the Court in the Final Order;

 

“Arrangement Agreement” means the agreement dated December 1, 2005 between Parent and
Target to which this Plan of Arrangement is attached as Schedule ”A”;

 

“Arrangement Resolutions” means the special resolutions of the Target Securityholders
approving the Arrangement in accordance with section 195 of the YBCA and
the provisions of the Interim Order;

 

“Business Day” means
any day excepting a Saturday or Sunday or a day recognized as a holiday in
Johannesburg, South Africa, Toronto, Ontario, or Whitehorse, Yukon Territory;

 

“Court” means the
Supreme Court of the Yukon Territory;

 

 

“Depositary” means
Equity Transfer Services Inc., at its delivery address in Toronto at Suite 420,
120 Adelaide Street West, Toronto, Ontario M5H 4C3;

 

“Dissent Rights” means
the Dissent Rights in respect of the Arrangement described in Section 4.1;

 

“Dissenting Shares”
means the Target Shares held by Dissenting Shareholders;

 

“Dissenting Shareholders” means holders of Target Shares who have duly and validly exercised
their Dissent Rights pursuant to Article 4 and the Interim Order;

 

“Effective Date means
the date upon which the Arrangement becomes effective as established by the date
of issue shown on the certificate issued by the registrar pursuant to the YBCA;

 

“Effective Time” means
12:01 a.m. (Whitehorse, Yukon time) on the Effective Date;

 

“Final Order” means the
final order of the Court approving the Arrangement as such order may be amended
by the Court at any time prior to the Effective Date or, if appealed, then,
unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

 

“Government Authority”
has the meaning ascribed to it in the Arrangement Agreement;

 

“Information Circular”
means the notice of the Target Meeting and accompanying management information
circular including all schedules and exhibits thereto, to be sent by Target to
the Target Securityholders in connection with the Target Meeting;

 

“Interim Order” means
an order of the Court providing for, among other things, the calling and
holding of the Target Meeting, as such order may be amended, supplemented or
varied by the Court;

 

“ITA” means the Income Tax Act (Canada), as amended;

 

“Letter of Transmittal” means the respective letters of transmittal to be delivered by
Target to the Target Shareholders, Target Warrantholders and Target
Optionholders, as applicable, and providing for the delivery of the applicable
Target Securities to the Depositary;

 

2

 

“Lien” means any mortgage, hypothec, prior claim, lien, pledge, assignment
for security, security interest, right of third parties or other charge or
encumbrance whatsoever;

 

“Notice of Dissent”
means a notice of dissent duly and validly given by a Target Shareholder
exercising Dissent Rights as contemplated in the Interim Order and as described
in Article 4;

 

“OSA” means the Securities Act (Ontario) and the rules,
regulations and policies made thereunder, as now in effect and as they may be
amended from time to time prior to the Effective Date;

 

“Parent” means Gold Fields Limited, a company incorporated under the laws of
South Africa;

 

“Plan of Arrangement”, “hereof”, “herein”, “hereunder” and similar
expressions means this plan of arrangement, including any appendices hereto,
and any amendments, variations or supplements hereto made from time to time in
accordance with the terms hereof, the Arrangement Agreement or made at the
direction of the Court in the Final Order;

 

“Specified Percentage”
means a percentage to be specified by Parent prior to the Effective Date and
set out in the Final Order as the percentage of the Target Shares held by
Target Shareholders (other than Parent and its Affiliates, unless they
otherwise elect, and Dissenting Shareholders) to be acquired by Acquisitionco,
but in no event being less than 75%;

 

“Subco” means Gold
Fields Guernsey Limited, a corporation existing under the laws of the Guernsey
Islands and a direct or indirect wholly-owned subsidiary of Parent;

 

“Target” means Bolivar Gold Corp., a company continued under the laws of the
Yukon Territory;

 

“Target Debentures” means the $26 million principal amount of 6% convertible debentures
of Target maturing December 5, 2008, convertible at the option of the
holder at $2.85;

 

