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(Send Draft 5/7/2004)
LOAN AGREEMENT
between
THE HOLLANDSCHE TRUST SWITZERLAND
NO. IT 8953/98
("the lender")
GLENCAIRN GOLD MINE (PTY) LIMITED
("the borrower")
CENTURION GOLD HOLDINGS INC
("the shareholder")
CENTURION GOLD HOLDINGS (PTY) LIMITED
("the associated company/s")
AND
("the sureties")
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1. DEFINITIONS
In this agreement unless the context clearly indicates a contrary
intention the following expressions shall bear the meanings assigned to
them below and cognate expressions shall bear corresponding meanings:
1.1 "the agreement" : this agreement;
1.2 "fixed rate" : a rate of 10% (ten percent) per annum;
1.3 "the Group" : the borrower, the shareholder and the associated
companies;
1.5 "loan" : the loan referred to in clause 2;
1.6 "parties" : the lender, the borrower, the shareholder and the
associated companies;
2. THE LOAN
The lender agrees to lend to the borrower who agrees to borrow from the
lender an amount of $625000,00 at 6 rand to the united states dollar (six
hundred and twenty five thousand dollars at exchange rate of six rand to
the united states dollar) on the terms and conditions herein contained.
3. ADVANCES
3.1 The loan shall be advanced by the lender to the borrower against
submission of proof acceptable to the lender confirming that all the
provisions of this Agreement have been complied with.
3.2 The loan amount shall be deposited into the bank account of the
borrower at Standard Bank Limited, Rivonia South Africa branch, Acc.
No 221499237.
4. REPAYMENT
4.1 The loan shall be repaid on or before the 31st June 2005.
4.2 The borrower hereby acknowledges and agrees that the lender shall
have the right to appropriate and allocate any monies received from
the borrower to any indebtedness or obligation of the borrower to
the lender as the lender may deem fit in its sole and absolute
discretion, and the borrower hereby waives the right to name the
debt to which any such monies may or shall in such event be
allocated or appropriated.
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5. RATE OF INTEREST
5.1 For the purposes of calculating interest in terms of this agreement
a month shall be the period from the first day of a month to the
last day of the month, both days inclusive.
5.2 The loan shall bear interest at the rate of 10 % per annum from the
date that the loan is paid into the bank account of the borrower.
5.3 Interest shall be calculated on the balance of capital outstanding
from day to day and is payable monthly in arrear on the last day of
every successive month.
5.4 The first payment of interest shall be due and payable on the last
day of the month during which the loan is deposited into the account
of the borrower.
6. CONDITIONS PRECEDENT
It shall be a condition precedent to any advance whatsoever under this
agreement that:
6.1 the shareholder, the associated company and the sureties shall have
guaranteed the obligations of the borrower under this agreement in
such form and subject to such terms and conditions as the lender may
reasonably require;
6.2 as security for the obligations of the borrower under this agreement
there shall be registered by the lender's conveyancers, in such form
and subject to such terms and conditions as the lender may
reasonably require a general notarial bond by the borrower, for the
capital amount of $6250000,00 (six hundred and twenty five thousand
united states dollars) as per clause 2 over all its movable assets,
in favour of the lender plus additional costs;
7. RESTRICTION OF USE OF LOAN
The borrower shall use the loan solely as working capital at its Primrose
operations and under no circumstances will be utilised to pay any loan
accounts of the past or present shareholders.
8. UNDERTAKINGS BY THE GROUP
8.1 The Group undertakes that as long as any amount is owing under the
loan, it shall:
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8.1.1 allow the duly authorised representatives of the lender at all
reasonable times to inspect its premises, works and equipment
and its books, documents and records and to make extracts from
or copies of the latter on the understanding that the
information obtained from the borrower will remain
confidential and restricted to the lender;
8.1.2 at all times insure with an insurer acceptable to the lender
and keep insured to the satisfaction of the lender all its
present and future insurable assets for such amounts and
against such risks as the lender may from time to time require
and will, if called upon to do so, cede the policies in
respect of assets over which the lender holds security for the
loan to the lender as collateral security. Should the borrower
or the associated companies fail to effect any of the
insurances required in terms of this agreement or to pay the
premiums thereon when due, such failure shall constitute a
breach of this agreement and the lender shall have the right
to effect such insurances and to pay such premiums to the
insurer concerned and to recover the amount so disbursed from
the borrower together with interest at the prime overdraft
rate;
8.1.3 furnish to the lender their audited annual financial
statements, as soon as such documents are available, but
within six months after the end of the financial year
concerned;
8.1.4 at all times maintain the plant, buildings and machinery owned
or used by them in good order and repair to the satisfaction
of the lender;
8.1.5 not materially change the nature of their businesses which
would have the effect of the borrower no longer being a bona
fide operator of the gold mining operation at Primrose;
8.2 not without the prior written consent of the lender:
8.2.1 pay any dividends in cash;
8.2.2 repay any shareholders' loans;
8.2.3 pay any interest on shareholders' loans in cash; or
8.2.4 pay fees, salaries, remuneration, commission or emoluments of
any kind whatsoever to its shareholders;
8.3 The borrower further undertakes that as long as any amount is owing
under this loan, it shall not without the prior written consent of
the lender dispose of any of the assets encumbered under the
notarial bond or further mortgage, pledge or hypothecate, or in any
other way further encumber any of the said assets.
