UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2014
Commission File Number 001-32399
BANRO CORPORATION
(Translation of registrant’s name into English)
1 First Canadian Place
100 King Street West,
Suite 7070
Toronto, Ontario, Canada
M5X
1E3
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F
Form 20-F[
]
Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1):[ ]
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders.
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7):[ ]
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other
document that the registrant foreign private issuer must furnish and make public
under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant’s “home country”), or under the
rules of the home country exchange on which the registrant’s securities are
traded, as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrant’s security
holders, and, if discussing a material event, has already been the subject of a
Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
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BANRO CORPORATION |
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|
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/s/ Donat Madilo |
| Date: August 18, 2014 |
Donat Madilo |
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Chief Financial Officer |
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INDEX TO EXHIBITS
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of August 18, 2014, by and among Banro Corporation, a Canadian corporation, with headquarters located at 1 First Canadian Place, 100 King Street
West, Suite 7070, Toronto, Ontario, Canada M5X 1E3 (the "Company"), and the investors listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 903 of Regulation S ("Regulation S") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act") and, to the extent applicable, National Instrument 45-106 – Prospectus and Registration Exemptions under
applicable Canadian securities laws.
B. The Company has authorized (i) a new series of Series A Priority Secured Notes of the Company, in substantially the form attached hereto as Exhibit A (the "Priority Notes") and (ii) a new series of
Series B Parity Secured Notes of the Company, in substantially the form attached hereto as Exhibit A (the "Parity Notes").
C. Each Buyer wishes to purchase, and the Company wishes to sell, at the Initial Closing (as defined below) upon the terms and conditions stated in this Agreement, (i) that aggregate principal amount of Priority Notes
set forth opposite such Buyer's name in column (3)(a) on the Schedule of Buyers attached hereto (which aggregate principal amount of Notes for all Buyers shall be $19,700,000) (the "Initial Priority Notes"), (ii) that aggregate principal
amount of Parity Notes set forth opposite such Buyer's name in column (4)(a) on the Schedule of Buyers attached hereto (which aggregate principal amount of Notes for all Buyers shall be $8,000,000) (the "Initial Parity Notes," and
together with the Initial Priority Notes, the "Initial Notes") and (iii) warrants, in substantially the form attached hereto as Exhibit B (the "Warrants"), representing the right to acquire that number of common shares of the
Company, no par value (the "Common Shares") set forth opposite such Buyer's name in column (6) on the Schedule of Buyers (as exercised, collectively, the "Warrant Shares").
D. Subject to the terms and conditions set forth in this Agreement, each Buyer wishes to purchase, and the Company wishes to sell, at up to two Additional Priority Closings (as defined below) up to that aggregate
principal amount of Priority Notes set forth opposite such Buyer's name in column (3)(b) on the Schedule of Buyers attached hereto (which aggregate principal amount of Priority Notes for all Buyers in all Additional Priority Closings shall
be up to $7,300,000) (the "Additional Priority Notes"). In addition, in exchange for some or all of the Parity Notes, the Company may issue more Additional Priority Notes pursuant to the terms set forth in the Parity Notes.
E. Subject to the terms and conditions set forth in this Agreement, each Buyer wishes to purchase, and the Company wishes to sell, at the Additional Parity Closing (as defined below) up to that aggregate principal
amount of Parity Notes set forth opposite such Buyer's name in column (4)(b) on the Schedule of Buyers attached hereto (which aggregate principal amount of Priority Notes for all Buyers shall be up to $500,000) (the "Additional Parity Notes" and together with the Additional Priority
Notes, the "Additional Notes" and the Additional Notes together with the Initial Notes, the "Notes").
F. The Company issued 10% senior secured notes due 2017 under an indenture dated as of March 2, 2012 (as may be amended, restated, modified or supplemented from time to time, the "Indenture") among the Company,
the guarantors named on the signature page thereto, and Equity Financial Trust Company as trustee and collateral agent.
G. In connection with the transactions pursuant to the Indenture, the Company entered into a collateral trust agreement dated as of March 2, 2012 (as may be amended, restated, modified or supplemented from time to time
(the "Collateral Trust Agreement") among the Company, the initial guarantors named on the signature pages thereto, and Equity Financial Trust Company, as indenture trustee and collateral agent (in such capacity, and as such capacity is
further broadened in the Collateral Trust Agreement, the "Collateral Agent").
H. The Collateral Trust Agreement sets forth the terms on which each Parity Lien Secured Party and each future Priority Lien Secured Party (as such terms are defined therein) appoint the Collateral Agent to act as the
trustee for the present and future holders of the Parity Lien Obligations and Priority Lien Obligations (as such terms are defined therein), respectively, to receive, hold, maintain, administer and distribute any collateral delivered to the
Collateral Agent and to enforce the collateral documents described in Schedule 1 (such documents as set forth in Schedule 1, as may be updated from time to time, are collectively the "Collateral Documents") and granted in favor of the
Collateral Agent.
I. Upon compliance with the procedures set forth in Section 3.8 of the Collateral Trust Agreement, including the execution by the Priority Debt Representative (as defined in Section 4(p) below) of the collateral trust
joinder in the form attached to the Collateral Trust Agreement and hereto as Exhibit H (the "Priority Joinder"), the Initial Priority Notes and the Additional Priority Notes will be designated as Priority Lien Debt (as such term is defined in
the Collateral Trust Agreement) creating Priority Lien Obligations, will rank senior to all existing and future indebtedness of the Company and its Subsidiaries (as defined in Section 3(a)), including the Parity Lien Debt (as such term is defined in
the Collateral Trust Agreement), and will be secured by a Priority Lien (as such term is defined in the Collateral Trust Agreement), on a pari passu basis with all existing Priority Lien Debt, in all of the current and future assets of the Company
and its direct and indirect Subsidiaries, currently formed or formed in the future, as evidenced by the Collateral Documents.
J. Upon compliance with the procedures set forth in Section 3.8 of the Collateral Trust Agreement, including the execution by the Parity Debt Representative (as defined in Section 4(q) below) of the collateral trust
joinder in the form attached to the Collateral Trust Agreement and hereto as Exhibit I (the " Parity Joinder" and together with the Priority Joinder, the "Joinders"), the Initial Parity Notes and the Additional Parity Notes will
be Parity Lien Debt (as such term is defined in the Collateral Trust Agreement) creating Parity Lien Obligations, will rank senior to all existing and future indebtedness of the Company and its Subsidiaries other than the Priority Lien Debt, and
will be secured by a Parity Lien (as such term is defined in the Collateral Trust Agreement), on a pari passu basis with all existing Parity Lien Debt, in all of the current and future assets of the Company and its direct and indirect Subsidiaries, currently formed or formed in the future, as evidenced by the
Collateral Documents.
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K. The Notes will be guaranteed by all direct and indirect Subsidiaries of the Company (other than those incorporated in Barbados), currently formed or formed in the future, as evidenced by a guarantee agreement, in the
form attached hereto as Exhibit C (as amended or modified from time to time in accordance with its terms, the "Guarantee Agreement").
L. The Notes, the Warrants and the Warrant Shares collectively are referred to herein as the "Securities".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) Purchase of Notes and Warrants.
(i) Subject to the satisfaction (or waiver by the party entitled to so waive) of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Initial Closing Date (as defined below), (x)
the principal amount of Initial Priority Notes as is set forth opposite such Buyer's name in column (3)(a) on the Schedule of Buyers, (y) the principal amount of Initial Parity Notes as is set forth opposite such Buyer's name in column (4)(a) on the
Schedule of Buyers, and (z) that number of Warrants to acquire up to that number of Warrant Shares as is set forth opposite such Buyer's name in columns (5) and (6), respectively, on the Schedule of Buyers (the "Initial Closing").
(ii) Subject to the satisfaction (or waiver by the party entitled to so waive) of the conditions set forth in Sections 1(c), 6(b) and 7(b) below, the Company shall issue and sell to each Buyer, and each Buyer severally,
but not jointly, agrees to purchase from the Company on one or more Additional Priority Closing Dates (as defined below), up to the principal amount of Additional Priority Notes as is set forth opposite such Buyer's name in column (3)(b) on the
Schedule of Buyers (each an "Additional Priority Closing").
(iii) Subject to the satisfaction (or waiver by the party entitled to so waive) of the conditions set forth in Sections 1(d), 6(b) and 7(b) below, the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the Company on the Additional Parity Closing Date (as defined below), up to the principal amount of Additional Parity Notes as is set forth opposite such Buyer's name in column (4)(b) on the
Schedule of Buyers (the "Additional Parity Closing" and together with the Additional Priority Closings, each an "Additional Closing", and each Additional Closing together with the Initial Closing, each a "Closing").
(b) Initial Closing Date. The date and time of the Initial Closing (the "Initial Closing Date") shall be 10:00 a.m., New York City time, on the date hereof (or such other date and time as is mutually
agreed to by the Company and each Buyer) after notification of satisfaction (or waiver by the party entitled to so waive) of the conditions to the Initial Closing set forth in Sections 6 and 7 below, at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, subject to the notification of the satisfaction (or waiver) of the conditions to the Initial Closing set forth in
Sections 6(a) and 7(a) below.
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(c) Additional Priority Closing Dates. Subject to the Company satisfying all of the applicable conditions set forth in Section 7(b) and the conditions contained in this Section 1(c), the Company may require the
Buyers to purchase up to the principal amount of Additional Priority Notes as set forth opposite each such Buyer's name in column (3)(b) on the Schedule of Buyers as designated in a Company Additional Priority Closing Notice (as defined below), but
not less than $1.5 million in aggregate principal amount for all Buyers at any Additional Priority Closing. The Company may exercise its right to effect an Additional Priority Closing under this Section 1(c) by delivering a written notice
thereof by facsimile or electronic mail and overnight courier to all, but not less than all, of the Buyers (each a "Company Additional Priority Closing Notice" and the date all of the Buyers receive such notice is referred to as the
"Company Additional Priority Closing Notice Date"). Without the prior written consent of the Required Holders, the Company may not deliver more than two (2) Company Additional Priority Closing Notices, nor may the aggregate principal amount
of Additional Priority Notes to be issued at any Additional Priority Closings (together with any Additional Priority Notes issued at any prior Additional Priority Closing) exceed the principal amount of Additional Priority Notes set forth opposite
each Buyer's name in column (3)(b) of the Schedule of Buyers. Each Company Additional Priority Closing Notice shall state the date on which such Additional Priority Closing shall occur, which date (i) shall not be later than twenty (20) Business
Days, nor sooner than ten (10) Business Days, after the applicable Company Additional Priority Closing Notice Date and (ii) shall not be later than September 30, 2014. Contemporaneously with the delivery of each Company Additional Priority Closing
Notice, the Company shall deliver to each Buyer all of the applicable closing deliverables contemplated pursuant to Section 7(b) to be held in escrow by the Buyers pending consummation of such Additional Priority Closing. If the Company delivers a
Company Additional Priority Closing Notice and on or prior to the date scheduled for the applicable Additional Priority Closing as set forth in the applicable Company Additional Priority Closing Notice, the Company is no longer in compliance with
all of the applicable closing conditions set forth in Section 7(b), the Company shall deliver a prompt written notice, but in any event within one (1) Business Day of the date of such non-compliance, to each of the Buyers indicating such
non-compliance (each a "Non-Compliance Notice"). If the Company delivers a Non-Compliance Notice to the Buyers or, after the Company has delivered a Company Additional Priority Closing Notice, any Buyer has otherwise determined that the
Company has not satisfied one or more applicable conditions to the applicable Additional Priority Closing set forth in Section 7(b), the Required Holders (as defined below) may elect, in their sole discretion, by written notice to the Company on or
prior to October 6, 2014 (such notice by the Required Holders, a "Buyer Additional Priority Closing Notice" and the date the Company receives such notice is referred to as a "Buyer Additional Priority Closing Notice Date"), to waive
any such condition or conditions, and may elect to purchase on behalf of all Buyers all or any portion of the Additional Priority Notes up to each Buyers pro rata portion of the maximum principal amount of Additional Priority Notes set forth in one
or more Company Additional Priority Closing Notices. Each Buyer Additional Priority Closing Notice shall also set forth the date of the consummation of the applicable Additional Priority Closing, which shall not be less than three (3) Business Days
nor more than ten (10) Business Days after the applicable Buyer Additional Priority Closing Notice Date. For the avoidance of doubt, if the Company is not in compliance with one or more applicable conditions of Section 7(b) hereof and the Required Holders have not delivered a Buyer Additional Priority Closing Notice, no Buyer shall have any obligation to
purchase any Additional Priority Notes. The location of any Additional Priority Closing shall be at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022. If the Company is in compliance with all of the applicable
provisions of Section 7(b) from the time of delivery of an Company Additional Priority Closing Notice through and including the date of the applicable Additional Priority Closing set forth in the applicable Company Additional Priority Closing
Notice, the applicable Additional Priority Closing shall occur on the date set forth in the applicable Company Additional Priority Closing Notice, and, otherwise, subject to the satisfaction or waiver of the applicable conditions to closing set
forth in Sections 6(b) and 7(b) hereof, such Additional Priority Closing shall occur on the date set forth in the applicable Buyer Additional Priority Closing Notice (such closing date, an "Additional Priority Closing Date").
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(d) Additional Parity Closing Date. Subject to the Company satisfying all of the conditions set forth in Section 7(b) and the conditions contained in this Section 1(d), the Company may require the Buyers to
purchase up to the principal amount of Additional Parity Notes as set forth opposite each such Buyer's name in column (4)(b) on the Schedule of Buyers as designated in the Company Additional Parity Closing Notice (as defined below). The Company may
exercise its right to effect the Additional Parity Closing under this Section 1(d) by delivering a written notice thereof by facsimile or electronic mail and overnight courier to all, but not less than all, of the Buyers (the "Company Additional
Parity Closing Notice" and the date all of the Buyers receive such notice is referred to as the "Company Additional Parity Closing Notice Date"). The Company Additional Parity Closing Notice shall state the date on which the Additional
Parity Closing shall occur, which date (i) shall not be later than twenty (20) Business Days, nor sooner than ten (10) Business Days, after the Company Additional Parity Closing Notice Date and (ii) shall not be later than December 31, 2014.