“Target Meeting” means the special meeting or meetings of Target Securityholders
(including any adjournment thereof) that is to be convened to consider and, if
deemed advisable, to approve the Arrangement Resolutions and other matters of
business, as described in the Information Circular;

 

3

 

“Target Options” means the share purchase options granted under the Target Stock
Option Plan and being outstanding and unexercised on the date hereof;

 

“Target Optionholder” means a holder of Target Options, and “Target
Optionholders” means all of such holders;

 

“Target Securities” means, collectively, the Target Shares, Target Warrants and Target
Options;

 

“Target Securityholders” means the Target Shareholders together with the holders of the
Target Options and Target Warrants;

 

“Target Shareholder” means a registered holder of Target Shares, from time to time, and “Target Shareholders”
means all of such holders;

 

“Target Shares” means the common shares in the capital of Target;

 

“Target Stock Option Plan” means the option plan of Target;

 

“Target Subsidiaries” means, collectively, each of the subsidiaries of Target;

 

“Target Warrants” means, collectively, the Target Initial Warrants, Target “A”
Warrants and the Target “B” Warrants;

 

“Target ‘A’ Warrants” means the outstanding common share purchase warrants of Target
expiring August 25, 2008, exercisable at $1.75 per Target Share;

 

“Target ‘B’ Warrants” means the outstanding common share purchase warrants of Target
expiring December 22, 2009, exercisable at $3.25 per Target Share;

 

“Target Initial Warrants” means the outstanding common share purchase warrants of Target
expiring March 17, 2008, exercisable at $1.10 per Target Share;

 

“Target Warrantholder” means a holder of Target Warrants;

 

“Taxes” has the meaning ascribed thereto in Section 4.1(m) of the Arrangement
Agreement; and

 

“YBCA” means the Business Corporations Act (Yukon) R.S.Y
2002, c. 20 including all regulations made thereunder, as amended.

 

4

 

Interpretation
Not Affected by Headings, etc.

 

The
division of this Plan of Arrangement into Articles, Sections paragraphs and
other portions and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation hereof. Unless
otherwise indicated, all references to an “Article”, “Section” or “paragraph”
followed by a number and/or a letter refer to the specified Article, Section or
paragraph of this Plan of Arrangement.

 

Number
and Gender

 

In this
Plan of Arrangement, unless the context otherwise requires, words used herein
importing the singular include the plural and vice versa. Words importing
gender include all genders.

 

Date of
Any Action

 

In the
event that any date on which any action is required to be taken hereunder by
any of the parties hereto is not a Business Day, such action shall be required
to be taken on the next succeeding day which is a Business Day.

 

Time

 

Time
shall be of the essence in every matter or action contemplated hereunder. All
times expressed herein or in the Letters of Transmittal are local time
(Whitehorse, Yukon Territory) unless otherwise stipulated herein or therein.

 

Currency

 

Unless
otherwise stated, all references in this Plan of Arrangement to sums of money
are expressed in lawful money of Canada.

 

EFFECT OF THE
ARRANGEMENT

 

At the
Effective Time, the Arrangement shall be binding upon Target, the Target
Securityholders, Parent, Acquisitionco and Subco.

 

ARRANGEMENT

 

The
Arrangement

 

At the
Effective Time, without any further act or formality, each of the events set
out below shall occur and be deemed to occur, except as otherwise noted in this
Section 3.1,  in the following
sequence:

 

Acquisitionco (or one or more
of its Affiliates) will provide the following loans to Target:

 

5

 

a loan having a principal
amount equal to the aggregate amount payable by Target under Section 3.1(b) (the
“Option Payment Loan”);

 

a loan having a principal
amount equal to the aggregate amount payable by Target under Section 3.1(c) (the
“Warrant Payment Loan”); and

 

a loan having a principal
amount equal to the aggregate amount payable by Target under Section 3.1(d) (the
“Debenture Payment Loan”);

 

the Option Payment Loan, Warrant Payment Loan
and Debenture Payment Loan to be evidenced by promissory notes issued by Target
to the lender thereof;