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9. UNDERTAKING BY THE SHAREHOLDER
The shareholder undertakes that as long as any amount is owing under the
loan, it shall give effect to the limitations on and undertakings of the
Group as set out in this Agreement.
10. RESTRICTION ON DISPOSAL OF SHARES
The Group undertakes that until repayment of the loan in full -
10.1 the shareholder will not issue any further shares except as provided
herein; and
10.2 the shareholder will not sell or in any other way dispose of any of
its shares in the borrower;
without the prior written consent of the lender, which consent shall not
be unreasonably withheld.
11. BREACH
11.1 Should the borrower fail for any reason whatsoever to make any
payment of interest or any instalment of capital on due date or
should any member of the Group commit any breach or fail to observe
any of the provisions of this agreement, then -
11.1.1 without prejudice to the lender's rights under clause 14.2,
the rate of interest applicable to the loan shall be increased
to the alternative rate for the duration of such breach or
failure; and
11.1.2 the full amount owing under the loan shall, failing
rectification of such breach or failure within 14 (fourteen)
days of having been given notice in writing by the lender of
such breach or failure, forthwith and without any further
notice become payable by the borrower and the lender shall be
entitled to withhold any amount not yet advanced to the
borrower.
11.2 Without prejudice to any right the lender may have under this
agreement to demand repayment at any time, any amount owing under
this agreement shall immediately and without notice become payable
upon the happening of any of the following events which shall be
deemed to be a breach of this agreement by the borrower namely, if -
11.2.1 any member of the Group is placed in liquidation or under
judicial management, whether provisional or final, or a
special resolution is passed for the winding-up of any member
of the Group; or
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11.2.2 a judgment is entered against the borrower or the shareholder
and the borrower or the shareholder fails within 14 (fourteen)
days after becoming aware of such judgment either to satisfy
the same or to apply for it to be set aside or to appeal
against it and in the event of such application or appeal
being unsuccessful, failing to make immediate payment; or
11.2.3 the borrower fails to utilise the loan or any portion thereof
for the purpose for which it had been advanced; or
11.2.4 without the prior written consent of the lender, any member of
the Group ceases to conduct its business.
12. LIQUID DOCUMENT
12.1 The amount of the borrower's indebtedness to the lender in terms of
this agreement at any time shall be determined and proved by a
certificate signed by any one of the lender's authorised signatories
whose appointment, qualification and authority need to be proved.
12.2 A certificate in terms of clause 12.1 shall be -
12.2.1 binding on the borrower as prima facie proof of the amount of
the borrower's indebtedness hereunder;
12.2.2 valid as a liquid document against the borrower in any
competent court for the purpose of obtaining provisional
sentence against the borrower thereon.
13. ISSUE OF SHARES
13.1 On signature hereof the shareholder shall issue to the lender free
of any consideration 500 000 (five hundred thousand) shares in the
shareholder. The said shares will be issued to the lender in terms
of Rule 144 Restricted stock of the Securities Exchange Commission.
13.2 The parties record that the said shares will only be tradable with
effect from one year of issuance date.
13.3 The lender shall be entitled to retain the aforesaid shares as its
sole and absolute property regardless of whether or not the loan is
repaid. The parties record that the shares represent the estimated
loss of the opportunity cost of the lender selling its aflease
shares to raise the capital for the loan.
13.4 In addition to the aforesaid, the shareholder shall on signature
furnish the lender with a promissory note in terms of which the
shareholder undertakes to issue to the lender in the event of the
borrower failing to pay the capital or the capital becoming due and
payable, shares in the shareholder to the value of the outstanding
debt. The provisions of 12.2 shall apply as to the amount of the
borrower's indebtedness.
