AGREEMENT 2
This Agreement made the 18 day of July 1996.
Between
Global Gold Corporation
and
London & International Mercantile Ltd.
and
HCL Communications Ltd.
Whereas:
Global Gold Corporation (GGC) is a Delaware Corporation with mining interests in
the Republic of Armenia comprising the Armenian Gold Recovery Company (AGR) as
set out in a Joint Venture Agreement between GGC and the Armenian Government
dated 1st May 1996 (JV) (as exhibited in the First Schedule hereto). To
facilitate the development of the AGR, GGC requires the delivery of a Guarantee
in the amount of US$250,000.00 (a draft of which is set out in the Second
Schedule hereto) (the "Guarantee") to be delivered to Xxxxxxx Inc. of 0000 Xxxx
Xxxxx Xxxx. X. Xxxxxxx, Xxxxxxx X0X 0X0 and is willing to secure the delivery of
same by issuing 1,000,000 shares of its common stock (the "Shares") together
with warrants to purchase 2,000,000 Shares of GGC (the "Warrants") (as set out
in the Seventh Schedule hereto) to the provider of the Guarantee and other
security set out herebelow.
London & International Mercantile Ltd. (LIM) is a financial company which is
internationally recognised and is of good reputation. LIM is ready, willing and
able to issue the Guarantee to Xxxxxxx Inc. subject to the terms and conditions
herein.
HCL Communications Ltd. (HCL) is the holder of an Option (the "Option") to
purchase the Shares and Warrants. HCL has introduced the other parties to each
other, has negotiated this Agreement and is prepared to allow the Shares and
Warrants held by HCL under the Option to be used as collateral to secure the
issue and delivery of the Guarantee.
Now Therefore:
As collateral security to cover any payment made to Xxxxxxx pursuant to the
Guarantee after a default in payment by GGC, GGC hereby issues as a pledge to
LIM or to its order or to its
assigns 1,000,000 shares of common stock of GGC (the "Shares") which the parties
agree is of value equivalent to US$1,500,000.00 valued at US$1.50 per share and
the Warrants (as set out in the Sixth Schedule hereto) ( the "Warrants") against
delivery of a Guarantee from LIM to
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the value of US$250,000.00 which shall be made payable to Xxxxxxx Inc. in
substantially the form attached hereto in the Second Schedule.
The Guarantee is payable in the event that GGC fails to pay the sum of
US$250,000.00 within 120 days of the delivery to Xxxxxxx Inc. of the Guarantee.
Further in any event the Guarantee shall be valid for up to six (6) months only.
A. In Consideration of the delivery of the Guarantee GGC shall simultaneously
deliver the following documentation to LIM.
1. (a) A certificate for 1,000,000 Shares of GGC with the Warrants attached
free of any charge, encumbrance or lien subject only to the option
in favour of HCL as set out in the Fourth Schedule hereto, pledged
as collateral security to cover any payment made to Xxxxxxx pursuant
to the Guarantee after a default in payment to Xxxxxxx by GGC.
(c) The Personal Pledges of Xxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxx
the Directors of GGC as set out in the Seventh Schedule.
2. A letter signed by Xxxxxxxxx Belknap, Webb & Tyler Attorneys ("PBW&T") or
the Law Offices of Xxxxxxx X. Field, general counsel to GGC, confirming
that:
(a) GGC has the lawful authority to issue the Shares and Warrants to
LIM.
(b) GGC will promptly arrange the issue of the Shares and Warrants to
LIM pledged as security for the Guarantee.
(c) The Guarantee is required by Xxxxxxx Inc. and the draft set out in
the Second Schedule is in a form and manner acceptable to Xxxxxxx
Inc.
(d) To the best of attorney's knowledge attorneys do not know of any
condition or restriction which would prevent the granting of a
NASDAQ Electronic Bulletin Board listing of the common stock of GGC
within a reasonable period of time after the issue and delivery of
the Guarantee although attorneys cannot predict the actual date
thereof because the processing, of the appropriate documentation to
be filed, by NASDAQ in connection therewith varies from case to
case. A letter signed by Xxxxxxx X. Field General Counsel to GGC
dated July 1996, setting out the options open to GGC is attached
hereto in the Eight Schedule.
(e) In the event of a default by GGC either before or after NASDAQ
quotation there are no restrictions on the sale by LIM or other
holder who is resident outside the USA of shares of common stock of
GGC for the full market value thereof without being subject to US
income tax, provided that LIM or such other holder is not engaged in
a trade or business in the USA and the income
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from such sale is not effectively connected with the conduct of any
such business for US income tax purposes.