 

Each Target Option held by a
Target Optionholder that has not been duly exercised prior to the Effective
Time shall be transferred by the Target Optionholder to Target and shall be
cancelled by Target and in exchange for such cancellation each Target
Optionholder shall be entitled to receive in respect of each such Target Option
held an amount of cash from Target equal to the amount, if any, by which $3.00
exceeds the exercise price of such Target Option (and, for greater certainty,
Target shall withhold any required withholding Taxes);

 

Each Target Warrant held by a
Target Warrantholder (other than Parent and its Affiliates, unless they
otherwise elect, and Dissenting Shareholders) that has not been duly exercised
prior to the Effective Time shall be transferred by the Target Warrantholder to
Target and shall be cancelled by Target and in exchange for such cancellation
each Target Warrantholder shall be entitled to receive in respect of each such
Target Warrant held an amount of cash from Target as follows:

 

$1.90 per Target Initial
Warrant;

 

$1.25 per Target “A” Warrant;
and

 

$0.40 per Target “B” Warrant;

 

Target shall repay the Target
Debentures, in the amount of $1,095.25 in cash per $1,000 principal amount per
Target Debenture, being the amount in cash that is equal to the “Change of
Control Amount” required under Article 7 of the indenture (the “Indenture”) dated December 4,
2003 between Target and Computershare Trust Company of Canada (the “Debenture Trustee”)
governing the Target Debentures (and, for greater certainty, Target shall
withhold any required withholding Taxes) and the Target Debentures shall be
cancelled, all in accordance with the provisions of the

 

6

 

Indenture. The above repayment amount is
based upon the December 31, 2005 interest payment having been made prior
to the Effective Time; and

 

after the completion of the
immediately preceding steps, the Specified Percentage of the Target Shares held
by a Target Shareholder (other than Parent and its Affiliates, unless they
otherwise elect, and Dissenting Shareholders) shall be transferred by the
Target Shareholder to Acquisitionco (free and clear of any Liens) and in
exchange therefor each Target Shareholder thereof shall be entitled to receive
$3.00 in cash from Acquisitionco for each such Target Share held;

 

simultaneous with the step in Section 3.1(e) above,
the remainder of the Target Shares held by a Target Shareholder (other than
Parent and its Affiliates, unless they otherwise elect, and Dissenting
Shareholders) shall be transferred by the Target Shareholder to Subco (free and
clear of any Liens) and in exchange therefor each Target Shareholder shall be
entitled to receive $3.00 in cash from Subco for each such Target Share held;
and

 

with respect to each Target
Share (other than Target Shares held by Parent and its Affiliates, unless they
otherwise elect, and the Dissenting Shares):

 

each such Target Shareholder
shall cease to be the holder of such share effective at the time of the steps
in Section 3.1(e) and (f) above and such holder’s name shall be
removed from the register of Target Shares with respect to such Target Shares
as of such time; and

 

Acquisitionco or Subco, as the
case may be, shall be deemed to be the transferee of such share (free and clear
of any Liens) effective at the time of the steps in Section 3.1(e) and
(f) above and shall be entered in the register of Target Shares as the
holder thereof as at such time.

 

DISSENT RIGHTS

 

Dissent
Rights

 

A
Target Shareholder may exercise dissent rights (“Dissent Rights”) conferred by the Interim Order in connection
with the Arrangement in the manner set out in the Interim Order, provided the
Notice of Dissent is received by Target by no later than 4:00 p.m.
(Whitehorse time) on the date which is two Business Days prior to the date of
the Target Meeting. Without limiting the generality of the foregoing, Target
Shareholders who duly exercise such Dissent Rights and who are ultimately
determined to be entitled to be paid fair value for their Target Shares shall
be deemed to have transferred such Target Shares, as of the Effective Time,
without any further act or formality to Acquisitionco (free and clear of any
Liens) in consideration of a payment of cash by

 

7

 

Acquisitionco equal to such fair value as of the day preceding the
Target Meeting. In no case shall Target or Parent be required to recognize such
Target Shareholders as Target Shareholders at and after the Effective Time, and
the names of such Target Shareholders shall be removed from Target’s register
of Target Shares as of the Effective Time.