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14. SURETY
The sureties hereby interpose and bind themselves as surety for and as co-
principal debtor in solidum jointly and severally with the borrower in
favour of the lender in respect of any claim arising out of this agreement
or any cancellation thereof, under renunciation of the benefits of
excussion, division and cession of action and of the benefit of all other
exceptions which might or could be pleaded by them and they shall:
14.1 be bound by all acknowledgements and admission by the
borrower;
14.2 not be entitled to be released here from by virtue of any
variations or novation of this agreement, the release of any
other security furnished by or on behalf of the borrower or
any extension of time or other indulgence granted by the
lender.
15. CESSION OF LOAN ACCOUNT
15.1 The shareholder hereby cedes to the lender all its rights in and to
its loan account in the borrower and being each and every sum of
money which the borrower may now or at any time hereafter owe to the
shareholder in respect of monies lent and advanced which monies the
shareholder irrevocably undertakes not to withdraw from the borrower
without the prior written consent of the lender.
15.2 The shareholder shall procure that the auditors of the borrower are
advised of the cession and that same is noted in the books and
financial statements of both the borrower and the shareholder.
15.3 This cession is given as a continuing covering security.
15.4 The shareholder and the borrower appoint the lender irrevocably as
their agent with full and unlimited power to realise the rights
ceded in terms of this cession in any way the lender may deem
necessary.
16. CESSION AND PLEDGE OF SHARES
16.1 As security for the proper and timeous performance by the borrower
of all its obligations to the lender, the shareholder hereby pledges
to the lender all right, title and interest whatever which the
shareholder may have to and arising out of the shares held by it in
the borrower.
16.2 The shares shall be regarded as pledge to the lender as a continuing
covering security for all sums of money which the borrower may now
or at any time hereafter owe to the lender.
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16.3 In order to perfect the pledge of the shares, the shareholders
shall, simultaneously with the signing hereof, deliver to the lender
the share certificates in respect of all the shares held by it in
the borrower.
16.4 The shareholder warrants to the lender that it is the beneficial
owner and holder of the shares and that no right of pre-emption or
option exists or will exist in respect of the shares for so long as
this agreement is enforced between the parties.
16.5 If the lender becomes entitled to claim payment from the borrower
and/or the shareholder in respect of any of the obligations for
which this pledge has been given, the lender shall be entitled
without notice to the shareholder to acquire all or any of the
pledged shares at a price equal to the fair value thereof which, in
the absence of agreement shall be determined by the auditors of the
borrower acting as experts and not as arbitrators and their decision
shall be final and binding on the shareholder and/or convey valid
title in the shares to any purchaser thereof.
16.6 If the lender becomes entitled for any reason to exercise its right
set out above, the shareholder hereby irrevocably and in rem suam
nominates, constitutes and appoints the lender as the shareholders
attorney and agent in the shareholders name, place and stead to sign
and execute all such documents and to do all such things as in its
sole and absolute discretion may consider necessary to give effect
to this pledge.
17. GENERAL CONDITIONS
17.1 No alteration, variation or consensual cancellation of this
agreement shall be of any effect unless it is recorded in writing
and signed by all the parties to this agreement of their respective
successors in title.
17.2 No relaxation which the lender may allow the borrower at any time in
regard to the carrying out of this agreement, shall -
17.2.1 prejudice any of the lender's rights under this agreement in
any manner whatever;
17.2.2 be regarded as a waiver of any of those rights.
17.3 The clause headings are inserted for convenience only and shall in
no way affect the construction hereof.
18. DOMICILIUM
18.1 For the purpose of this agreement the borrower choose the following
domiciliums:
18.1.1 the borrower:
18.1.2 the shareholder:
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18.1.3 the associated company:
18.1.4 the sureties
18.2 All notices which are to be given by the lender in terms of this
agreement shall be presumed, until the contrary is proved to have
been received:
18.2.1 if delivered by hand on the date of delivery to the address
above;
18.2.2 if transmitted by facsimile on the first business day after
the transmission.
18.3 The parties may by notice in writing from time to time alter their
addresses and facsimile details.
19. GOVERNING LAW
This Agreement shall be governed by, construed and enforced in accordance
with the laws of the Republic of South Africa.
20. COSTS The borrower shall pay -
20.1 the costs of and incidental to the preparation of this agreement;
20.2 the costs of and incidental to the registration of the notarial
bond;
20.3 the amount of all charges and expenses of whatever nature,
including, but without derogating from the generality of the
aforegoing, attorney and client legal costs and collection
commission incurred by the lender in securing or endeavouring to
secure fulfilment, of any obligations in terms of this agreement.
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For and on behalf of Hollandsche Trust IT 8953/98 Switzerland.
Trustee
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As Witness: Date:
For and behalf of Glencairn Mine PTY Ltd,Centurion Gold Holdings Inc,Centurion
Gold Holdings PTY Ltd.
Director
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As Witness: Date:
