DATED 28 October 2005
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XXXXX LIMITED (1)
and
CENTURION GOLD HOLDINGS, INC (2)
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LOAN AGREEMENT
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GSC Solicitors
00-00 Xxx Xxxxx
Xxxxxx XX0X 0XX
Tel: 000 0000 0000
Fax: 000 0000 0000
Ref: JHB KJ
THIS AGREEMENT is dated 28 October 2005
PARTIES
XXXXX LIMITED, a company registered under the laws of the British Virgin Islands
with company number 583614 whose administrative office is at Pausillipe Chemin
des Trois-Portes 11 CH2000 Neuchatel Switzerland ("Xxxxx"); and
CENTURION GOLD HOLDINGS, INC, a company registered under the laws of Florida USA
with company number 00-0000000 whose registered office is at Mainreef Road,
Primrose, South Africa ("Centurion").
WHEREAS
1. This Agreement is supplemental to an agreement between Centurion and
Escopeta Oil Co., LLC, ("Escopeta") a Texas Corporation dated 17 October
2005 ("the Escopeta Agreement") a copy of which is attached as Annexe "A"
whereby Centurion agreed to purchase an undivided 75% interest ("the
Rights") in the oil & gas leases referred to in the Schedule thereto ("the
Oil & Gas Leases").
2. Xxxxx has agreed to assist Centurion to finance the payments under the
Escopeta Agreement on the terms and upon the conditions set out below.
NOW IT IS AGREED as follows
1. Loans to Centurion
Xxxxx has advanced sums totalling US$2,475,000 to Centurion to fund the
payment by Centurion of the following:
1.1 to Carbon Investments Limited the sum of US$2,000,000 being the initial
cash consideration due and payable to Carbon as consideration for the
acquisition of the Rights under the Escopeta Agreement; and
1.2 to Escopeta the sums of $125,000 and $350,000 being the initial cash sums
pursuant to the Escopeta Agreement,
1.3 the sums referred to in paragraphs 1.1 and 1.2 above are hereinafter
collectively referred to as "the Loans".
2 Interest
Centurion shall pay interest on the Loans to Xxxxx at the rate of 12% per
annum for so long as the Loans and any interest thereon remains
outstanding.
3 Repayment of Loans
The Loans shall be repaid by Centurion on the earlier of the following
events:
3.1 the date of the Sale of the Rights,
3.2 the date upon which Centurion raises additional equity following a placing
sale of its shares,
3.3 24 months from the date hereof, or
3.4 an Event of Default.
4. Security
Centurion as security for the repayment of the Loans and the repayment of
all interest and costs under this Agreement shall charge and pledge its
40% interest in the Rights to Xxxxx.
5. Immediately following execution of this Agreement Centurion shall give
notice of this Agreement and its terms to Escopeta and due notice of the
Agreement shall (if possible) be registered in the relevant land authority
in Alaska where the Oil & Gas Leases were initially issued and registered.
6. Financing of the Escopeta Agreement
Until such time as the Loans are repaid in full together with all interest
and costs Centurion undertakes to finance and make all payments due to
Escopeta under the terms of the Escopeta Agreement on a timeous basis and
to do all acts and things necessary to preserve the rights under the
Escopeta Agreement.
7. Notwithstanding the provisions of paragraph 6. above the Parties shall
mutually cooperate to assist Centurion to raise funds to enable Centurion
to fund all payments due and payable under the Escopeta Agreement.
8. Sale of the Rights
Centurion will use its best endeavours to procure the Rights will be sold
by Centurion to a listed company in the UK or elsewhere for a
consideration to be established following completion of a Competent
Valuation Report to be commissioned by Centurion and will expeditiously
appoint all and any necessary professional advisers to effect such sale.
9. Competent Valuers Report
Centurion will coordinate the preparation of the Competent Valuation
Report as soon as practicably possible with the intent that such Report
shall be available by no later than 31 December 2005 with an Executive
Summary Report giving estimates of the reserves within the Prospects
contained within the Oil & Gas Leases being completed as soon as possible.
10. Conduct in the event of no Sale
In the event that Centurion is not successful in coordinating and securing
a sale of the Rights Centurion shall fulfil its obligations under the
Escopeta Agreement.