(f) GGC is lawfully able to made the warranties and undertakings given
by it in Clause 3. herein.
3. GGC hereby undertakes, warrants and agrees as follows:
(a) GGC will issue 1,000,000 shares of common stock (the Shares)
together with the Warrants in GGC to LIM as security for the issue
by LIM of the Guarantee subject to the terms and conditions of this
Agreement which Shares and Warrants will be delivered upon the
execution and delivery hereof.
(b) GGC expects to have a NASDAQ Bulletin Board quotation within sixty
(60) days of the date of issue of the Guarantee and in any event
will seek a Full NASDAQ Small Cap Listing within ninety (90) days
provided GGC meets the NASDAQ equity test.
(c) That in the event that LIM, after sale of the shares and other
recovery as set out herein, is not fully refunded its outlay and
fees from HCL as set out in Subsidiary Agreement in the Fourth
Schedule herein, LIM shall be paid any shortfall by the two above
named directors of GGC.
(d) GGC represents that it expects to receive an offer to purchase its
shares from Xx. Xxxxxx Xxxxx or his assigns within thirty days which
if accepted by GGC would raise a sum in excess of US$5,000,000 for
the use of GGC.
(e) All legal fees, charges, and validity fees charged by LIM as are set
out in the Tenth Schedule hereto will be paid for by GGC as and when
set out in said Tenth Schedule.
(f) GGC has no knowledge of any condition or restriction which would
prevent the granting of a NASDAQ Electronic Bulletin Board listing
for its common stock within a period of sixty (60) days of the date
of issue and delivery of the Guarantee.
4. GGC exhibits herewith:
(a) A copy of the JV in the First Schedule hereto.
(b) A copy of the GGC 10-KSB for the year ended December 31, 1995 in the
Third Schedule hereto.
5. GGC will honour the Option in favour of HCL after release by LIM of the
Shares and Warrants from the pledge in consideration for HCL hereby
agreeing to allow the Optioned Shares to be so pledged.
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B. In consideration of which LIM shall:
(a) Issue the Guarantee within one (1) business day and deliver the
Guarantee to Xxxxxxx Inc. within three (3) business days after the
execution and delivery of this Agreement.
(b) enter into a Subsidiary Agreement with HCL as set out in the Fourth
Schedule hereto.
(c) Return the certificate for 1,000,000 shares of common stock (the
Shares) and the Warrants of GGC to GGC within ten (10) business days
after the expiration of the Guarantee if no payment has been made to
or claimed by the Armenian Government and if HCL has not exercised
the Option, or return such remaining unsold Shares if HCL has
exercised its Option in part. Upon expiration of the Guarantee
without any payment made thereunder by LIM, all of LIM's rights with
respect to the Shares and the Warrants as collateral security shall
terminate without any further action on the part of LIM.
C. Miscellaneous
(a) It is agreed that the terms and conditions, warrants and
undertakings given herein are separate, distinct and independent
from terms and conditions, warrants and undertakings given in the
Agreement 1 dated 18th July 1996 (Armenian Government Agreement).
(b) No Party shall, without the prior consent in writing of the other
Parties, assign, transfer or otherwise part with control of its
benefits or burdens hereunder.
(c) This Agreement shall be binding on the successors and assigns of the
Parties hereto.
(d) The Parties and arbitrators are charged to apply this Agreement in
good faith as it is written taking into account the fair and
reasonable expectations of the Parties as expressed herein.
(e) The Parties agree to refer all unsettled disputes arising out of
this Agreement to the International Chamber of Commerce, under the
Rules of Conciliation and Arbitration, for arbitration by a panel of
three arbitrators. LIM may appoint one Arbitrator and GGC shall
appoint another, HCL shall appoint a third arbitrator; provided that
if all three arbitrators have not been appointed within thirty days
after the party submitting the matter in dispute has notified the
other Parties of such submission, any Party may apply to the
International Chamber of Commerce, London England to appoint the
remaining arbitrators. This Agreement shall be interpreted in
accordance with and governed by English
4
Law. The place of arbitration of any matter to be settled shall be
London, England.