 

Rights
of Dissenting Shareholders

 

In the
event a Target Shareholder gives a Notice of Dissent but is not entitled, for
any reason, to be paid the fair value of the Target Shares in respect of which
the Notice of Dissent was given as contemplated in the Interim Order, such
Target Shareholder shall be deemed to have participated in the Arrangement on
the same basis as a non-dissenting Target Shareholder.

 

EFFECT OF ARRANGEMENT
AND PAYMENT

 

Effect
of Arrangement

 

After
the Effective Time, certificates formerly representing Target Securities (other
than Target Securities held by Parent and its Affiliates, unless they otherwise
elect, and Dissenting Shareholders) shall represent only the right to receive
any cash payment which the former Target Securityholder is entitled to receive
pursuant to Article 3 of this Plan of Arrangement, subject to compliance
with the requirements set forth in this Article 5.

 

Payment

 

At or prior to the Effective
Time, Acquisitionco and Subco shall deposit with the Depositary, for the
benefit of the Target Shareholders (other than Parent and its Affiliates,
unless they otherwise elect,), cash in an amount equal to the total
consideration payable under this Plan of Arrangement for the Target Shares held
by such Target Shareholders. 
Acquisitionco (or its relevant Affiliate or Affiliates) shall be hereby
deemed to have been directed by Target to and shall, not later than the
Effective Time, provide to the Depositary, for the benefit of the Target
Optionholders and the Target Warrantholders (other than Parent and its
Affiliates, unless they otherwise elect, and Dissenting Shareholders), cash in
an amount equal to the total consideration payable under this Plan of
Arrangement for the Target Options and the Target Warrants held by such Target
Optionholders and Target Warrantholders.

 

Subject to Section 5.3,
Acquisitionco and Subco shall cause the Depositary, as soon as possible
following the later of the Effective Date and the date of deposit with the
Depositary of a duly completed Letter of Transmittal together with certificates
representing the Target Shares to:

 

8

 

forward or cause to be
forwarded by first class mail (postage prepaid) to such Target Shareholder at
the address specified in the Letter of Transmittal; or

 

if requested by the Target
Shareholder in the Letter of Transmittal, make available at the Depositary for
pick-up by the Target Shareholder; or

 

if the Letter of Transmittal
neither specifies an address nor contains a request as described in (ii),
forward or cause to be forwarded by first class mail (postage prepaid) to
the  Target Shareholder at the address of
such Target Shareholder as shown on the applicable register maintained by
Target as at the Effective Time,

 

a cheque (or other form of immediately
available funds) representing the cash payment payable to such Target
Shareholder as determined in accordance with the provisions hereof.

 

Subject to Section 5.3,
Target shall, as soon as possible following the later of the Effective Date and
the date of deposit with the Depositary of a duly completed Letter of
Transmittal together with (A) in the case of Target Options, such
documentation as Acquisitionco may reasonably require representing the Target
Options held by such Target Optionholder, and (B) in the case of Target
Warrants, certificates representing Target Warrants or other documentation as
provided in the Letter of Transmittal, cause the Depositary to:

 

forward or cause to be
forwarded by first class mail (postage prepaid) to such Target Securityholder
at the address specified in the Letter of Transmittal;

 

if requested by the Target
Securityholder in the Letter of Transmittal, make available at the Depositary
for pick-up by the Securityholder; or

 

if the Letter of Transmittal
neither specifies an address nor contains a request as described in (ii),
forward or cause to be forwarded by first class mail (postage prepaid) to the
Target Securityholder at the address of such Target Securityholder as shown on
the applicable register maintained by Target as at the Effective Time,

 

a cheque (or other form of immediately
available funds) representing the cash payment payable to such Target
Securityholder as determined in accordance with the provisions hereof.

