April 8, 2009 New Gold Inc. Vancouver, British Columbia V6C 2X8 Dear Sirs:
April 8,
2009
New Gold
Inc.
0000-000
Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
X0X
0X0
Dear
Sirs:
Re:
Arrangement between Western Goldfields Inc. (“WGI”) and New Gold Inc. (“New
Gold”)
This
letter sets out our agreement with respect to certain matters in connection with
the proposed business combination by way of arrangement pursuant to a business
combination agreement dated as of March 3, 2009 between WGI and New Gold (the
“Agreement”). For
good and valuable consideration (for which receipt is hereby acknowledged by
both of us), we agree as follows (and the Agreement, and in the case of section
6 below, the Plan of Arrangement, shall be amended accordingly):
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1.
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With
respect to Xx. Xxxxxx Xxxx, a director of WGI, who will cease to be a
director upon the Effective Time, each of the Western Options owned by him
and outlined in Section 1 of Schedule “A”, upon the Effective Time, be
exchanged for a fully vested New Gold Replacement Option in accordance
with the Plan of Arrangement and, which shall continue for the full
original term of the Western Option it
replaces.
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2.
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Xx.
Xxxx’x 200,000 Western Options outlined in Section 2 of Schedule “A”
shall, upon the Effective Time, be exchanged for fully vested New Gold
Replacement Options in accordance with the Plan of Arrangement, which
shall continue for a period of, and expire after, one year following the
Effective Time (and shall not expire within 90 days of Xx. Xxxx ceasing to
be a director).
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3.
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Section
(i) of Schedule “F” to the Agreement shall be and is hereby amended so
that only the 6,250,000 Western Options held by directors and/or officers
of WGI as set out in Section 3 of Schedule “A” hereto shall have to be
exercised or surrendered for cancellation prior to the Effective
Time.
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4.
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The
Western Options set out in Section 4 of Schedule “A” hereto shall be
exchanged for fully vested New Gold Replacement Options in accordance with
the Plan of Arrangement.
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5.
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Notwithstanding
the terms of the Agreement, the Western Disclosure Memorandum, and the
severance agreement of Xx. Xxxxxxx Xxxxxxxxx, New Gold hereby agrees that
the severance package for Xx. Xxxxxxxxx, in connection with his
termination as an officer of WGI, shall consist of a payment of $816,667
in cash (before any statutory withholdings) and health insurance benefits
shall be maintained for him for a period of two years following his
termination.
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6.
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In
accordance with the Interim Order, section 4.01 of the Plan of Arrangement
shall be amended to provide that the deadline for filing a notice of
dissent with Western shall be no later than 5:00 pm (Toronto time) on the
date that is one Business Day prior to the Western Meeting or any date to
which the Western Meeting may be postponed or
adjourned.
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7.
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Terms
that are not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
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By:
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(Signed)
“Xxxxx Xxxxx”
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Name:
Xxxxx Xxxxx
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Title:
Chief Financial Officer
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Accepted
as of the date above.
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NEW
GOLD INC.
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By:
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(Signed)
“Xxxxxx Xxxxxxxxx”
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Name:
Xxxxxx Xxxxxxxxx
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Title:
President and CEO
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SCHEDULE
“A”
[The
information contained in this Schedule has been omitted by Western to protect
certain personal information]