(f) No Party shall be in breach of this Agreement if there is any total
or partial failure of performance by it of its duties and
obligations under this Agreement occasioned by any act of God, fire,
act of Government, or State, war, civil commotion, insurrection,
embargo, prevention from, or hindrance in, obtaining raw materials,
energy or other supplies, labour disputes or whatever nature and any
other reason beyond the control of either Party. If a Party is
unable to perform its duties and obligations under this Agreement as
a direct result of the effect of one of those reasons that Party
shall give written notice to the others of the inability stating the
reason in question. The operation of this Agreement shall be
suspended during the period in which the reason continues. Forthwith
upon the reason ceasing to exist the Party relying upon it shall
give written advice to the others of this fact. If the reason
continues for more than one year and substantially affects the
commercial basis of this Agreement the Party not claiming relief
under this clause shall have the right to terminate this Agreement
upon giving twenty days written notice of such termination to the
non-performing Party.
(g) If any provision or term of this Agreement or any part thereof shall
become or be declared illegal, invalid or unenforceable for any
reason in one or more jurisdictions it shall be deemed to be deleted
from this Agreement in the jurisdiction or jurisdictions in question
provided always that if any such deletion substantially affects or
alters the commercial basis of this Agreement the Parties shall
negotiate in good faith to amend and modify the provisions and terms
of this Agreement as may be necessary to give effect to the true
desire of the Parties herein or otherwise may be desirable in the
circumstances.
(h) Each Party shall be responsible for its own taxes, duties and other
government charges.
(i) This Agreement together with the Schedules embodies the entire
agreement and understanding of the Parties with respect to the
subject matter hereof and supersedes all prior oral or written
agreements understandings or arrangements with respect to the
subject matter hereof.
(j) This Agreement may be amended, modified, varied or supplanted by the
Parties mutually agreeing to do so in writing.
(k) No failure or delay by any Party to exercise any right of remedy
under this Agreement shall be constured as a waiver thereof nor
shall any single or partial exercise of any right or remedy be
construed as a waiver as the case may be. The rights and remedies
provided in this Agreement are cumulative and are not exclusive of
any rights or remedies provided by law.
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(l) Each of the Parties hereto shall be responsible for its own legal
and other advisory costs incurred in the preparation of this
Agreement. This Clause is without prejudice to and does not affect
LIM's right to collect all fees set out in the Tenth Schedule.
(m) Any notice or other document to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if
delivered or sent to the principal place of business of the
recipient by hand (and receipt acknowledged), by facsimile (where
receipt is acknowledged) or by an internationally recognized
overnight delivery service (such as Federal Express).
(n) The Parties may expressly agree to accept notice or other document
by telex, facsimile, computer transmission or other electronic media
at the principal place of business or other stated address of the
receiving Party.
(o) In the event that HCL executes the purchase of 2,000,000 shares of
GGC common stock together with the warrants (to purchase 4,000,000
shares of GGC common stock attached) pursuant to the Stock Purchase
Agreement hereto attached and set out in the Seventh Schedule the
Shares and Warrants (issued hereunder) as collateral security, but
which are returned to GGC hereunder, shall be part of the total
package of shares and warrants that are made available to HCL by GGC
(by Stock Purchase Agreement dated 1996) in accordance with said
Stock Purchase Agreement.
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IN WITNESS WHEREOF the undersigned duly authorized representatives of the
Parties hereto have hereunto executed and sealed the Agreement on the day and
year first above written.
Global Gold Corporation
By /s/ Xxxxx X. Xxxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
Witness: /s/ Xxxxxx Xxxxxxxx
---------------------
London & International Mercantile Ltd.
By /s/ Xxx X. Xxxxxxxx
---------------------
Name: Xxx X. Xxxxxxxx
Title: Director
Witness: /s/ Xxxxx Xxxxxx
---------------------
HCL Communications Ltd.
By /s/ Alec Trustram Eve
---------------------
Name: Alec Trustram Eve
Title: Executive
Witness: /s/ Xxxxx Xxxxxx
---------------------
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FOURTH SCHEDULE
Subsidiary Agreement dated 18 July 1996
London & International Mercantile Ltd. (LIM)
HCL Communciations Ltd. (HCL)
and
Global Gold Corporation (GGC)
Whereas in Agreement 2 (the "Agreement") between LIM, GGC and HCL, LIM has
agreed to deliver a Guarantee to the Armenian Government and GGC has agreed to
issue as a pledge 1,000,000 shares of common stock (the "Shares") and 2,000,000
warrants (the "Warrants"), in GGC held by HCL under an option agreement (the
"Option") to LIM.
HCL under the Option may at any time up to sixty one (61) days after the date of
execution and delivery hereof offer to buy all or part of the Shares and
Warrants pursuant to the Stock Purchase Agreement set out in the Sixth Schedule
and LIM agrees to allow HCL to exercise the Option by making payment for the
Shares for the sum of US$1.50 per Share and the Warrants at the price set forth
in the Stock Purchase Agreement, to LIM during the continuance of the Guarantee
and thereafter, if there is no payment made by LIM under the Guarantee, to GGC.
LIM and GGC agree to honour the Option and GGC agrees that HCL may purchase all
or part of the Shares and Warrants for the said sum of US$1.50 per Share and the
Warrants at the price set out in the Stock Purchase Agreement in the Sixth
Schedule.
Now therefore
In consideration of the Option granted by LIM and GGC to HCL to buy all or part
of the Shares and Warrants to HCL by GGC, HCL agrees to do as follows:
(a) If HCL offers to buy all or part of the Shares HCL shall promptly pay
US$1.50 per share for the Shares and the Warrants. Any payment thus made
during the continuance of the Guarantee will be received by LIM as
replacement security for the issue of the Guarantee and LIM's fees as set
out in the Tenth Schedule hereto and held in escrow by LIM until release
of the Guarantee, in the same manner as the Shares and Warrants were held
until purchase by HCL.
(b) If HCL fails to offer to purchase all or part of the Shares within a
period of sixty one (61) days from the date of execution and delivery
hereof then HCL shall forfied its Option.
(c) The Miscellaneous provisions in Clause C. of the Principal Agreement apply
to this Subsidiary Agreement where appropriate.
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IN WITNESS WHEREOF the undersigned duly authorised representatives of the
Parties hereto have hereunto executed and sealed this Subsidiary Agreement on
the day and year first above written.
London & International Mercantile Ltd.
By /s/ Xxx X. Xxxxxxxx
---------------------
Name: Xxx X. Xxxxxxxx
Title: Director
Witness: /s/ Xxxxx Xxxxxx
---------------------
HCL Communcations Ltd.
By /s/ Alec Trustram Eve
-----------------------
Name: Alec Trustram Eve
Title: Executive
Witness: /s/ Xxxxx Xxxxxx
-----------------------
Global Gold Corporation
By /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
Witness: /s/ Xxxxxx Xxxxxxxx
-----------------------
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FIFTH SCHEDULE
Personal undertaking of Alec Trustram Eve
I Alec Trustram Eve hereby undertake as follows
That in consideration of the signing by all parties of the Principal Agreement
and the Subsidiary Agreement in the Fifth Schedule I will
(a) Establish and register HCL Communications Ltd. as a Private Limited
Company registered in England.
(b) Transfer to and bind HCL to honour the Agreement as set out in the Fourth
Schedule to the Principal Agreement.
Signed: /s/ Alec Trustram Eve
-----------------------
Witnessed: /s/ Xxxxx Xxxxxx
-----------------------
Dated: 18 July 1996
-----------------------
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SEVENTH SCHEDULE
Personal Pledge by Directors of GGC
We being two of the directors of GGC as part of the security given to LIM under
the Principal Agreement herewith, hereby personally, jointly and severally
pledge, commit, promise and undertake that:
In the event that the Guarantee issued by LIM in accordance with the terms
of the Agreement is called upon by Xxxxxxx Inc. and LIM makes payment of
the sum of US$250,000 to Xxxxxxx Inc;
should LIM after sale of the Shares and Warrants (held as pledge) not have
realised, from the proceeds of said sale, sufficient funds to recover the
principal sum of US$250,000 paid under the Guarantee together with the
costs, charges and fees set out in the Tenth Schedule hereto and all other
reasonable fees and costs incurred by LIM in issuing the Guarantee and
perfecting the Shares and Warrants as security and the recovery,
safekeeping, offer and sale of the Shares and Warrants.
we will jointly and severally without protest or deduction pay to LIM an amount
to cover the difference between all moneys due to LIM and the actual moneys
recovery by LIM from the sale as herein set out.
Signed: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Xxxxx X. Xxxxxxxxx
Signed: /s/ Xxxxxx Xxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxx
Dated: July 18, 1996
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TENTH SCHEDULE
Payable by GGC as and when set out herein
(a) 1.75% per US$250,000 ($4,375) payable upon confirmation by LIM that it is
about to deliver the Guarante to Xxxxxxx Inc.
(b) Validity cost 0.5% per month (minimum period of six months) therefore cost
is $7,500 for the Guarantee payalbe upon the signing hereof.
(c) Reasonable legal fees (not to exceed US$3,000) in reviewing this Agreement
invoiced by LIM payable as and when invoiced.