 

9

 

No Target Securityholder shall
be entitled to receive any consideration with respect to the Target Securities
other than the cash payments which they are entitled to receive in accordance
with Article 3 of this Plan of Arrangement and, for greater certainty, no
Target Securityholder will be entitled to receive any interest, dividends,
premium or other payment in connection therewith.

 

Until such time as a former
Target Securityholder complies with the provisions of Sections 5.2(b) or
5.2(c), as applicable, the cash payments to which such Target Securityholder is
entitled shall, subject to Section 5.3, be delivered to the Depositary to be
held in trust for such Target Securityholder for delivery to the Target
Securityholder in accordance with the provisions hereof and the Letters of
Transmittal, without interest and net of all applicable withholding and other
Taxes, if any, upon delivery of the applicable Letters of Transmittal and the
certificates representing the Target Securities (or, in the case of Target
Options, documentation provided)  in
accordance with Section 5.2(b) and Section 5.2(c).

 

Target, Acquisitionco, Subco
and the Debenture Trustee shall be entitled to deduct and withhold from any
amount otherwise payable pursuant to this Plan of Arrangement, the Arrangement
Agreement or the Indenture to any Target Securityholder or holder of Target
Debentures, as the case may be, such amounts as are required to be deducted and
withheld with respect to the making of such payment under the ITA or any other
provision of domestic or foreign Tax legislation.  To the extent amounts are so deducted and
withheld and paid to the appropriate Government Authority by Target, Acquisitionco,
Subco or the Debenture Trustee, such deducted and withheld amounts shall be
treated for all purposes of this the Plan of Arrangement and the Arrangement
Agreement or the Indenture as having been paid to the Target Securityholder or
holder of Target Debentures, as the case may be, in respect of which such
deduction and withholding was made by Target, Acquisitionco, Subco or the
Debenture Trustee.

 

Acquisitionco (or its relevant
Affiliate or Affiliates) shall be hereby deemed to have been directed by the
Target to and shall, not later than the Effective Time, provide to the
Debenture Trustee funds in an amount equal to the Debenture Payment Loan
representing the advance of the loan specified in Section 3.1(a)(iii) hereof
to the Target, which amount shall be applied by the Debenture Trustee to repay
the Target Debentures in accordance with the provisions of the Indenture.

 

10

 

Surrender
of Rights

 

Any
certificate (or, in the case of Target Options, such other documentation as
required pursuant to Section 5.2(c)) formerly representing Target
Securities not duly surrendered on or prior to the sixth anniversary of the
Effective Date shall cease to represent a claim or interest of any kind or
nature against Target, Acquisitionco, Subco or the Depository by a former
Target Securityholder.  On such date, all
cash to which such former Target Securityholder was entitled shall be deemed to
have been surrendered to Target, Acquisitionco, Subco, as applicable.

 

AMENDMENT

 

Amendment
of Plan of Arrangement

 

Target and Parent reserve the
right to amend, modify and/or supplement this Plan of Arrangement at any time
and from time to time, provided that any amendment, modification or supplement
must be contained in a written document which is filed with the Court and, if
made following the Target Meeting, approved by the Court and communicated to
Target Securityholders in the manner required by the Court (if so required).

 

Any amendment, modification or
supplement to this Plan of Arrangement may be proposed by Target or Parent at
any time prior to or at the Target Meeting with or without any other prior
notice or communication and, if so proposed and accepted by the persons voting
at the Target Meeting, shall become part of this Plan of Arrangement for all
purposes.

 

Any amendment, modification or
supplement to this Plan of Arrangement which is approved or directed by the
Court following the Target Meeting shall be effective only if it is consented
to by Target and Parent (acting reasonably).

 

This Plan of Arrangement may be
withdrawn prior to the Effective Time in accordance with the terms of the
Arrangement Agreement.

 

Notwithstanding the foregoing
provisions of this Section 6.1, no amendment, modification or supplement to
this Plan of Arrangement may be made prior to the Effective Time except in
accordance with the terms of the Arrangement Agreement.

 

11

 

FURTHER ASSURANCES

 

Notwithstanding
that the transactions and events set out herein shall occur and be deemed to
occur in the order set out in this Plan of Arrangement without any further act
or formality, each of the parties to the Arrangement Agreement shall make, do
and execute, or cause to be made, done and executed, all such further acts,
deeds, agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order to document or evidence any of
the transactions or events set out herein.

 

12

 

EXHIBIT ”I”

COMMITMENTS

 

 

	
   

  	
   

  	
  Salary

  	
   

  	
  Severance(1)

  	
   

  	
  Options

  	
   

  	
  Price

  	
   

  	
  Value(2)

  	
   

  	
  Bonus Units

  	
   

  	
  Value(2)

  	
   

  	
  Other(3)

  	
   

  
	
  Iacono, Serafino

  	
   

  	
  USD 

  	
  290,000

  	
   

  	
  870,000

  	
   

  	
  2,350,000

  	
   

  	
  1.03

  	
   

  	
  4,626,000

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  USD 

  	
  68,110

  	
   

  
	
  de la Campa, Miguel

  	
   

  	
  USD 

  	
  232,000

  	
   

  	
  696,000

  	
   

  	
  2,350,000

  	
   

  	
  1.03

  	
   

  	
  4,626,000

  	
   

  	
  1,425,000

  	
   

  	
  4,275,000

  	
   

  	
  USD 

  	
  64,688

  	
   

  
	
  Arata, Jose Francisco

  	
   

  	
  USD 

  	
  197,200

  	
   

  	
  591,600

  	
   

  	
  1,149,166

  	
   

  	
  1.24

  	
   

  	
  2,023,548

  	
   

  	
  1,150,000

  	
   

  	
  3,450,000

  	
   

  	
  USD 

  	
  62,635

  	
   

  
	
  Doyle, Robert

  	
   

  	
  CAD 

  	
  240,000

  	
   

  	
  720,000

  	
   

  	
  1,192,500

  	
   

  	
  1.16

  	
   

  	
  2,189,350

  	
   

  	
  450,000

  	
   

  	
  1,350,000

  	
   

  	
  CAD 

  	
  29,500

  	
   

  
	
  Volk, Peter

  	
   

  	
  CAD 

  	
  190,000

  	
   

  	
  570,000

  	
   

  	
  598,333

  	
   

  	
  1.18

  	
   

  	
  1,090,166

  	
   

  	
  330,000

  	
   

  	
  990,000

  	
   

  	
  CAD 

  	
  27,000

  	
   

  
	
  Quesnel, William

  	
   

  	
  CAD 

  	
  150,000

  	
   

  	
  300,000

  	
   

  	
  100,000

  	
   

  	
  2.74

  	
   

  	
  26,000

  	
   

  	
  50,000

  	
   

  	
  150,000

  	
   

  	
  CAD 

  	
  25,000

  	
   

  
	
  Miranda, Mario

  	
   

  	
  CAD 

  	
  120,000

  	
   

  	
  120,000

  	
   

  	
  75,000

  	
   

  	
  2.00

  	
   

  	
  75,000

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  CAD 

  	
  23,500

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  7,814,999

  	
   

  	
  1.12

  	
   

  	
  14,656,064

  	
   

  	
  3,405,000

  	
   

  	
  10,215,000

  	
   

  	
   

  	
   

  
	
  All other staff

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,164,334

  	
   

  	
  1.48

  	
   

  	
  1,767,809

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  8,979,333

  	
   

  	
  1.17

  	
   

  	
  16,423,873

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1) Per
employment agreements, all others as required by law or mutual agreement

(2) CAD

(3) Estimated
12-month continuance of health care, pension/insurance/other for named
executives

 

Other obligations:

 

Advisory fee -
2% of transaction value to maximum of C$8.5 million in favor of GMP
Securities/Endeavour Financial

Work fee -
C$500,000 payable in connection with warrant conversion program in favor of GMP
Securities

In both cases
before out-of-pocket expenses and PST/GST as applicable

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