11. Restrictions
11.1 Centurion shall not without the prior written approval of Xxxxx:
11.1.1 sell, transfer, lease, assign or otherwise dispose of the Rights or
any part thereof (or any interest therein), or contract so to do
whether or not for valuable consideration;
11.1.2 mortgage encumber, pledge or otherwise charge the Rights or any
part thereof (or any interest therein), or contract so to do;
11.1.3 do or permit or suffer to be done any act or thing whereby
Centurion may be wound up (whether voluntarily or compulsorily);
11.1.4 enter into any contract or transaction relating to the Rights
except in accordance with the terms of this Agreement and in on the
ordinary and proper course of its business in promoting and
developing the Rights on arm's length terms;
11.1.5 borrow or raise money secured on the Rights;
11.1.6 take major decisions relating to the Rights (in excess of US$10,000
being regarded as material for these purposes);
11.1.7 incur capital expenditure in respect of the Rights (in excess of
US$10,000 or such other sum as may be agreed between the Parties
from time to time); and
11.1.8 hold any meeting with Escopeta or purport to transact any business
at any such meeting unless there are present duly authorised
representatives or proxies for Xxxxx.
12. Warranties and Indemnity
In consideration of Xxxxx agreeing to enter into this Agreement Centurion,
warrants and undertakes to Xxxxx that each of the warranties ("the
Warranties") set out in the Schedule is true complete and accurate in all
respects and is not misleading and Centurion agrees and acknowledges that
Xxxxx is entering into this Agreement in reliance on the Warranties and
that Xxxxx may treat the same as conditions of this Agreement;
13. Each of the Warranties shall be separate and independent and shall not be
limited by reference to any other paragraph or sub-paragraph or anything
in this Agreement; and
Centurion covenants with and undertakes to Xxxxx to indemnify Xxxxx
against all losses, costs, charges and expenses (including without
limitation all legal and accountancy expenses) which Xxxxx may incur
whether before or after the start of any action in connection with the
investigation or settlement of a claim against Centurion in respect of a
breach or the enforcement of a settlement and legal proceedings against
Centurion in respect of a breach of the Warranties or a breach of this
Agreement or a breach of the Escopeta Agreement.
14. Event of Default
14.1 There shall be an event of default ("Event of Default"):
14.1.1 if Centurion fails to observe or perform any other obligations
under this Agreement or the Escopeta Agreement or Centurion is or
becomes in breach of any Warranty; or
14.1.2 if a receiver or administrative receiver or manager is appointed of
or in relation to Centurion or the whole or any part of Centurion's
undertaking assets rights or revenues or Centurion's directors
request any person to make any such appointment; or
14.1.3 if an encumbrancer takes possession of or a distress execution
sequestration or process is levied or enforced upon the whole or any
part of Centurion's undertaking assets rights or revenues; or
14.1.4 if Centurion ceases to carry on the whole or a substantial part of
its business or stops or suspends payment of its debts or proposes
or enters into any composition scheme compromise or arrangement with
or for the benefit of its creditors generally or any class of them;
or
14.1.5 if an application is made or a petition is presented by any person
to any court for an administration order in relation to Centurion;
or
14.1.6 if Centurion is (or admits that it is) unable to pay its debts as
they fall due or are deemed unable to pay its debts under section
123(1) of the Insolvency Xxx 0000; or
14.1.7 if Centurion becomes insolvent or any petition is presented by any
person or any order is made by any court or any meeting is convened
for the purpose of considering a resolution or any resolution is
passed for its winding-up liquidation or dissolution; or
14.1.8 if any of Centurion's shareholders issues a petition pursuant to
Xxxxxxx 000 Xxxxxxxxx Xxx 0000; or
14.1.9 if any circumstances arise which in Carbon's opinion has or may
have a material adverse effect on Centurion's ability to perform its
obligations under this Agreement or the Escopeta Agreement; or
14.1.10 if there is a change in the ownership or control of Centurion
(except where Carbon's prior written consent has been obtained); or
14.1.11 any event described in paragraphs 15.1.2 to 15.1.8 inclusive above
or any analogous event occurs to the Company in any other
jurisdiction.
14.2 If any Event of Default shall occur and be continuing after a period of
14 days following notice of an Event of Default being given by Xxxxx to
Centurion, then Xxxxx shall cease to be under any further commitment to
Centurion and Xxxxx may at any time thereafter (notwithstanding any
conflicting agreement or arrangement) declare that this Agreement shall
be terminated with immediate effect in which case Xxxxx shall have the
right to acquire Centurion's 40% interest in the Rights for US$1.
15. Invalidity of part of Agreement
In the event that there shall be a final adjudication that any
provisions or provision of this Agreement is, are or shall be invalid,
illegal or contrary to public policy such adjudication shall not affect
any of the other provisions of this Agreement which other provisions
shall continue in full force and effect.
16. Notices
16.1 Any notice to be given pursuant to this Agreement shall be in writing and
sent by registered or recorded delivery return receipt requested. Any
notice to a party shall be sent to the address of such party as set out in
this Agreement or to such other address as such party may have designated
by notice pursuant to this paragraph.
17. Duration and assignment
17.1 This Agreement shall supersede any previous agreements between the Parties
and this Agreement shall continue in full force and effect until the
earlier of:
17.1.1 the date of repayment of the Loans and all interest and costs
payable under this Agreement
17.1.2 the date on which the Parties have concluded a sale of the Rights
in accordance with the provisions of paragraph 7. above; or
17.1.3 the date on which the Parties have successfully exploited the
Rights under the Escopeta Agreement in accordance with the
provisions of paragraph 10. above; or
17.1.4 the date of commencement of Centurion's winding up; or
17.1.5 the occurrence of an Event of Default.
17.2 Centurion shall not be entitled to assign this Agreement or any of its
rights and obligations under it or any of its interest in the Rights
unless such assignment has previously been agreed in writing by Xxxxx.
17.3 This Agreement shall enure for the benefit of and be binding upon the
respective successors in title and/or personal representatives and/or
permitted assigns of the Parties.
18. Costs
Centurion shall be responsible for the payment of all professional fees
incurred by the Parties in connection with the negotiation preparation and
completion of this Agreement.
19. Governing Law
This Agreement should be governed by the laws of England & Wales and the
Parties shall submit themselves to the exclusive jurisdiction of England &
Wales
As Witness the Parties have set their hands the day and year first above written
Signed by )
for and on behalf of )
Xxxxx Limited )
In the presence of )
Signed by Xxxx Xxxx )
for and on behalf of )
Centurion Gold Holdings, Inc )
In the presence of )
SCHEDULE
Warranties
1. All information contained in this Agreement and all other information
relating to Centurion is true, accurate and complete in every respect and
there is no fact or matter which renders any such matters or information
untrue, incomplete or misleading or the disclosure of which might
reasonably affect the willingness of Xxxxx to enter into this Agreement.
2. Centurion has full power and authority to enter into and perform this
Agreement and the Escopeta Agreement and this Agreement and the Escopeta
Agreement constitute valid and binding obligations on Centurion in
accordance with their terms.
3. The entry into this Agreement or the Escopeta Agreement or performing the
obligations in such agreements has not resulted nor will result in the
breach of any obligation of Centurion under:
3.1 its memorandum or articles of association, statutes, bye laws or
other terms of charter or corporate regulation;
3.2 any law or any order, judgment or decree of any court or
governmental agency including all relevant regulations of the
Securities Exchange Commission in the United States of America; or
3.3 any contract, undertaking or agreement.
4. Centurion is entitled to enter into this Agreement and the Escopeta
Agreement without the consent of any third party.
5 Centurion has conducted and is conducting its business in accordance with
all applicable laws and regulations and Centurion is not in breach of any
order, decree or judgement of any court or any governmental or regulatory
authority.
6 Centurion is not a party to any litigation or arbitration proceedings or
any regulatory proceedings before any tribunal, assessor or expert in any
jurisdiction and there are no proceedings of any of the aforesaid kind
pending or threatened either by or against Centurion and there are no
facts or circumstances which are likely to give rise thereto nor is there
any dispute with any revenue authority in relation to the affairs of
Centurion.
7 No distress, execution or other process has been levied in respect of
Centurion which remains undischarged and there is no unsatisfied judgement
or Court order outstanding against Centurion.
8 No receiver or manager has been appointed of the whole or any part of the
assets or undertakings of Centurion.
9 No meeting has been convened at which a resolution will be proposed, no
resolution has been passed, no petition has been presented and no order
has been made for the winding up of Centurion.
ANNEXE "A"
The Escopeta Agreement
["to be attached"]