Contemporaneously with the delivery of the Company Additional Parity Closing Notice, the Company shall deliver to each Buyer all of the closing deliverables contemplated pursuant to Section 7(b) to be held in escrow by the Buyers pending
consummation of the Additional Parity Closing. If the Company delivers a Company Additional Parity Closing Notice and on or prior to the date scheduled for the Additional Parity Closing as set forth in the Company Additional Parity Closing Notice,
the Company is no longer in compliance with all of the closing conditions set forth in Section 7(b), the Company shall promptly deliver a Non-Compliance Notice, but in any event within one (1) Business Day of the date of such non-compliance, to each
of the Buyers indicating such non-compliance. If the Company delivers a Non-Compliance Notice to the Buyers or, after the Company has delivered a Company Additional Parity Closing Notice, any Buyer has otherwise determined that the Company has not
satisfied one or more conditions to the Additional Parity Closing set forth in Section 7(b), the Required Holders (as defined below) may elect, in their sole discretion, by written notice to the Company on or prior to January 5, 2015 (such notice by
the Required Holders, a "Buyer Additional Parity Closing Notice" and the date the Company receives such notice is referred to as the "Buyer Additional Parity Closing Notice Date"), to waive any such condition or conditions, and may
elect to purchase on behalf of all Buyers all or any portion of the Additional Parity Notes up to each Buyers pro rata portion of the maximum principal amount of Additional Parity Notes set forth in the Company Additional Parity Closing Notice. The
Buyer Additional Parity Closing Notice shall also set forth the date of the consummation of the Additional Parity Closing, which shall not be less than three (3) Business Days nor more than ten (10) Business Days after the Buyer Additional Parity Closing Notice Date. For the avoidance of doubt, if the Company is not in compliance with one or more conditions of Section 7(b) hereof and the Required Holders have not
delivered a Buyer Additional Parity Closing Notice, no Buyer shall have any obligation to purchase any Additional Parity Notes. The location of any Additional Parity Closing shall be at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue,
New York, New York 10022. If the Company is in compliance with all of the provisions of Section 7(b) from the time of delivery of the Company Additional Parity Closing Notice through and including the date of the Additional Parity Closing set forth
in the Company Additional Parity Closing Notice, the Additional Parity Closing shall occur on the date set forth in the Company Additional Parity Closing Notice, and, otherwise, subject to the satisfaction or waiver of the conditions to closing set
forth in Sections 6(b) and 7(b) hereof, the Additional Parity Closing shall occur on the date set forth in the applicable Buyer Additional Parity Closing Notice (such closing date, the "Additional Parity Closing Date" and together with each
Additional Priority Closing Date, an "Additional Closing Date" and each Additional Closing Date together with the Initial Closing Date, each a "Closing Date").
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(e) Purchase Price. The aggregate purchase price for the Initial Notes and the Warrants to be purchased by each Buyer at the Initial Closing (the "Initial Purchase Price") shall be the amount set forth
opposite each Buyer's name in column (7) of the Schedule of Buyers. Each Buyer shall pay $1,000 for each $1,000 of principal amount of Initial Notes and related Warrants to be purchased by such Buyer at the Initial Closing. The Buyers and
the Company mutually agree that the allocation of each $1,000 of Purchase Price between the Initial Notes and the Warrants shall be $50 allocated to the Warrants and $950 allocated to the Initial Notes, and neither the Buyers nor the
Company shall take any position inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes. The aggregate purchase price for Additional Notes to be purchased by each Buyer at each
Additional Closing (the "Additional Purchase Price" and together with the Initial Purchase Price, the "Purchase Price") shall be $1,000 for each $1,000 of principal amount of Additional Notes to be purchased by such Buyer at
such Additional Closing.
(f) Form of Payment – Initial Closing. On the Initial Closing Date, (i) each Buyer shall pay its applicable Initial Purchase Price to the Company for the Initial Notes and the Warrants to be issued and sold
to such Buyer at the Initial Closing (less, in the case of Gramercy Distressed Opportunity Fund II LP ("Gramercy"), the amounts withheld pursuant to Section 4(g)), by wire transfer of immediately available funds in accordance with the
Company's written wire instructions and (ii) the Company shall deliver to Gramercy Funds Management LLC on behalf of each Buyer (A) the Initial Priority Notes (allocated in the principal amounts as is set forth opposite such Buyer's name in column
(3)(a) on the Schedule of Buyers) which such Buyer is then purchasing hereunder, (B) the Initial Parity Notes (allocated in the principal amounts as is set forth opposite such Buyer's name in column (4)(a) on the Schedule of Buyers) which such Buyer
is then purchasing hereunder, and (C) the Warrants (allocated in the amounts as is set forth opposite such Buyer's name in column (5) on the Schedule of Buyers) which such Buyer is purchasing hereunder, in each case duly executed on behalf of the
Company and registered in the name of such Buyer or its designee.
(g) Form of Payment – Additional Closings. On each Additional Closing Date, (i) each Buyer shall pay its applicable Additional Purchase Price to the Company for the Additional Notes to be issued and sold to such Buyer at such Additional Closing (less, in the case of Gramercy, the amounts withheld pursuant to Section 4(g)), by wire transfer of immediately available funds in accordance with the Company's
written wire instructions and (ii) the Company shall deliver to Gramercy Funds Management LLC on behalf of each Buyer the applicable Additional Notes (allocated in the principal amounts as is set forth opposite such Buyer's name in columns (3)(b)
and 4(b) on the Schedule of Buyers or such lesser principal amount as set forth in the applicable Company Additional Priority Closing Notice or the Company Additional Parity Closing Notice, as the case may be, or as such Buyer may elect to purchase
in accordance with Section 1(c) or Section 1(d), as applicable, as the result of a delivery of a Non-Compliance Notice) which such Buyer is then purchasing hereunder, duly executed on behalf of the Company and registered in the name of such Buyer or
its designee.
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2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants with respect to only itself that:
(a) Reliance on Exemptions and Exclusions. Such Buyer
understands that the Securities are being offered and sold to it (i) in reliance on the specific exclusion from the registration requirements of United States federal and state securities laws, as the case may be, provided by Rule 903 of Regulation
S under the 1933 Act, and (ii) outside of Canada with reasonable steps taken to ensure that the Securities come to rest outside of Canada, and that the Company is relying in part upon the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exclusion, to ensure the offer and sale of the Securities is effected outside Canada and to
determine the eligibility of such Buyer to acquire the Securities. Accordingly, each Buyer represents and warrants that such Buyer is acquiring the Notes and Warrants in an "offshore transaction" as defined in Regulation S (an "Offshore
Transaction") and is not a "U.S. person" as defined in Regulation S (a "U.S. Person"), a resident of any province of Canada or acquiring the Securities for the account or benefit of, or for resale to a U.S. Person or a resident of any
province of Canada. Each Buyer acknowledges and agrees that the Warrants may be exercised only in an "Offshore Transaction" by a person that is not a U.S. Person or exercising the Warrants on behalf of a U.S. Person (or, for the period described in
the legends contemplated by Section 3(rr), on behalf of a resident of any province of Canada) unless, in the case of an exercise by or on behalf of a U.S. Person, an exemption from registration under the 1933 Act is available and the Company has
received an opinion of counsel to such effect in form and substance reasonably satisfactory to it.
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(b) Transfer or Resale. Such Buyer is acquiring the Notes and Warrants in offshore transactions in accordance with Rule 903 of Regulation S and understands that: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws; and (ii) such Buyer agrees that if it decides to offer, sell or otherwise transfer any of the Notes or Warrants or Warrant Shares, such Notes and Warrants or Warrant Shares, may be
offered, sold or otherwise transferred only: (A) to the Company or any of its Subsidiaries; (B) outside the United States in accordance with Regulation S under the 1933 Act and within Canada in compliance with Applicable Securities Laws (and,
including, without limitation, the legends contemplated by Section 3(rr)) or elsewhere in compliance with local laws; or (C) within the United States (1) pursuant to an effective registration statement under the 1933 Act, (2) in accordance with an
exemption from registration under the 1933 Act provided by Rule 144 or Rule 144A thereunder, if available, and in compliance with any applicable state securities laws or (3) in a transaction that does not require registration under the 1933 Act or applicable state securities laws. Notwithstanding the foregoing, but
subject to compliance with Applicable Securities Laws, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to
be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or
any other Transaction Document (as defined below), including, without limitation, this Section 2(b). For purposes of this Agreement, (i) "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization and a government or any department or agency thereof, (ii) "Applicable Securities Laws" means, collectively, the applicable securities legislation and regulations of, and the instruments, policies,
rules, orders, codes, notices and published interpretation notes of, the securities regulatory authorities of the provinces and territories of Canada, their respective regulations, rulings, rules, orders and prescribed forms thereunder, the
applicable published policy statements issued by the respective provincial securities regulators (each, a "Securities Commission") thereunder and the applicable securities laws of the United States to the extent the context requires, and
(iii) "United States" or "U.S." means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia.
(c) Validity; Enforcement. This Agreement and the other Transaction Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
(d) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the other Transaction Documents to which such Buyer is a party and the consummation by such Buyer of the transactions
contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(e) Placement Agents. Such Buyer has not engaged any placement agent or other agent in connection with the sale of the Securities and there is no other Person acting or purporting to act at the request of such
Buyer who is entitled to any brokerage, agency or other fiscal advisory or similar fee in connection with the transactions contemplated herein.
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(f) Own Account. Each Buyer is purchasing the Notes and Warrants as principal for its own account and not for the benefit of any other Person.
(g) Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
(a) Organization and Qualification. (i) The Company is up to date in all filings under the Canada Business Corporations Act (the "CBCA") and Applicable Securities Laws. The Company and the Company's
"Subsidiaries" (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns more than 50% of the share capital or equity or similar interests) are entities duly organized and validly existing and
in good standing (if applicable) under the laws of the jurisdiction in which they are formed. The Company and its Subsidiaries have the requisite power and authorization to own their properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and, to the extent legally applicable, is in good standing (if applicable) in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect. Without limitation to the foregoing, the
Company and its Subsidiaries have complied with all public filing requirements required to be filed under the laws of the Democratic Republic of the Congo ("DRC") in relation to the Subsidiaries, the Material Properties and the Material
Permits. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, individually or taken as a whole, or on the transactions contemplated hereby or in the other Transaction Documents (as defined in Section 3(b)) or by the agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company or any Subsidiary to perform its obligations under the Transaction Documents.
(ii) The Company has no Subsidiaries except as set forth on Schedule 3(a). As used herein, (a) "Material Permit" means each of the 13 exploitation permits relating to the Company's Twangiza, Namoya,
Lugushwa and Kamituga properties, and each of the Company's 14 exploration permits, in each case as described in the Company's Annual Information Form for the financial year ended December 31, 2013; and (b) "Material Properties" means the
material mineral properties and projects of the Company and Subsidiaries, more particularly set out in Schedule "A" hereto, including, without limitation, the material mineral properties known as the Twangiza, Lugushwa, Namoya and Kamituga
projects, and each a "Material Property".
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(b) Authorization; Enforcement; Validity. The Company has the requisite power and authority, to the extent it is a party thereto or bound thereby, to enter into and perform its obligations under this Agreement,
the Notes, the Warrants, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Guarantee Agreement, the Joinders, the Lock-Up Agreements (as defined in Section 7(a)(xxii)), the Collateral Documents and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the
"Transaction Documents") and the Company has the requisite power and authority to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company, to the extent it
is a party thereto or bound thereby, and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes and the Warrants, and the reservation for issuance and the
issuance of the Warrant Shares issuable upon exercise of the Warrants have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its
shareholders (other than such filings required under Applicable Securities Laws and the approval of the Toronto Stock Exchange ("TSX") and NYSE MKT LLC ("NYSE MKT", and together with TSX, the "Principal Markets"). This
Agreement and the other Transaction Documents, to the extent the Company is a party thereto, have been duly executed and delivered by the Company, and constitute legal, valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and remedies. Each of the Subsidiaries party to any of the Transaction Documents has the requisite power and authority to enter into and perform its obligations under such Transaction Documents. The
execution and delivery by the Subsidiaries party to any of the Transaction Documents of such Transaction Documents and the consummation by such Subsidiaries of the transactions contemplated thereby have been duly authorized by such Subsidiaries'
respective boards of directors (or other applicable governing body) and (other than filings as may be required by state securities agencies or similar agencies) no further filing, consent, or authorization is required by such Subsidiaries, their
respective boards of directors (or other applicable governing body) or shareholders (or other applicable owners of equity of such Subsidiaries). The Transaction Documents to which any of the Subsidiaries are parties have been duly executed and
delivered by such Subsidiaries, and constitute legal, valid and binding obligations of such Subsidiaries, enforceable against them in accordance with their respective terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
(c) Issuance of Securities. The issuance of the Notes and the Warrants are duly authorized by the board of directors of the Company and, upon issuance in accordance with the terms of the Transaction Documents,
shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof. As of Initial Closing, a number of Common Shares shall have been duly authorized and reserved for issuance which equals or exceeds the maximum
number of Warrant Shares issuable pursuant to the Warrants (without taking into account any limitations or adjustments on the exercise of the Warrants set forth in the Warrants). As of the date hereof, there are an unlimited number of Common Shares
authorized and unissued. Upon exercise of the Warrants in accordance with the terms of the Warrants, the Warrant Shares will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges
with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Shares. Assuming the accuracy of each of the representations and warranties and performance of each of the undertakings set forth in Section 2 of this Agreement and compliance with the terms of this Agreement and the Warrants in connection with the exercise thereof, the offer and issuance
by the Company of the Securities is not required to be registered under the 1933 Act and is exempt from the prospectus and registration requirements of Applicable Securities Laws of Canada.
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(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and any of its Subsidiaries party to any of the Transaction Documents and the consummation by the Company and
any of its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the Warrants and reservation for issuance and issuance of the Warrant Shares) will not (i) result in a
violation of any memorandum of association, certificate or articles of incorporation, certificate of formation, bylaws, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any share capital of
the Company or any of its Subsidiaries or the articles of association or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws or Applicable Securities Laws of Canada and regulations and the rules and regulations of either Principal Market applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected).
(e) Consents. Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, except
for the following: (i) the filing by the Company of a listing application and a notice for acceptance of a private placement for the Warrant Shares with the Principal Markets, which shall be done pursuant to the rules of the Principal Markets and
(ii) any notices or filings required to be given or made with the Principal Markets which have been or will be given or made on a timely basis by the Company. All consents, authorizations, orders, filings and registrations which the Company or any
of its Subsidiaries is required to obtain prior to the issuance of the Initial Notes and the Warrants have been obtained or effected on or prior to the Initial Closing Date, and the Company and its Subsidiaries are unaware of any facts or
circumstances that might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of
either Principal Market and has no knowledge of any facts that would reasonably lead to delisting or suspension of the Common Shares in the foreseeable future. The issuance by the Company of the Securities shall not have the effect of delisting or
suspending the Common Shares from either Principal Market.
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(f) Acknowledgment Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm's length purchaser in relation to the Company with
respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer's purchase of the Securities. The Company further represents to each Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its
representatives.
(g) Placement Agent's Fees. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or brokers' commissions (other than for persons engaged by any Buyer or its
investment advisor) relating to or arising out of the transactions contemplated hereby, if any, in connection with the sale of the Securities. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out-of-pocket expenses) arising in connection with any such claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities
and there is no Person acting or purporting to act at the request of the Company or any of its Subsidiaries that is entitled to any brokerage, agency or other advisory or similar fee in connection with the transactions contemplated hereby, other
than Mining Research Group Inc., which are getting an advisory fees. The Company shall be responsible for all fees and expenses of Mining Research Group Inc.
(h) No Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or Applicable Securities Laws, whether through integration with prior offerings or otherwise, or caused this offering of
the Securities to be integrated with any prior offerings by the Company or any of its Subsidiaries or that would require approval of shareholders of the Company for purposes of the 1933 Act, Applicable Securities Laws or any applicable shareholder
approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their
affiliates or any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or Applicable Securities Laws or cause the offering of
the Securities to be integrated with other offerings for purposes of any such applicable shareholder approval provisions.
(i) [Intentionally Omitted]
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(j) Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under its articles, bylaws or any other constating documents or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and any Buyer's ownership of the Securities. Except for the Shareholders
Rights Plan Agreement dated as of April 29, 2005 between the Company and Equity Financial Trust Company (formerly Equity Transfer Services Inc.), as rights agent, as amended June 27, 2008, June 29, 2011 and June 27, 2014 (the "Rights Plan"),
a copy of which has been made available to the Buyers, the Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Shares or a change in control of the Company or any of
its Subsidiaries. The Company confirms that as a result of the Exchange Caps described in Section 1(f) of the Warrants and Section 4(s)(iii)(G) of the Securities Purchase Agreement, dated as of February 28, 2014 by and among the Company, Twangiza
(Barbados) Limited and Namoya (Barbados) Limited and the investors party thereto, no Buyer is, and as a result of Closing, shall not become an "Acquiring Person" under and for purposes of such Rights Plan, and accordingly no "Flip-In Event" under
the Rights Plan shall occur by reason of or in connection with the Closing.
(k) SEC-CSA Documents; Financial Statements. Except as disclosed in Schedule 3(k), during the two (2) years prior to the date hereof, the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC and the Canadian Securities Administrators (the "CSA") pursuant to the reporting requirements of the 1934 Act and the Applicable Securities Laws (all of the foregoing filed prior to the
date hereof, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC-CSA Documents"). The Company has delivered to the
Buyers or their respective representatives true, correct and complete copies of the SEC-CSA Documents not available on the EDGAR system or the System for Electronic Document Analysis and Retrieved maintained by the CSA ("SEDAR"). As of their
respective filing dates, the SEC-CSA Documents complied in all material respects with the requirements of the 1934 Act and the Applicable Securities Laws and the rules and regulations of the SEC and the CSA promulgated thereunder applicable to the
SEC-CSA Documents, and none of the SEC-CSA Documents, at the time they were filed with the SEC or the CSA, as applicable, contained or, as amended or supplemented, presently contain, any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective filing dates, the financial statements of the
Company included in the SEC-CSA Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or the CSA with respect thereto as in effect as of the time of such
filing. Such financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, consistently applied, during the periods involved ("IFRS") (except
(i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No
other information provided by or on behalf of the Company to the Buyers which is not included in the SEC-CSA Documents, including, without limitation, information referred to in this Agreement or in the disclosure schedules to this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.
The Company has not filed any confidential material change reports with any Securities Commission that is still maintained on a confidential basis.
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(l) Absence of Certain Changes. Except as disclosed in Schedule 3(l), since December 31, 2013, there has been no material adverse change and no material adverse development in the business, assets,
properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries taken as a whole, other than as publicly disclosed. Except as disclosed in Schedule 3(l), since December 31,
2013, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $7,100,000 in respect of exploration capital expenditures, $43,300,000 in respect of development capital expenditures (net of pre-commercial production revenues), $7,200,000 in
respect of ongoing capital expenditures and $1,700,000 in respect of fixed asset purchases. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at each Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), "Insolvent" means, with
respect to any Person, (i) the present fair saleable value of such Person's assets is less than the amount required to pay such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such
Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to occur with respect to the Company, its Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under Applicable Securities Laws on a registration statement on Form F-10 filed with the SEC or a long form prospectus under Applicable Securities Laws of Canada relating to
an issuance and sale by the Company of its Common Shares and which has not been publicly announced.
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(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under any certificate of designations or articles of amendment of any
outstanding series of preference shares of the Company (if any), or any of their respective articles, bylaws or other constating documents, as applicable. Neither the Company nor any of its Subsidiaries, nor Delrand Resources Limited
("Delrand") is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation or other lawful requirements of any governmental or regulatory body applicable to the Company or any of its Subsidiaries or Delrand, as applicable, and neither the Company nor any of its Subsidiaries nor Delrand will conduct its
respective business in violation of any of the foregoing, except for possible violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing,
the Company is not in violation of any of the rules, regulations or requirements of either Principal Market and has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Shares by either
Principal Market in the foreseeable future. Except as set forth in Schedule 3(n), during the two (2) years prior to the date hereof, the Common Shares have been designated for quotation on the Principal Markets. Except as set forth in
Schedule 3(n), during the two (2) years prior to the date hereof, (i) trading in the Common Shares has not been suspended by the SEC, the CSA or either Principal Market and (ii) the Company has received no communication, written or oral, from
the SEC, the CSA or either Principal Market regarding the suspension or delisting of the Common Shares from either Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, provincial or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. Neither the Company nor any of its
Subsidiaries has 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, including in respect of the
Material Properties and the Material Permits.
(o) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries nor Delrand, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries
or Delrand has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries or Delrand(i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended, the Corruption of Foreign Public Officials Act, as amended, or any similar laws of any other jurisdiction applicable to the Company or any of its Subsidiaries or Delrand; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.
(p) Sarbanes-Oxley Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.
(q) Transactions With Affiliates. Except as set forth on Schedule 3(q), none of the officers, directors or employees of the Company or any of its Subsidiaries, or any known holder of more than 10 percent
of any class of shares of the Company, is presently or at any time in the past two years has been a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such officer, director, employee or shareholder or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other entity in which any such
officer, director, employee or shareholder has a substantial interest or is an officer, director, trustee or partner.
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(r) Equity Capitalization. As of the date hereof, the authorized share capital of the Company consists of (i) an unlimited number of Common Shares, of which as of the date hereof, 252,100,672 Common Shares
are issued and outstanding, 16,051,744 Common Shares are reserved for issuance pursuant to the Company's and its Subsidiaries' stock option and purchase plans and 9,135,000 Common Shares are reserved for issuance pursuant to securities (other than
the aforementioned options, the Warrants and preferred shares of Twangiza (Barbados) Limited and Namoya (Barbados) Limited) exercisable or exchangeable for, or convertible into, Common Shares, and (ii) an unlimited number of preference shares,
issuable in series, of which 116,000 Series A preference shares and 1,200,000 Series B preference shares are issued and outstanding as of the date hereof. All of such outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except as disclosed above or in Schedule 3(r): (i) none of the Company's share capital is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of
the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares or share capital of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of
its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or
any of its Subsidiaries is or may become bound other than as disclosed in Schedule 3(s); (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or
any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act or under any Applicable Securities Laws of
Canada; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligations required
to be disclosed in the SEC-CSA Documents but not so disclosed in the SEC-CSA Documents, other than those incurred in the ordinary course of the Company's or any of its Subsidiaries' respective businesses and which, individually or in the aggregate,
do not or would not be reasonably expected to have a Material Adverse Effect. The Company has furnished or made available to the Buyers true, correct and complete copies of the Company's and each Subsidiaries' articles, bylaws and other constating documents, in
each case, as amended and as in effect on the date hereof, and the terms of all securities convertible into, or exercisable or exchangeable for Common Shares and the material rights of the holders thereof in respect thereto.
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(s) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any
contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any
term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any
contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. Schedule 3(s) provides a detailed description of the
material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) "Indebtedness" of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services, including, without limitation, "capital leases" in accordance with IFRS (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or
similar arrangement which, in connection with IFRS, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; and (y) "Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
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(t) Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by either Principal Market, any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Shares or any of the Company's or its Subsidiaries' officers or directors, whether of a civil or criminal nature or
otherwise, in their capacities as such, which individually or in the aggregate, if determined adversely to the Company or any of its Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
(u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
(v) Employee Relations.
(i)Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer
of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer's
employment with the Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.
(ii)The Company and its Subsidiaries are in compliance with all applicable federal, state, provincial, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and
wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary is aware of any existing or imminent
conflict involving employees of any of their principal suppliers, or customers which could reasonably be expected to have a Material Adverse Effect.
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(iii)Except as would not have a Material Adverse Effect, each plan for retirement, bonus, stock
purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation,
incentive or otherwise contributed to or required to be contributed to, by the Company or any of its Subsidiaries for the benefit of any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries (the "Employee Plans") has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations that are applicable to such Employee Plans, in each case in all material respects and has been publicly disclosed to the extent required by Applicable Securities Laws. Except as would not have a Material Adverse
Effect, all material accruals for unpaid vacation pay, premiums for unemployment insurance, health premiums, federal, state or provincial pension plan premiums, accrued wages, salaries and commissions and employee benefit plan payments have been
reflected in the books and records of the Company and its Subsidiaries.
(w) Title. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except for Permitted Liens (as defined in the Indenture). Any real property and facilities held under lease by the Company and any of
its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
(x) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names,
original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor ("Intellectual
Property Rights") necessary to conduct their respective businesses as now conducted. Except as set forth in Schedule 3(x), none of the Company's Intellectual Property Rights have expired or terminated or have been abandoned or are
expected to expire or terminate or are expected to be abandoned, within three years from the date of this Agreement. Neither the Company nor any Subsidiary has any knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with any and all applicable Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and
(iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term "Environmental Laws" means all United States, Barbados and Canadian federal, state, provincial, local
or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
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(z) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Company or such Subsidiary.
(aa) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities, and for so long any Buyer holds any Securities, will not be, an "investment company," a company controlled
by an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended.
(bb) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all U.S., Canadian, federal, state, provincial and foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, and all such tax returns, reports and allocations are true and correct in all material respects, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. The Company and each of its Subsidiaries has withheld or collected all amounts in respect of taxes which it has been required to withhold or collect, and has remitted such amounts to the appropriate tax
authority. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and none of the officers of the Company or any of its Subsidiaries know of any reasonable basis for any such claim.
(cc) Internal Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act and Applicable Securities Laws) that it believes
are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms
of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company's management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. During the twelve months prior to the date hereof neither the Company nor any of its Subsidiaries has received any notice or correspondence from
any accountant relating to any potential material weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.
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(dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by
the Company in its 1934 Act filings or in its Information Record and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect. As used herein, "Information Record" means the Company's most recent
annual information form and all information contained in any press release, material change report (excluding any confidential material change report), financial statements or other document of the Company that has been publicly filed by or on
behalf of the Company on SEDAR pursuant to Applicable Securities Laws or otherwise.
(ee) Ranking of Notes. No Indebtedness of the Company or any of its Subsidiaries is senior to the Notes in right of payment, whether with respect of payment of redemptions, interest, damages or upon liquidation
or dissolution or otherwise. No Indebtedness of the Company that is held by one or more Subsidiaries of the Company is senior or pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages or upon
liquidation or dissolution or otherwise.
(ff) Shares Freely Tradable. The Warrant Shares will be freely tradable on the TSX from and after the date that is four months and one day after the Initial Closing Date.
(gg) Transfer Taxes. On each Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be
sold to each Buyer hereunder on such Closing Date will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(hh) Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any of the Notes, the Warrants or the Warrant Shares.
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(ii) Acknowledgement Regarding Buyers' Trading Activity. The Company acknowledges and agrees that (i) none of the Buyers has been asked to agree, nor has any Buyer agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or "derivative" securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) any Buyer, and counter-parties in "derivative" transactions to which any such Buyer is a party, directly or indirectly, presently may have a "short" position in the Common Shares, and (iii) each Buyer shall
not be deemed to have any affiliation with or control over any arm's length counter-party in any "derivative" transaction. The Company further understands and acknowledges that, subject to applicable law, one or more Buyers may engage in hedging
and/or trading activities at various times during the period that the Securities are outstanding and (b) such hedging and/or trading activities, if any, can reduce the value of the existing shareholders' equity interest in the Company both at and
after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any of the
documents executed in connection herewith.
(jj) U.S. Real Property Holding Corporation; Taxable Canadian Property. The Company is not, has never been, and so long as any Securities remain outstanding, shall not become, a U.S. real property holding
corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended and the Company shall so certify upon any Buyer's request. The Common Shares do not derive, for purposes of the Income Tax Act (Canada) as amended,
more than 50 percent of its fair market value from one or any combination of (i) real or immoveable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties (as such terms are defined in the Income Tax Act
(Canada), or (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii) whether or not such property exists.
(kk) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act of 1956, as amended (the "BHCA") and to regulation by the Board of
Governors of the Federal Reserve System (the "Federal Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of
voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a
controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ll) No Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other
than as specified in the Transaction Documents.
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(mm) Disclosure. Other than as contemplated to be disclosed by the Company in accordance with Section 4(i), the Company confirms that neither it nor any other Person acting on its behalf has provided any of the
Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business and the transactions contemplated hereby, including the disclosure
schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 2.
(nn) Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1) of the 1933 Act.
(oo) Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock option plan of the Company and (ii) with an exercise price at least equal to
the fair market value of the Common Shares on the date such stock option would be considered granted under IFRS and applicable law. No stock option granted under the Company's stock option plan has been backdated. The Company has not knowingly
granted, and there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their financial results or prospects.
(pp) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants
and lawyers formerly or presently employed by the Company and there are no fees owed by the Company to any of its accountants or lawyers which could affect the Company's ability to perform any of its obligations under any of the Transaction
Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC and the CSA. Based on those discussions, the Company has no reason to believe that
it will need to restate any such financial statements or any part thereof.
(qq) Regulation S. The (i) Notes are being offered and sold to the Buyers pursuant to an exemption from the registration requirements of the 1933 Act pursuant Category 1 of Rule 903 of Regulation S and (ii)
Warrants are being offered and sold to the Buyers pursuant to an exemption from the registration requirements of the 1933 Act pursuant Category 2 of Rule 903 of Regulation S. The Company is a "foreign issuer" as defined in Regulation S and has
"substantial U.S. market interest in its Common Shares as defined in Regulation S under the 1933 Act. Neither the issuer, any distributor, any of their respective affiliates, nor any Person acting on behalf of any of the foregoing has made or will
make any "directed selling efforts" with respect to any of the Securities in the United States (as such terms are defined in Regulation S). No Notes or Warrants shall bear any restrictive legend restricting transfer referencing any U.S. securities laws. Assuming the Warrants are exercised (i) in a cashless exercise as provided in the Warrant, or (ii) in an
"Offshore Transaction" and are not exercised by or on behalf of a U.S. Person, the Warrant Shares will not be "restricted securities" as defined in Rule 144 under the 1933 Act, and shall not bear any restrictive legend restricting transfer
referencing any U.S. securities laws.
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(rr) Canadian Legends. No Securities shall bear any restrictive legend referencing any Applicable Securities Laws of Canada, other than prior to the date that is four months and a day after the applicable
Closing Date the legends set forth below:
(i) in respect of the Notes and the Warrants:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE APPLICABLE CLOSING DATE].
(ii) in respect of the Warrant Shares:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE APPLICABLE CLOSING DATE].
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE ("TSX"); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON TSX.
(ss) Other Agreements. To the knowledge of the Company, except as referred to herein, no agreement is in force or effect which in any manner affects the voting or control of any of the securities of the Company
or any of its Subsidiaries.
(tt) Material Properties; DRC Risks. The Company or one or more of its Subsidiaries are parties to valid and subsisting agreements, documents or instruments pursuant to which the Company or one or more of its
Subsidiaries is the lawful registered and beneficial holder of the Material Properties. The licenses or concessions comprising the Material Properties are registered in the names of the material Subsidiaries as set out in Schedule "A" hereto.
The representations in this section are subject to future risks arising out of possible changes in mining and/or investment policies in the DRC, to sovereign risk, and/or challenges which may arise in enforcing rights in the DRC ("DRC
Risks") but, for the avoidance of doubt, are not subject to any risks for which comfort is given pursuant to the legal opinion to be provided by the Company's counsel in the DRC, in substantially the form of Exhibit E-3 attached hereto.
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(uu) DRC Subsidiary Equityholders. Each holder of equity of a Subsidiary formed in the DRC that is an individual is a nominee under a declaration of trust solely in favor of the majority equity holder of such
Subsidiary and does not have the unilateral right to revoke such declaration of trust.
(vv) Collateral Documents. The Company and each of the Subsidiaries hereby acknowledge, confirm and agree that each Collateral Document granted by the Company or any Subsidiary to and in favor of the Collateral
Agent for the benefit of the Parity Lien Secured Parties and the Priority Lien Secured Parties, as security for the Parity Lien Obligations and the Priority Lien Obligations, respectively, continues to be in full force and effect, unamended, and
enforceable against the Company and each such Subsidiary in accordance with their respective terms, and the security interests, assignments, mortgages, charges, hypothecations and pledges granted by the Company and each Subsidiary in favor of the
Collateral Agent for the benefit of the Parity Lien Secured Parties and the Priority Lien Secured Parties continue to secure, apply and extend to all Parity Lien Obligations and Priority Lien Obligations, respectively, owing by the Company and each
Subsidiary under the Notes.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.
(b) Securities Law Filings. The Company shall make all filings and reports relating to the offer and sale of the Securities required under Applicable Securities Laws following each Closing Date.
(c) Reporting Status. Until the date on which none of the Notes and Warrants are outstanding (the "Reporting Period"), the Company shall (i) timely file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such
termination and (ii) timely file all reports with the CSA pursuant to the Applicable Securities Laws of Canada, and the Company will remain in good standing as a "reporting issuer" under Applicable Securities Laws of Canada. As used herein,
"Investor" means a Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9(g) and any transferee or
assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9(g) (in each case, including any transferee or assignee who
acquires any Notes or Warrants and agrees to be bound by the provisions of this Agreement in accordance with Section 9(g)).
(d) Use of Proceeds. The Company will use, and will cause its Subsidiaries to use, the proceeds from the sale of the Securities solely as set forth on Schedule 4(d).
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(e) Financial Information. The Company agrees to send the following to each Investor during the Reporting Period unless the following are filed with the SEC through EDGAR and are available to the public through
the EDGAR system or with the CSA through SEDAR and are available to the public through the SEDAR system, within one (1) Business Day after the filing thereof with the SEC or the CSA, as applicable: (i) a copy of its Annual Reports on Form 40-F, any
Current Reports on Form 6-K (or any analogous reports under the 1934 Act) and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act and any annual reports, annual information forms (at such time as the
Company is not exempt from the requirement to prepare and file same), annual and interim financial statements including management discussion and analysis, material change reports and any offering documents or amendments filed pursuant to Applicable
Securities Laws, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given to the
shareholders of the Company generally, including without limitation, any management information circular, contemporaneously with the making available or giving thereof to the shareholders. As used herein, "Business Day" means any day other
than Saturday, Sunday or other day on which commercial banks in The City of New York or Toronto, Canada are authorized or required by law to remain closed.
(f) Listing. The Company shall promptly secure the listing approval of all of the Warrant Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Shares are
then listed (subject to official notice of issuance) and shall, so long as Notes or Warrants remain outstanding, maintain such listing of all Warrant Shares from time to time issuable under the terms of the Transaction Documents. So long as Notes or
Warrants remain outstanding, the Company shall maintain the authorization for quotation of the Common Shares on the Principal Markets or on the TSX and any other Eligible Market (as defined in the Warrants) in the United States. Neither the Company
nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Shares on either Principal Market. The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 4(f).
(g) Fees. The Company shall reimburse Gramercy (a Buyer) or its designee(s) (in addition to any other expense amounts paid to Gramercy or its counsel prior to the date of this Agreement) for all costs and
expenses reasonably incurred by Gramercy or any professionals engaged by Gramercy in connection with the transactions contemplated by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and
implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount may be withheld by Gramercy from its purchase price for any Notes purchased at each Closing to the extent not
previously reimbursed by the Company. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's commissions (other than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in connection with any
claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers. If any of the Transaction Documents
are requested by the Company to be amended, modified or waived or if any of the Transaction Documents are contemplated to be amended, modified or waived pursuant to the terms of the Transaction Documents, the Company shall reimburse Gramercy (a Buyer)
or its designee(s) for all costs and expenses reasonably incurred by Gramercy or any professionals engaged by Gramercy in connection with any such amendments, modifications or waivers (including all legal fees and disbursements in connection
therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount may be withheld by Gramercy from any payment, if applicable, contemplated to be made
by Gramercy to the Company.
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(h) Pledge of Securities. The Company acknowledges and agrees that, subject to Applicable Securities Laws, the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(b) hereof; provided that an Investor and its
pledgee shall be required to comply with the provisions of Section 2(b) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. So long as Notes or Warrants remain outstanding, the Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.
(i) Disclosure of Transactions and Other Material Information. On or before
3:45 p.m., New York City time, on August 18, 2014, the Company shall issue a press release reasonably acceptable to the Buyers and file
(x) a Current Report on Form 6-K and (y) a material change report on Form 51-102F3 in accordance with National Instrument 51-102 of the CSA with respect thereto (the "Cleansing Reports"), in each case describing (1) the terms of the
transactions contemplated by the Transaction Documents in the form required by Applicable Securities Laws and attaching, to the extent required, the material Transaction Documents (including, without limitation, this Agreement (and all schedules and
exhibits to this Agreement), the form of Notes, the form of the Warrant, the form of Guarantee Agreement and the form of Lock-Up Agreement as exhibits to such filing), (2) the Company's overall financial plan, (3) the Company's forward looking
guidance and (4) to the extent not already publicly disclosed, the financial results for the fiscal quarter ended June 30, 2014, and publicly filing the Company's financial statements for the fiscal quarter ended June 30, 2014. To the extent that
any material Transaction Documents are not attached to a material change report in accordance with the immediately preceding sentence because they are not required to be attached or otherwise, all of such material Transaction Documents, or forms
thereof, shall be made publicly available on the Company's public record by filing such material Transaction Documents on SEDAR on or prior to August 18, 2014. From and after the filing of the Cleansing Reports, no Buyer shall be in possession of
any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that is not disclosed in the Cleansing Reports. In addition, effective upon the
filing of the Cleansing Reports, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees, affiliates or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
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The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees,
affiliates and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer. If a Buyer has, or
believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries from the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates or agents, it may provide the
Company with written notice thereof. The Company shall, within five (5) Trading Days (as defined in the Warrants) of receipt of such notice, make public disclosure of such material, nonpublic information. In the event of a breach of the foregoing
covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall have the right
to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, shareholders, affiliates or agents for any such disclosure. To the
extent that the Company delivers any material, non-public information to a Buyer without such Buyer's consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade
on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the Cleansing Reports and
contemporaneously therewith or (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to
its release). Without the prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise.
(j) Additional Notes; Variable Securities. So long as any Buyer beneficially owns any Notes, the Company will not issue any Notes other than to the Buyers as contemplated hereby and the Company shall not issue
any other securities that would cause a breach or default under the Notes. For so long as any Warrants remain outstanding, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common
Shares or directly or indirectly convertible into or exchangeable or exercisable for Common Shares at a price which varies or may vary with the market price of the Common Shares, including by way of one or more reset(s) to any fixed price unless the
conversion, exchange or exercise price of any such security cannot be less than the then applicable Exercise Price (as defined in the Warrants) with respect to the Common Shares into which any Warrant is exercisable.
(k) Corporate Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall (i) maintain its corporate existence and (ii) not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants.
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(l) Reservation of Shares. So long as any Buyer owns any Warrants, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, the Warrant Shares
issuable upon exercise of the Warrants.
(m) Conduct of Business. So long as Notes or Warrants remain outstanding, the business of the Company and its Subsidiaries and Delrand shall not be conducted in violation of any law, ordinance or regulation of
any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.
(n) Additional Issuances of Securities.
(i) For purposes of this Section 4(n), the following definitions shall apply.
(A) "Convertible Securities" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Shares.
(B) "Options" means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.
(C) "Common Share Equivalents" means, collectively, Options and Convertible Securities.
(ii) From the date hereof until the one year anniversary of the last Closing Date hereunder (which, for the avoidance of doubt, if there is no Additional Closing, the last Closing Date will be the Initial Closing Date),
the Company shall not, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preference shares or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common
Shares or Common Share Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a "Subsequent Placement") unless the Company shall have first complied with this Section 4(n)(ii).
(A) The Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed or intended issuance or sale or exchange (the "Offer") of the securities being offered (the
"Offered Securities") in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount
of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with
such Buyers at least thirty-five percent (35%) of the Offered Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion of the aggregate principal amount of Notes purchased hereunder (the "Basic Amount"), and (b) with respect to each
Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less
than their Basic Amounts (the "Undersubscription Amount"), which process shall be repeated until the Buyers shall have an opportunity to subscribe for any remaining Undersubscription Amount.
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(B) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after such Buyer's receipt of the Offer Notice (the
"Offer Period"), setting forth the portion of such Buyer's Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to
purchase (in either case, the "Notice of Acceptance"). If the Basic Amounts subscribed for by all Buyers who are eligible to participate under the Subsequent Placement pursuant to Applicable Securities Laws upon the terms specified in the
Offer are less than the total of all of the Basic Amounts, then each Buyer who is eligible to participate under the Subsequent Placement pursuant to Applicable Securities Laws upon the terms specified in the Offer and who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the "Available Undersubscription Amount"), each Buyer who is eligible to participate under the Subsequent Placement
pursuant to Applicable Securities Laws upon the terms specified in the Offer and who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of
such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding anything to the contrary contained herein,
if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Buyers a new Offer Notice and the Offer Period shall expire on the second (2nd)
Business Day after such Buyer's receipt of such new Offer Notice.
(C) The Company shall have five (5) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not
been given by the Buyers who are eligible to participate under the Subsequent Placement pursuant to Applicable Securities Laws upon the terms specified in the Offer (the "Refused Securities") pursuant to a definitive agreement (the
"Subsequent Placement Agreement") but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable
to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement, and (b) either (x) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 6-K and with the CSA on a material change report on Form
51-102F3 in accordance with the National Instrument 51-102 of the CSA with respect thereto with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.
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(D) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(n)(ii)(C) above), then each Buyer who is eligible to
participate under the Subsequent Placement pursuant to Applicable Securities Laws upon the terms specified in the Offer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice
of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(n)(ii)(B) above multiplied by a fraction, (i) the numerator of which shall be the number
or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to Section 4(n)(ii)(C) above prior to such reduction) and (ii) the denominator of which
shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance with Section 4(n)(ii)(A) above.
(E) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers who are eligible to participate under the Subsequent Placement pursuant to Applicable Securities Laws
upon the terms specified in the Offer shall acquire from the Company, and the Company shall issue to such Buyers, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 4(n)(ii)(C) above if
the Buyers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Buyers of a purchase
agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Buyers and their respective counsel.
(F) Any Offered Securities not acquired by the Buyers or other persons in accordance with Section 4(n)(ii)(C) above may not be issued, sold or exchanged until they are again offered to the Buyers under the procedures
specified in this Section 4(n).
(G) The Company and the Buyers agree that if any Buyer elects to participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto
(collectively, the "Subsequent Placement Documents") shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading as to any securities of the Company owned by such Buyer prior to such
Subsequent Placement.
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(H) Notwithstanding anything to the contrary in this Section 4(n) and unless otherwise agreed to by the Buyers, the Company shall either confirm in writing to the Buyers that the transaction with respect to the
Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case in such a manner such that the Buyers will not be in possession of material non-public information, by the twelfth (12th) Business Day
following delivery of the Offer Notice. If by the twelfth (12th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by the Buyers, such transaction shall be deemed to have been abandoned and the Buyers shall not be deemed to be in possession of any material, non-public information with respect to the
Company. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company shall provide each Buyer with another Offer Notice and each Buyer will again have the right of participation set forth in this Section
4(n)(ii). The Company shall not be permitted to deliver more than one such Offer Notice to the Buyers in any 60 day period.
(iii) The restrictions contained in subsection (ii) of this Section 4(n) shall not apply in connection with the issuance of any Excluded Securities (as defined in the Warrants).
(iv) Notwithstanding anything to the contrary contained in this Section 4(n), if any Subsequent Placement would require the Company to obtain shareholder approval as a condition to consummating such Subsequent Placement
solely as a result of the Buyers' participation, then each applicable Buyer shall either forego participating in such Subsequent Placement or elect to participate up to its exchange cap limits or such other amount as may be permitted to avoid
shareholder approval as a condition to consummating the Subsequent Placement, whichever is greater; provided, that the Company shall use commercially reasonable efforts in good faith to facilitate the participation of each Buyer in each
Subsequent Placement, including, without limitation, by (i) using commercially reasonable efforts to execute voting agreement with its shareholders, (ii) coordinating with the Buyers in good faith, if requested by any Buyer to do so, to introduce
exchange caps into the definitive documentation with respect to the Subsequent Placement, and (iii) using commercially reasonable efforts, if requested by any Buyer, to obtain shareholder approval on a post-closing basis.
(o) Waiver of Rights Plan; Required Shareholder Meeting. The Company shall be required to call a meeting of its shareholders no later than the earlier of (i) its next annual general meeting of shareholders and
(ii) the first anniversary of the Initial Closing Date for the purpose of seeking the following shareholder approvals: (A) waiver of the application of the Rights Plan in connection with (I) any contemplated issuance of Warrant Shares in excess of
the Exchange Cap (as defined in the Warrants) and (II) any contemplated issuance of Exchange Shares issuable upon exchange of the Preferred Shares (as such terms are defined in the Preferred SPA (as defined below)) pursuant to the terms set forth in
that certain Securities Purchase Agreement dated as of February 28, 2014 by and among the Company and the investors listed on the signature pages attached thereto (the "Preferred SPA") in excess of the Exchange Cap (as defined in the
Preferred SPA), (B) waiver of (I) the Exchange Cap (as defined in the Warrants) as contemplated under section 1(f) of the Warrants and (II) the Exchange Cap (as defined in the Preferred SPA) as contemplated in Section 4(s)(iii)(G) of the Preferred
SPA and (C) waiver of (I) the restriction set forth in Section 4(s)(iv)(A) of the Preferred SPA providing that any adjustment pursuant thereto shall not decrease the Exchange Price (as defined in the February SPA) below CAD 0.63 (as such price is
adjusted for any stock split, stock combination, reclassification or similar transaction after February 28, 2014) and (II) the Floor Price (as defined in the Warrants) as contemplated in Section 2(e) of the Warrants.
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(p) Priority Debt Representative.
(i) Each Buyer hereby (a) appoints Gramercy Funds Management LLC as the "Priority Debt Representative" under the Collateral Trust Agreement with respect to the Priority Lien Notes (in such capacity, the "Priority Debt Representative"), (b) authorizes the Priority Debt Representative to
execute and deliver the Priority Joinder and (c) authorizes the Priority Debt Representative (and its officers, directors, employees and agents) to take such action on such Buyer's behalf in accordance with the terms hereof and under the Collateral
Trust Agreement. The Priority Debt Representative shall not have, by reason hereof, by reason of executing the Priority Joinder or pursuant to any Collateral Documents, a fiduciary relationship in respect of any Buyer. Neither the Priority Debt
Representative nor any of its officers, directors, employees and agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or the Collateral Documents except to the extent caused by its own gross
negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Priority Debt Representative and all of its officers, directors, employees and agents (collectively, the "Priority Debt Representative
Indemnitees") from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such
Priority Debt Representative Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Priority Debt Representative Indemnitee of the duties and obligations of Priority Debt Representative
pursuant hereto, the Priority Joinder or any of the Collateral Documents.
(ii) The Priority Debt Representative shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and
correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement, any of the other Transaction Documents or any of the Collateral Documents and its duties hereunder or thereunder, upon
advice of counsel selected by it.
(iii) The Priority Debt Representative may resign from the performance of all its functions and duties hereunder and under the Priority Notes and the Collateral Trust Agreement at any time by giving at least ten (10)
Business Days prior written notice to the Company and each holder of the Priority Notes. Such resignation shall take effect upon the acceptance by a successor Priority Debt Representative of appointment as provided below. Upon any such notice of
resignation, the holders of a majority of the outstanding principal amount of Priority Notes shall appoint a successor Priority Debt Representative. Upon the acceptance of the appointment as Priority Debt Representative, such successor Priority Debt
Representative shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Priority Debt Representative, and the retiring Priority Debt Representative shall be discharged from its duties and obligations
under this Agreement, the Priority Notes and the Collateral Trust Agreement. After any Priority Debt Representative's resignation hereunder, the provisions of this Section 4(p) shall inure to its benefit. If a successor Priority Debt Representative
shall not have been so appointed within said ten (10) Business Day period, the retiring Priority Debt Representative shall then appoint a successor Priority Debt Representative who shall serve until such time, if any, as the holders of a majority of the outstanding principal amount of Priority Notes appoints a successor
Priority Debt Representative as provided above.
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(iv) The Company hereby covenants and agrees to take all actions as promptly as practicable reasonably requested by either the holders of a majority of the outstanding principal amount of Priority Notes or the Priority
Debt Representative (or its successor), from time to time pursuant to the terms of this Section 4(p), to secure a successor Priority Debt Representative satisfactory to such requesting part(y)(ies), in their sole discretion, including, without
limitation, by paying all fees of such successor Priority Debt Representative, by having the Company agree to indemnify any successor Priority Debt Representative and by the Company executing such agreement reasonably requested or required by the
successor Priority Debt Representative to confirm such successor's appointment.
(q) Parity Debt Representative.
(i) Each Buyer hereby (a) appoints Gramercy Funds Management LLC as the "Parity Debt Representative" under the Collateral Trust Agreement with respect to the Parity Lien Notes (in such capacity, the "Parity Debt Representative"), (b) authorizes the Parity Debt Representative to execute and
deliver the Parity Joinder and (c) authorizes the Parity Debt Representative (and its officers, directors, employees and agents) to take such action on such Buyer's behalf in accordance with the terms hereof and under the Collateral Trust Agreement.
The Parity Debt Representative shall not have, by reason hereof, by reason of executing the Parity Joinder or pursuant to any Collateral Documents, a fiduciary relationship in respect of any Buyer. Neither the Parity Debt Representative nor any of
its officers, directors, employees and agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or the Collateral Documents except to the extent caused by its own gross negligence or willful
misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Parity Debt Representative and all of its officers, directors, employees and agents (collectively, the "Parity Debt Representative Indemnitees") from
and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Parity Debt Representative
Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Parity Debt Representative Indemnitee of the duties and obligations of Parity Debt Representative pursuant hereto, the Parity Joinder
or any of the Collateral Documents.
(ii) The Parity Debt Representative shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement, any of the other Transaction Documents or any of the Collateral Documents and its duties hereunder or thereunder, upon advice
of counsel selected by it.
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(iii) The Parity Debt Representative may resign from the performance of all its functions and duties hereunder and under the Initial Parity Notes and the Collateral Trust Agreement at any time by giving at least ten
(10) Business Days prior written notice to the Company and each holder of the Initial Parity Notes. Such resignation shall take effect upon the acceptance by a successor Parity Debt Representative of appointment as provided below. Upon any such notice of resignation, the holders
of a majority of the outstanding principal amount of Initial Parity Notes shall appoint a successor Parity Debt Representative. Upon the acceptance of the appointment as Parity Debt Representative, such successor Parity Debt Representative shall
succeed to and become vested with all the rights, powers, privileges and duties of the retiring Parity Debt Representative, and the retiring Parity Debt Representative shall be discharged from its duties and obligations under this Agreement, the
Initial Parity Notes and the Collateral Trust Agreement. After any Parity Debt Representative's resignation hereunder, the provisions of this Section 4(q) shall inure to its benefit. If a successor Parity Debt Representative shall not have been so
appointed within said ten (10) Business Day period, the retiring Parity Debt Representative shall then appoint a successor Parity Debt Representative who shall serve until such time, if any, as the holders of a majority of the outstanding principal
amount of Initial Parity Notes appoints a successor Parity Debt Representative as provided above.
(iv) The Company hereby covenants and agrees to take all actions as promptly as practicable reasonably requested by either the holders of a majority of the outstanding principal amount of Initial Parity Notes or the
Priority Debt Representative (or its successor), from time to time pursuant to the terms of this Section 4(q), to secure a successor Parity Debt Representative satisfactory to such requesting part(y)(ies), in their sole discretion, including,
without limitation, by paying all fees of such successor Parity Debt Representative, by having the Company agree to indemnify any successor Parity Debt Representative and by the Company executing such agreement reasonably requested or required by
the successor Parity Debt Representative to confirm such successor's appointment.
(r) DTC and CDS Eligibility. From and after the date that is four months and one day after the Initial Closing Date until such time as no Warrants are outstanding, the Company shall cause the Common Shares to be
eligible to be deposited in certificate form at DTC, cleared and converted into electronic shares by DTC and held in the name of the clearing firm servicing each Investor's brokerage firm for the benefit of such Investor ("DTC Eligible").
Until such time as no Warrants are outstanding, the Company shall cause the Common Shares to be eligible to be deposited in certificate form at CDS, cleared and converted into electronic shares by CDS and held in the name of the clearing firm
servicing each Investor's brokerage firm for the benefit of such Investor ("CDS Eligible").
(s) Restrictions on Purchase Rights. While the Warrants are outstanding, the Company shall not grant, issue or sell any rights to purchase shares, warrants, securities or other property pro rata to all holders
of the Common Shares without the prior written consent of the Required Holders.
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(t) Restrictions on Issuances. While the Warrants are outstanding, except with the prior written consent of the Required Holders, the Company shall not effect any Subsequent Placement if the effect of such
Subsequent Placement would be to cause the Exercise Price, without giving effect to the Floor Price (as defined in the Warrants) set forth in the Warrants, to fall below CAN$0.2239 (as adjusted for any share dividend, share split,
share consolidation, reclassification or similar transaction occurring after the date hereof).
(u) Lock-Up. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term of the lockup period and shall enforce the provisions of each Lock-Up
Agreement in accordance with its terms. If any officer or director that is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its reasonable best efforts to seek specific performance of the
terms of such Lock-Up Agreement. On or prior to the one year anniversary of the last Closing Date hereunder (which, for the avoidance of doubt, if there is no Additional Closing, the last Closing Date will be the Initial Closing Date), the Company
shall not issue any Common Shares (or equivalent equity securities) to any of its officers or directors unless each such Person has entered into a Lock-Up Agreement in the form attached hereto as Exhibit J.
(v) Priority Debt Sharing Confirmation. The Buyers of the Priority Notes hereby agree, for the benefit of all holders of each other existing and future Series of Priority Lien Debt and each existing and future
Priority Debt Representative, that all Priority Lien Obligations will be and are secured equally and ratably by all Liens (as defined in the Collateral Trust Agreement) at any time granted by the Company or any Obligor (as defined in the Collateral
Trust Agreement) to secure the obligations in respect of the Priority Notes, whether or not upon property otherwise constituting Collateral (as defined in the Collateral Trust Agreement), that all such Liens will be enforceable by the Collateral
Agent for the benefit of all holders of Priority Lien Obligations equally and ratably, and that the Buyers of the Priority Notes are bound by the provisions in the Collateral Trust Agreement relating to the order of application of proceeds from
enforcement of such Liens, and consent to and direct the Collateral Agent to perform its obligations under the Collateral Trust Agreement.
(w) Parity Debt Sharing Confirmation. The Buyers of the Initial Parity Notes hereby agree, for the benefit of all holders of each other existing and future Series of Parity Lien Debt and each existing and future
Parity Debt Representative, that all Parity Lien Obligations will be and are secured equally and ratably by all Liens at any time granted by the Company or any Obligor to secure the obligations in respect of the Initial Parity Notes, whether or not
upon property otherwise constituting Collateral, that all such Liens will be enforceable by the Collateral Agent for the benefit of all holders of Parity Lien Obligations equally and ratably, and that the Buyers of Initial Parity Notes are bound by
the provisions in the Collateral Trust Agreement relating to the order of application of proceeds from enforcement of such Liens, and consent to and direct the Collateral Agent to perform its obligations under the Collateral Trust Agreement.
(x) Business Pledge Agreements. The maximum amount secured under the business pledge agreements granted by the Subsidiaries incorporated in the Democratic Republic of Congo in favor of the Collateral Agent shall
at all times, while any Notes are outstanding, exceed the aggregate of the Parity Lien Obligations and the Priority Lien Obligations (as such terms are defined in the Collateral Trust Agreement) by at least $15,000,000.
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(y) Dormant Subsidiaries. No later than thirty (30) calendar days after the Initial Closing Date, (i) the Company shall cause each of Banro American Resources Inc. and Banro Hydro SPRL (the "Dormant
Subsidiaries") to execute a joinder to the Guarantee Agreement, (ii) the Company shall pledge all of the equity securities it holds in each of the Dormant Subsidiaries, and (iii) the Company shall cause each of the Dormant Subsidiaries to
provide security in favor of the Collateral Agent over all of its assets to secure each of its obligations under the Guarantee Agreement (in form and substance satisfactory to the Required Holders and their counsel and, in the case of Banro Hydro
SPRL, such collateral agreements shall be substantially in the form of collateral agreements provided by the Subsidiaries formed in the DRC). Upon the request of the Priority Debt Representative or the Parity Debt Representative or the Collateral
Agent, as applicable, the Company shall cause each Dormant Subsidiaries to take such other actions required pursuant to the Collateral Trust Agreement as so requested.
(z) Non-Employee DRC Equity Holders. No later than thirty (30) calendar days after the Initial Closing Date, in accordance with DRC law, the Company shall cause each of Carmen Stone-Kondrat , Richard Lachik and
each other equity holder of any Subsidiary (including those formed in the DRC) that is an individual, but is not either an employee of the Company's counsel in the DRC or an employee of the Company to transfer for no or nominal consideration their
ownership of any such equity securities to one or more current employees of the Company's counsel in the DRC or current employees of the Company. In addition, in accordance with DRC law, each such equity holder shall agree that if he or she is no
longer either an employee of the Company's counsel in the DRC or an employee of the Company to promptly transfer, at the request of the Company or any Buyer, for no or nominal consideration their ownership of any such equity securities to one or
more current employees of the Company's counsel in the DRC or current employees of the Company. The Company shall cause each nominee and beneficiary under any declaration of trust with respect to the equity ownership of Subsidiaries formed in the
DRC to execute any additional documentation as any Buyer may reasonably request to clarify that the declaration of trust may not be unilaterally revoked by the applicable nominee.
(aa) Closing Documents. On or prior to fourteen (14) calendar days after the Initial Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Schulte Roth & Zabel LLP a
complete closing set of the executed Transaction Documents, Securities and any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and a register for the Warrants (collectively, the "Registers") in which the Company shall record the
name and address of the Person in whose name the Notes and the Warrants, respectively, have been issued (including the name and address of each transferee), the principal amount of Notes held by such Person and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person, respectively. The Company shall keep the Registers open and available at all
times during business hours for inspection of any Buyer or its legal representatives.
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(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, in the form of Exhibit D attached hereto (the "Irrevocable
Transfer Agent Instructions") to issue certificates or credit shares to the applicable balance accounts at DTC or CDS, registered in the name of each Buyer or its respective nominee(s), for the Warrant Shares to be issued upon exercise of the
Warrants in such amounts as specified from time to time by each Buyer to the Company upon exercise of the Warrants. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(b) hereof, will be given by the Company to its transfer agent, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Warrant Shares in accordance with Section 2(b), the Company shall permit the transfer and shall promptly instruct its transfer
agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC or CDS in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
(a) Initial Closing. The obligation of the Company hereunder to issue and sell the Initial Notes and the related Warrants to each Buyer at the Initial Closing is subject to the satisfaction, at or before the
Initial Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof: (i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer shall have delivered to the Company the Initial Purchase Price (less, in the case of Gramercy, the amounts withheld pursuant to Section 4(g)) for the Initial Notes and the related Warrants being
purchased by such Buyer at the Initial Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Initial Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct in all material respects as of such specified date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Initial Closing Date.
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(b) Additional Closings. The obligation of the Company hereunder to issue and sell the Additional Notes to each Buyer at each Additional Closing is subject to the satisfaction, at or before the applicable
Additional Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof:
(i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer shall have delivered to the Company the applicable Additional Purchase Price (less, in the case of Gramercy, the amounts withheld pursuant to Section 4(g)) for the applicable Additional Notes being
purchased by such Buyer at the applicable Additional Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall be true and correct as of the date when made and as of the applicable Additional Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the applicable Additional Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
(a) Initial Closing. The obligation of each Buyer hereunder to purchase the Initial Notes and the related Warrants at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may
be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company and each of its Subsidiaries shall have duly executed and delivered to Gramercy Funds Management LLC on behalf of
such Buyer each of the following documents to which it is a party: (A) each of the Transaction Documents, (B) the Initial Notes (allocated in such principal amounts as is set forth opposite such Buyer's name in columns (3)(a) and (4)(a) of the
Schedule of Buyers) being purchased by such Buyer at the Initial Closing and (C) the related Warrants (allocated in such amounts as is set forth opposite such Buyer's name in column (5) of the Schedule of Buyers) being purchased by such Buyer at the
Initial Closing.
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(ii) Such Buyer shall have received the opinion of (i) Norton Rose Fulbright Canada LLP, the Company's outside Canadian counsel, dated as of the Initial Closing Date, in substantially the form of Exhibit E-1
attached hereto, (ii) Dorsey & Whitney LLP, the Company's outside United States counsel, dated as of the Initial Closing Date, in substantially the form of Exhibit E-2 attached hereto, (iii) Djunga & Risasi, the Company's outside DRC
counsel, dated as of the Initial Closing Date, in substantially the form of Exhibit E-3 attached hereto and Clarke Gittens Farmer, the Company's outside Barbados counsel, dated as of the Initial Closing Date, in substantially the form of
Exhibit E-4 attached hereto.
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached hereto, which instructions shall have been delivered to the Company's
transfer agent.
(iv) The Company shall have delivered to such Buyer (i) a certificate of compliance with the CBCA of the Company, and (ii) evidence of the absence of a default of the Company's reporting issuer status, and each
Subsidiary shall have delivered to such Buyer a certificate evidencing the formation and status of such Subsidiary in such Subsidiary's jurisdiction of formation issued by the applicable Ministry or governmental department (or comparable office) of
such jurisdiction, as of a date within ten (10) days of the Initial Closing Date.
(v) The Company shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation (if applicable) and good standing issued by the applicable Ministry or governmental
department (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten (10) days of the Initial Closing Date.
(vi) The Company shall have delivered to such Buyer a certified copy of the articles, bylaws and other constating documents, as applicable, of the Company and each of its Subsidiaries as certified by the applicable
Ministry or governmental department (or equivalent) in the applicable jurisdiction of incorporation within ten (10) days of the Initial Closing Date.
(vii) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and the Subsidiaries, as applicable, and dated as of the Initial Closing Date, as to (i) the resolutions
consistent with Section 3(b) as adopted by the Company's and each of its Subsidiaries' board of directors in a form reasonably acceptable to such Buyer, (ii) the articles, bylaws and other constating documents of the Company and each of its
Subsidiaries and (iii) incumbency, in the form attached hereto as Exhibit F.
(viii) The representations and warranties of the Company shall be true and correct as of the date when made and as of the Initial Closing Date as though made at that time (except for representations and warranties that
speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company at or prior to the Initial Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Initial Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form attached hereto as Exhibit G.
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(ix) The Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of Common Shares outstanding as of a date within five (5) days of the Initial Closing Date.
(x) The Common Shares (I) shall be designated for quotation or listed on the Principal Markets and (II) shall not have been suspended, as of the Initial Closing Date, by the SEC, the CSA or the Principal Markets from
trading on either Principal Market nor shall suspension by the SEC, the CSA or either Principal Market have been threatened, as of the Initial Closing Date, either (A) in writing by the SEC, the CSA or either Principal Market or (B) by falling below
the minimum listing maintenance requirements of either Principal Market. The approval of the Principal Markets for the issuance of the Securities contemplated hereby (to the extent required) and conditional listing of the Warrant Shares shall have
been obtained.
(xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.
(xii) Each of the Company's Subsidiaries (other than those incorporated in Barbados) shall have executed and delivered to such Buyer the Guarantee Agreement.
(xiii) The Company shall have taken all steps under the Collateral Trust Agreement to designate the Initial Priority Notes as Priority Lien Debt and to ensure that such Priority Lien Debt is secured by a Priority Lien
on a pari passu basis with all previously existing Priority Lien Debt (and that is senior to the Parity Liens).
(xiv) The Company shall have taken all steps under the Collateral Trust Agreement to designate the Initial Parity Notes as Parity Lien Debt and to ensure that such Parity Lien Debt is secured by a Parity Lien on a pari
passu basis with all previously existing Parity Lien Debt (and that is subordinate to the Priority Liens).
(xv) The Priority Debt Representative shall have received certified copies of searches disclosing all financing statements (or equivalents) under or pursuant to the Personal Property Security Act and such
comparable legislation in Barbados and the Democratic Republic of Congo evidencing the perfection of security interests purported to be created by the Collateral Documents in favor of the Collateral Agent for the benefit of the Priority Lien Secured
Parties to secure the obligations under the Initial Priority Notes, being Priority Lien Obligations.
(xvi) The Parity Debt Representative shall have received certified copies of searches disclosing all financing statements (or equivalents) under or pursuant to the Personal Property Security Act and such
comparable legislation in Barbados and the Democratic Republic of Congo evidencing the perfection of security interests purported to be created by the Collateral Documents in favor of the Collateral Agent for the benefit of the Parity Lien Secured Parties to secure the obligations under the Initial Parity Notes, being Parity Lien Obligations.
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(xvii) The Priority Debt Representative shall have received copies of the executed Collateral Trust Agreement and all Collateral Documents creating a Priority Lien on the collateral secured thereby requested by the
Buyers.
(xviii) The Parity Debt Representative shall have received executed copies of the Collateral Trust Agreement and all Collateral Documents creating a Parity Lien on the collateral secured thereby requested by the Buyers.
(xix) Neither the Company nor any of its Subsidiaries shall have received any notice (whether written or oral) from the Ministry of Mines in the DRC or any other governmental authority of the DRC (the "DRC
State"), whether pursuant to any ongoing or proposed title review proceedings with the DRC State or otherwise, which in the opinion of such Buyer, withdraws or purports to withdraw any benefits currently held by the Company pursuant to its
mining convention with the DRC State (including with regard to exemptions granted to the Company under the taxation laws, import and export laws and royalty laws under the terms of such convention).
(xx) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
(xxi) The Company shall have delivered to each Buyer a copy of the lock-up agreement in the form attached hereto as Exhibit J executed and delivered by each of the Persons listed on Schedule 7(a)(xxii)
(collectively, the "Lock-Up Agreements").
(xxii) The Company shall have issued a press release acceptable to the Buyers and shall have filed (x) a Current Report on Form 6-K and (y) a material change report on Form 51-102F3 in accordance with National
Instrument 51-102 of the CSA with respect thereto, in each case describing (1) the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and National Instrument 51-102 and attaching, to the extent
required, the material Transaction Documents, (2) the Company's overall financial plan and (3) the Company's forward looking guidance, in each case in accordance with the provisions of Section 4(i) To the extent that any material Transaction
Documents are not attached to a material change report in accordance with the immediately preceding sentence because they are not required to be attached or otherwise, all of such material Transaction Documents, or forms thereof, shall have been
made publicly available on the Company's public record by filing such material Transaction Documents on SEDAR.
(xxiii) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
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(b) Additional Closings. The obligation of each Buyer hereunder to purchase Additional Notes at each Additional Closing is subject to the satisfaction, at or before the applicable Additional Closing Date,
of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company and
each of its Subsidiaries shall have duly executed and delivered to Gramercy Funds Management LLC on behalf of such Buyer each of the following documents to which it is a party: (A) each of the Transaction Documents, (B) the Additional Priority Notes
(allocated in up to such principal amounts as is set forth opposite such Buyer's name in column (3)(b) of the Schedule of Buyers) being purchased by such Buyer at such Additional Closing and (C) the Additional Parity Notes (allocated in up to such
principal amounts as is set forth opposite such Buyer's name in column (4)(b) of the Schedule of Buyers) being purchased by such Buyer at such Additional Closing.
(ii) Such Buyer shall have received the opinion of (i) Norton Rose Fulbright Canada LLP, the Company's outside Canadian counsel, dated as of the applicable Additional Closing Date, in substantially the form of
Exhibit E-1 attached hereto, (ii) Dorsey & Whitney LLP, the Company's outside United States counsel, dated as of the applicable Additional Closing Date, in substantially the form of Exhibit E-2 attached hereto, (iii) Djunga &
Risasi, the Company's outside DRC counsel, dated as of the applicable Additional Closing Date, in substantially the form of Exhibit E-3 attached hereto and Clarke Gittens Farmer, the Company's outside Barbados counsel, dated as of the
applicable Additional Closing Date, in substantially the form of Exhibit E-4 attached hereto.
(iii) The Company shall have delivered to such Buyer a certificate of compliance with the CBCA of the Company, and (ii) evidence of the absence of a default of the Company's reporting issuer status, and each Subsidiary
shall have delivered to such Buyer a certificate evidencing the formation and status of such Subsidiary in such Subsidiary's jurisdiction of formation issued by the applicable Ministry or governmental department (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the applicable Additional Closing Date.
(iv) The Company shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation (if applicable) and good standing issued by the applicable Ministry or governmental
department (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten (10) days of the applicable Additional Closing Date.
(v) The Company shall have delivered to such Buyer certified copy of the articles, bylaws and other constating documents of the Company and each of its Subsidiaries as certified by the applicable Ministry or
governmental department (or equivalent) in the applicable jurisdiction of incorporation within ten (10) days of the applicable Additional Closing Date.
(vi) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and the Subsidiaries, as applicable, and dated as of the applicable Additional Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's and each of its Subsidiaries' board of directors in a form reasonably acceptable to such Buyer, (ii) the articles,
bylaws and other constating documents of the Company and each of its Subsidiaries and (iii) incumbency, in the form attached hereto as Exhibit F.
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(vii) The representations and warranties of the Company shall be true and correct as of the date when made and as of the applicable Additional Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the applicable Additional Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of
the applicable Additional Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as Exhibit G.
(viii) The Common Shares (I) shall be designated for quotation or listed on the Principal Markets and (II) shall not have been suspended, as of the applicable Additional Closing Date, by the SEC, the CSA or the
Principal Markets from trading on either Principal Market nor shall suspension by the SEC, the CSA or either Principal Market have been threatened, as of the applicable Additional Closing Date, either (A) in writing by the SEC, the CSA or either
Principal Market or (B) by falling below the minimum listing maintenance requirements of either Principal Market. The approval of the Principal Markets for the issuance of the Securities contemplated hereby and conditional listing of the Warrant
Shares shall have been obtained.
(ix) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.
(x) Each of the Company's Subsidiaries (other than those incorporated in Barbados) shall have executed and delivered to such Buyer the Guarantee Agreement.
(xi) Solely with respect to the Additional Parity Closing, the Parity Debt Representative shall have received certified copies of searches disclosing all financing statements (or equivalents) under or pursuant to the
Personal Property Security Act and such comparable legislation in Barbados and the Democratic Republic of Congo evidencing the perfection of security interests purported to be created by the Collateral Documents in favor of the Collateral
Agent for the benefit of the Parity Lien Secured Parties to secure the obligations under the Additional Parity Notes, being Parity Lien Obligations.
(xii) Solely with respect to each Additional Priority Closing, the Priority Debt Representative shall have received certified copies of searches disclosing all financing statements (or equivalents) under or pursuant to
the Personal Property Security Act and such comparable legislation in Barbados and the Democratic Republic of Congo evidencing the perfection of security interests purported to be created by the Collateral Documents in favor of the Collateral Agent for the benefit of the Priority Lien Secured Parties to secure the obligations under the Additional Priority Notes, being Priority Lien Obligations.
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(xiii) Solely with respect to each Additional Priority Closing, the Priority Debt Representative shall have received copies of the executed Collateral Trust Agreement and all Collateral Documents creating a Priority
Lien on the collateral secured thereby.
(xiv) Solely with respect to the Additional Parity Closing, the Parity Debt Representative shall have received copies of the executed Collateral Trust Agreement and all Collateral Documents creating a Parity Lien on the
collateral secured thereby.
(xv) Solely with respect to each Additional Priority Closing, the Company shall have taken all steps under the Collateral Trust Agreement to designate the Additional Priority Notes as Priority Lien Debt and to ensure
that such Priority Lien Debt is secured by a Priority Lien on a pari passu basis with all previously existing Priority Lien Debt.
(xvi) Solely with respect to each Additional Parity Closing, the Company shall have taken all steps under the Collateral Trust Agreement to designate the Additional Parity Notes as Parity Lien Debt and to ensure that
such Parity Lien Debt is secured by a Parity Lien on a pari passu basis with all previously existing Parity Lien Debt.
(xvii) Neither the Company nor any of its Subsidiaries shall have received any notice (whether written or oral) from the Ministry of Mines in the DRC or any other DRC State, whether pursuant to any ongoing or proposed
title review proceedings with the DRC State or otherwise, which in the opinion of such Buyer, withdraws or purports to withdraw any benefits currently held by the Company pursuant to its mining convention with the DRC State (including with regard to
exemptions granted to the Company under the taxation laws, import and export laws and royalty laws under the terms of such convention).
(xviii) No Event of Default (as defined in the Initial Notes) shall have occurred.
(xix) No Material Adverse Effect shall have occurred.
(xx) Since the Initial Closing Date, there has not been any
stoppages to gold production for more than three (3) consecutive days at any of the following mines or circuits: 1) the Twangiza mine, 2) the Namoya CIL / Gravity circuit or 3) the Namoya Heap Leach circuit, except for stoppages in connection with
planned maintenance or upgrades that have been publicly announced prior to such events, which production stoppages shall not exceed the number of days previously publicly announced.
(xxi) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
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(xxii) Solely with respect to the Additional Parity Closing, neither the Company nor any Subsidiary shall have entered into a Gold Streaming Transaction (as defined in the Notes).
(xxiii) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Initial Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date hereof due to the Company's or such Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date by delivering a written notice to that effect to each other party to this Agreement and without liability of any party to any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 8 due to a breach of a representation, warranty, covenant or agreement by the Company, the Company shall remain obligated to reimburse Gramercy or its designee(s), as applicable, for the expenses described in Section 4(g)
above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby appoints CT
Corporation System, with offices at 111 Eighth Avenue, New York, New York 10011, as its agent for service of process in New York. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile or e-mail signature shall be considered due execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile or e-mail signature.
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(c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions
of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(e) Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on
their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Provisions of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of at least a majority of the aggregate principal amount of
Notes issued or issuable under this Agreement, which must include Gramercy as long as Gramercy holds any Notes (the "Required Holders"); provided that the provisions of Section 4(p) cannot be amended without the additional prior
written approval of the Priority Debt Representative or its successor and the provisions of Section 4(q) cannot be amended without the additional prior written approval of the Parity Debt Representative or its successor. Any amendment or waiver
effected in accordance with this Section 9(e) shall be binding upon each Buyer and holder of Securities and the Company. No such amendment shall be effective to the extent that it applies to less than all of the Buyers or holders of Securities. No
consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees) also is offered to
all of the parties to the Transaction Documents, holders of Notes or holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.
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(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or by electronic mail (provided confirmation of
receipt is generated); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall
be:
If to the Company:
Banro Corporation
1 First Canadian Place
100 King Street West, Suite 7070
Toronto, Ontario, Canada M5X 1E3
Telephone: 416.366.2221
Facsimile: 416-366-7722
Attention: Geoffrey Farr
E-mail: GFarr@banro.com
with a copy to:
Norton Rose Fulbright Canada LLP / S.E.N.C.R.L., s.r.l.
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84, Toronto, ON M5J 2Z4 Canada
Telephone: 416.202.6711
Facsimile: 416.216.3930
Attention: Richard Lachcik
E-mail: richard.lachcik@nortonrosefulbright.com
If to the Transfer Agent:
Equity Financial Trust Company
200 University Ave., Suite 300
Toronto, Ontario, Canada M5H 4H1
Telephone: 416.361.0930
Facsimile: 416.361.0470
Attention: Rosa Vieira
E-mail: rvieira@equityfinancialtrust.com
If to a Buyer, to its address, facsimile number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
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Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
E-mail: eleazer.klein@srz.com
or to such other address, facsimile number and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine or e-mail containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile, receipt by e-mail or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively. Notwithstanding anything to the contrary contained herein, if the Company is required to deliver a notice to a Buyer under Section 4(n) of this Agreement or under any of the
Transaction Documents with respect to a Fundamental Transaction or an Offer to Repurchase (as defined in the Notes), in each case that constitutes material non-public information about the Company, in lieu of delivering such material non-public
information to the Buyers, the Company shall instead deliver to each applicable Buyer a written notice (a "Pre-Notice"), which Pre-Notice shall ask such Buyer if it wants to receive any such material non-public information about the Company.
For the avoidance of doubt, such Pre-Notice shall not contain any material non-public information. If any Buyer consents in writing to receive material, nonpublic information of the Company, the Company shall promptly, but no later than the date
contemplated under the applicable notice provision in the Transaction Documents, deliver the applicable notice to such Buyer, and the Company shall not be required to publicly disclose such information. If a Buyer does not elect to receive such
material non-public information, notwithstanding anything to the contrary in the Transaction Documents, the Company shall not be required to deliver to such Buyer the applicable notice containing material non-public information that such Buyer did
not elect to receive. If a Buyer does not elect to receive material non-public information with respect to a notice relating to a Fundamental Transaction or an Offer to Repurchase, the Company shall be required to deliver such notice to such Buyer
promptly after the information to be delivered in such notice shall no longer constitute material non-public information, including, as applicable, promptly after the applicable information has been publicly disclosed. For greater certainty, if the
Pre-Notice related to a Subsequent Placement, the Company shall be deemed to have complied with Section 4(n) with respect to such Subsequent Placement with respect to which a Buyer did not elect to receive material non-public information. For the
avoidance of doubt, the fact that a Buyer does not elect to receive material non-public information with respect of one notice does not impact the Company's obligations to deliver future notices or Pre-Notices in accordance with the Transaction
Documents.
.
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(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided the direct or indirect successors and assigns of any
Buyers are, or become, by virtue of the agreement providing for such succession or assignment, a holder of Notes or Warrants and such successors or assigns agree to be bound by the undertakings and limitations imposed on a Buyer by this Agreement
(if applicable), provided further that solely in respect of Section 4(n), any such successor or assign is an Affiliate of one or more of the Buyers. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Required Holders, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants). A Buyer may
assign some or all of its rights hereunder without the consent of the Company to a person that is, or becomes, by virtue of the agreement providing for such assignment, a holder of Notes or Warrants and such assignee agrees to be bound by the
representations, undertakings and limitations imposed on a Buyer by this Agreement (if applicable), in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights, provided further that any rights under
Section 4(n) may only be assigned to an Affiliate of one or more of the Buyers. For greater certainty, the rights provided in Section 9(k) may only be assigned to a Person that is then a holder of the Notes or the Warrants.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except that (i) each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k), (ii) Section 4(v) is also intended for the benefit of all holders of each other
existing and future Series of Priority Lien Debt and each existing and future Priority Debt Representative, and (iii) Section 4(w) is also intended for the benefit of all holders of each other existing and future Series of Parity Lien Debt and each
existing and future Parity Debt Representative.
(i) Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3, and the agreements and covenants set forth in
Sections 4, 5 and 9 shall survive each Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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(k) Indemnification. (i) In consideration of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations
under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other Investors and all of their shareholders, partners, members, officers, directors, employees and direct or indirect investors and
any of the foregoing Persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees"), as incurred, from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company
or any Subsidiary) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of an Investor as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents; provided, that no Indemnitee shall be entitled to indemnification under this Section 9(k) to the extent that a court of competent jurisdiction renders a final
determination that such Indemnified Liabilities were the result of the gross negligence, willful misconduct or a violation of applicable law on the part of such Indemnitee. To the extent that the foregoing undertaking by the Company or any
Indemnitee may be unenforceable for any reason, the Company and the applicable Indemnitee shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.
(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim for indemnification in respect thereof is to be made against any indemnifying party under this Section 9(k), deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying
party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be selected by the Buyers holding at least a majority of the Securities issued and issuable hereunder. The Indemnitee shall
cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the
Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld conditioned or delayed,
consent to entry of any judgment or enter into any settlement or other compromise which (i) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to
such Indemnified Liabilities or litigation, (ii) requires any admission of wrongdoing by such Indemnitee, or (iii) obligates or requires an Indemnitee to take, or refrain from taking, any action. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9(k), except to the extent that the indemnifying party is prejudiced
in its ability to defend such action.
- 51 -
(iii) The indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
(iv) The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against the indemnifying party or others, and (y) any liabilities the indemnifying party
may be subject to pursuant to the law.
(l) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against
any party.
(m) Remedies. Each Buyer and each other Investor shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of any Transaction Document and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in the Transaction Documents shall be cumulative and in addition to all other remedies available at law or
in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein or in any other Transaction Document shall be deemed a waiver of compliance with the provisions giving rise to such remedy. Nothing
herein shall limit a Buyer's or other Investor's right to pursue actual damages for any failure by either Company to comply with the terms of this Agreement or other Transaction Documents. Amounts set forth or provided for in this Agreement and the other Transaction Documents with respect to payments and the like (and the computation thereof) shall be the amounts to be
received by the Investor thereof and shall not, except as expressly provided herein or in the respective Transaction Agreements, be subject to any other obligation of the Company or its Subsidiaries (or the performance thereof)
- 52 -
(n) Rescission and
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document
and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.
(o) Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company or a Subsidiary, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, United States or Canadian federal, state or provincial
law, foreign law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
(p) Currency. Unless otherwise indicated, all dollar amounts referred to in this Agreement are in United States Dollars ("U.S. Dollars"). All amounts owing under this Agreement, all principal, interest and
other amounts owing under the Notes, and all amounts owing under any other Transaction Document shall be paid in U.S. Dollars. Except as otherwise provided herein, all amounts denominated in other currencies shall be converted in the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. "Exchange Rate" means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as
published in The Wall Street Journal on the relevant date of calculation.
(q) Independent Nature of Buyers' Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in
concert or as a group, and the Company shall not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled, subject to
the Collateral Trust Agreement. to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to
be joined as an additional party in any proceeding for such purpose.
- 53 -
(r) Taxes.
(i) All payments or other transfers of property or rights by the Company or any Subsidiary to the Investors in regard or in connection with this Agreement, the other Transaction Documents or any of the Securities
(including the payment or the accrual of interest but excluding dividends or other distributions or payments on the Warrant Shares) shall be made free and clear of and without deduction for any present or future income, excise, stamp, documentary,
property or franchise taxes and any other taxes, levies, fees, duties, withholdings or other charges of any nature whatsoever ("Taxes"), of any governmental agency or authority in Barbados, Canada, the Democratic Republic of the Congo or the
United States of America, and including any stamp taxes or any other similar taxes which may be required for enforcement purposes or any stamp tax due upon issuance of the Common Shares issuable upon exercise of the Warrants. In the event that any
withholding or deduction from any interest, distribution, accrual or payment to be made by the Company or any Subsidiary hereunder, the other Transaction Documents or any of the Securities (other than the Warrant Shares or as expressly provided in
the Warrant) is required in respect of any Taxes pursuant to any applicable law, rule or regulation (determined, unless otherwise mutually agreed by the Company and the relevant Investors, on the assumption that the payor is not entitled to
determine such withholding or deduction requirement by "looking through" any partnership or other fiscally transparent entity), then the Company or such Subsidiary, as applicable, shall promptly:
(1) pay directly or caused to be paid directly to the
relevant authority the full amount required to be so withheld or deducted;
(2) forward to the applicable Investor an official receipt or other documentation satisfactory to such Investor evidencing such payment to such authority promptly after
receipt of the same; and
(3) except as provided in (ii) below, pay to the applicable Investor such additional amount or amounts as is necessary to ensure that the net amount actually received by such Investor will equal the full amount such Investor
would have received had no such withholding or deduction been required.
(ii) The Company and the Subsidiaries will not be required to pay any additional amounts under (i)(3) above to any Investor, or be obligated to indemnify such Investor under (iv) below, in respect of any Taxes:
- 54 -
(1) imposed on, or deducted or withheld from, payments in respect of the Securities to an Investor or a beneficial owner of Securities by reason of the existence of any present or former connection (including, without
limitation, carrying on business or having a permanent establishment or fixed base) between such Investor or beneficial owner (or between a fiduciary, settlor, beneficiary, member, shareholder or other equity owner of, or possessor of power over,
such beneficial owner, if such beneficial owner is an estate, trust, partnership, limited liability company, corporation or other entity) and the taxing jurisdiction (including, without limitation, any Taxes imposed on such Investor or beneficial
owner’s net income) other than connections solely arising from such recipient having executed, delivered, become a party to, performed obligations under, received payments under, received or perfected a security interest under, engaged in any
other transaction pursuant to, or enforced any Securities, or sold or assigned an interest in any Security;
(2) imposed on or measured by the Investor’s or beneficial owner’s overall net income or capital, branch taxes or franchise
taxes, under the laws of which the Investor or beneficial owner is organized, centrally managed, controlled or in which it maintains a lending office;
(3) imposed on, or deducted or withheld from, payments in respect of the Securities to an Investor
or beneficial owner as a result of the failure of such Investor or beneficial owner to take commercially reasonable steps to comply with any applicable certification, identification, information, documentation, or similar reporting requirements
concerning the nationality, residence, entitlement to treaty benefits, identity or connection with the relevant taxing jurisdiction of such Investor or beneficial owner (except to the extent that such failure to comply arises from the Investor not
being in possession of sufficient information to effect such compliance); or
(4) any combination of items (1) through (3).
(iii) The Company and each Subsidiary further agree that if any present or future taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, including franchise taxes
and taxes imposed on or measured by any Investor's net income or receipts ("Further Taxes") are directly or indirectly asserted against such Investor with respect to any payment of any additional amount described in paragraph (i)(3) and
received by such Investor hereunder, such Investor may pay such Further Taxes and the Company or the applicable Subsidiary will promptly pay to such Investor such additional amounts (including all penalties, interest or expenses) that such Investor
specifies as necessary to preserve the after-tax return that such Investor would have received if such Taxes or Further Taxes had not been imposed.
(iv) If the Company or any Subsidiary fails to pay any Taxes described in (i), above, when due to the appropriate taxing authority or fails to remit to the applicable Investor the required receipts or other required
documentary evidence for such payment of Taxes received for such payments from the relevant taxing authority or fails to pay to the applicable Investor additional amounts as described in (i)(3), above, the Company and the Subsidiaries shall jointly
and severally indemnify such Investor for any incremental Taxes, interest, penalties, unpaid additional amounts, expenses and costs that may become payable or are incurred by such Investor as a result of any such failure. In addition to the foregoing, the Company and the Subsidiaries hereby jointly and severally indemnify and hold each Investor harmless for any and all payments made by any Investor of any
such Taxes and Further Taxes and for any liabilities (including penalties, interest, legal costs and expenses) incurred by any Investor or which may be imposed on any Investor in connection therewith or any delays in their payment.
- 55 -
(v) The obligations of the Company and the Subsidiaries under this Section 9(r) shall survive the termination of this Agreement and the other Transaction Documents and the payment of the Notes and all other amounts
payable under the respective Transaction Documents.
(s) Judgment Currency. If for the purpose of obtaining or enforcing judgment against the Company or any Subsidiary in any court in any jurisdiction it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 9(s) referred to as the "Judgment Currency") an amount due in United States dollars under this Agreement or any other Transaction Documents, the conversion shall be made at the Exchange Rate
prevailing on the Business Day immediately preceding:
(i) the date of actual payment of the amount due, in the case of any proceeding in the courts of New York or Toronto, as the case may be, or in the courts of any other jurisdiction that will give effect to such
conversion being made on such date: or
(ii) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 9(s) being
hereinafter referred to as the "Judgment Conversion Date").
(iii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(s)(ii) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of
actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of United States dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iv) Any amount due from the Company or any Subsidiary under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this
Agreement or any other Transaction Document.
[Signature Page Follows]
- 56 -
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
BANRO CORPORATION
By: “Richard Brissenden”
Name: Richard Brissenden
Title: Chairman of the Board
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
BUYERS:
GRAMERCY DISTRESSED OPPORTUNITY FUND II LP
By: “Robert L. Rauch”
Name: Robert L. Rauch
Title: Partner, Portfolio Manager
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
BUYERS:
THE ROYAL BANK OF SCOTLAND GROUP PENSION FUND
By: “Robert L. Rauch”
Name: Robert L. Rauch
Title: Partner, Portfolio Manager
SCHEDULE OF BUYERS
[REDACTED]
EXHIBITS
| Exhibit A |
Form of Notes |
| Exhibit B |
Form of Warrants |
| Exhibit C |
Form of Guarantee Agreement |
| Exhibit D |
Form of Irrevocable Transfer Agent Instructions |
| Exhibit E-1 |
Form of Opinion of Company Canadian Counsel |
| Exhibit E-2 |
Form of Opinion of Company United States Counsel |
| Exhibit E-3 |
Form of Opinion of Company DRC Counsel |
| Exhibit E-4 |
Form of Opinion of Company Barbados Counsel |
| Exhibit F |
Form of Secretary's Certificate |
| Exhibit G |
Form of Officer's Certificate |
| Exhibit H |
Form of Priority Joinder |
| Exhibit I |
Form of Parity Joinder |
| Exhibit J |
Form of Lock-Up Agreement |
| SCHEDULE 1 |
| |
| COLLATERAL DOCUMENTS |
| DRC Security - see Schedule 1.1 |
| |
| Barbados Security - see Schedule 1.2 |
| |
| Ontario Security - see Schedule 1.3 |
| SCHEDULE 1.1 |
| |
| DRC COLLATERAL DOCUMENTS |
I. |
Agency Agreement* |
| |
|
| 1. |
Contrat de representation among Equity Financial Trust
Company (“Equity”), Rawbank S.A.R.L. (“Rawbank”) and Banro
Corporation ("Banro") |
| |
|
|
Description: Agency agreement dated April 24, 2012
pursuant to which Equity appointed Rawbank as its agent in the
DRC. |
| |
|
| II. |
Business Pledge Agreement (and related
registration)* |
| |
|
| 2. |
Acte de gage du Fonds de Commerce between Banro Congo
Mining SARL (“BCM”) and Equity |
| |
|
| 3. |
Acte de gage du Fonds de Commerce between Kamituga Mining
SARL (“KM”) and Equity |
| |
|
| 4. |
Acte de gage du Fonds de Commerce between Lugushawa
Mining SARL (“LM”) and Equity |
| |
|
| 5. |
Acte de gage du Fonds de Commerce between Namoya Mining
SARL (“NM”) and Equity |
| |
|
| 6. |
Acte de gage du Fonds de Commerce between Twangiza Mining
SARL (“TM”) and Equity |
Description: Pledge agreements
dated April 24, 2012 pursuant to which BCM, KM, LM, NM and TM pledge all of
their business and assets to secure the indenture obligations (“Indenture
Obligations”), as defined in the note indenture dated March 2, 2012 among
Banro, Equity and the guarantors named therein (the "Note Indenture").
| III. |
Share Pledge
Agreement* |
| |
|
| 7. |
Contrat de nantissement de titres among Equity,
Banro Corporation and BCM |
| |
|
| 8. |
Contrat de nantissement de titres among Equity,
Banro Corporation and KM |
| |
|
| 9. |
Contrat de nantissement de titres among Equity,
Banro Corporation and LM |
| |
|
| 10. |
Contrat de nantissement de titres among Equity,
Banro Corporation and NM |
| |
|
| 11. |
Contrat de nantissement de titres among Equity,
Banro Corporation and TM |
Description: Share Pledge
agreements dated April 28, 2012 pursuant to which Banro pledges its shares in
BCM, KM, LM, NM, and TM to secure the payment of the Indenture Obligations, as assumed BC, Kamituga, Lugushwa, Namoya and Twangiza (as defined below) by pursuant to the assumption agreements dated June 20, 2013.
IV. |
Pledge over Marketable
Products* |
| |
|
| 12. |
Contrat de gage des produits marchands among BCM, Equity,
Banro Corporation and Rawbank |
| |
|
| 13. |
Contrat de gage des produits marchands among KM, Equity,
Banro Corporation and Rawbank |
| |
|
| 14. |
Contrat de gage des produits marchands among LM, Equity,
Banro Corporation and Rawbank |
| |
|
| 15. |
Contrat de gage des produits marchands among NM, Equity,
Banro Corporation and Rawbank |
2
| 16. |
Contrat de gage des produits marchands among TM, Equity,
Banro Corporation and Rawbank |
Description: Pledge Agreements
dated April 28, 2012 pursuant to which BCM, KM, LM, NM, and TM pledge their
marketable products to secure the Indenture Obligations.
| V. |
Bank Account Pledge - Banque Commerciale du Congo
SARL (“BCDC”)* |
| |
|
| 17. |
Contrat de nantissement sur le solde crediteur des
comptes bancaires between BCDC and BCM |
| |
|
| 18. |
Contrat de nantissement sur le solde crediteur des
comptes bancaires between BCDC and KM |
| |
|
| 19. |
Contrat de nantissement sur le solde crediteur des
comptes bancaires between BCDC and LM |
| |
|
| 20. |
Contrat de nantissement sur le solde crediteur des
comptes bancaires between BCDC and NM |
| |
|
| 21. |
Contrat de nantissement sur le solde crediteur des
comptes bancaires between BCDC and TM |
Description: Agreements dated
April 28, 2012 pursuant to which BCM, KM, LM, NM and TM pledge sums credited,
sums that may be credited and interest accruing in the bank accounts held at the
Banque Commerciale du Congo to secure the Indenture Obligations.
| VI. |
Bank Account Pledge -
Rawbank* |
| |
|
| 22. |
Contrat de nantissement sur le solde crediteur
des comptes bancaires between Rawbank and BCM |
| |
|
| 23. |
Contrat de nantissement sur le solde crediteur
des comptes bancaires between Rawbank and NM |
| |
|
| 24. |
Contrat de nantissement sur le solde crediteur
des comptes bancaires between Rawbank and TM |
Description: Agreements dated
April 28, 2012 pursuant to which BCM, KM, LM, NM and TM pledge sums credited,
sums that may be credited, and interest accruing in the bank accounts held at
the Banque Commerciale du Congo to secure the Indenture Obligations.
* As amended by Amending Agreements dated January 21, 2013
pursuant to which the parties to each agreement agreed that the Indenture
Obligations would be replaced by Priority Lien Obligations and the Parity Lien
Obligations, each as defined in the Note Indenture.
3
| SCHEDULE 1.2 |
| |
| BARBADOS COLLATERAL DOCUMENTS |
BANRO CORPORATION (“Banro”)
| 1. |
Banro equitable charge re: shares of Group |
| |
|
|
Description: Agreement dated April 23, 2013 pursuant to
which Equity receives a charge over shares held by Banro in Banro Group
(Barbados) Limited ("Group"). |
| |
|
| 2. |
Statement of Charge re: Banro equitable charge re: shares
of Group |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement. The maximum sum deemed to be secured by
the Charge is US$225,000,000. |
BANRO GROUP (BARBADOS) LIMITED (“Group”)
| 3. |
Group debenture |
| |
|
|
Description: Debenture dated April 23, 2013 made by way
of deed by Group in favour of Equity comprising fixed charges, assignments
and a floating charge. |
| |
|
| 4. |
Statement of Charge re: Group debenture |
| |
|
|
Description: Executed statement of charge, dated April
23, 2013, pursuant to the above debenture which provides a short summary
of its particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
| |
|
| 5. |
Group equitable charge re: shares of Group
subsidiaries |
| |
|
|
Description: An agreement dated April 23, 2013, pursuant
to which Equity receives a charge over shares held by Group in BC,
Kamituga, Lugushwa, Namoya and Twangiza (as defined below). |
| |
|
| 6. |
Statement of Charge re: Group equitable charge re: shares
of Group subsidiaries |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement. The maximum sum deemed to be secured by
the Charge is US$225,000,000. |
BANRO CONGO (BARBADOS) LIMITED (“BC”)
| 7. |
BC debenture |
| |
|
|
Description: Debenture dated April 23, 2013, made by way
of deed by BC in favour of Equity comprising fixed charges, assignments
and a floating charge. |
| |
|
| 8. |
Statement of Charge re BC debenture |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement which provides a short summary of its
particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
KAMITUGA (BARBADOS) LIMITED (“KAMITUGA”)
| 9. |
Kamituga debenture |
| |
|
|
Description: Debenture dated April 23, 2013, made by way
of deed by Kamituga in favour of Equity comprising fixed charges,
assignments and a floating charge. |
4
| 10. |
Statement of Charge re Kamituga debenture |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement which provides a short summary of its
particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
LUGUSHWA (BARBADOS) LIMITED (“LUGUSHWA”)
| 11. |
Lugushwa debenture |
| |
|
|
Description: Debenture dated April 23, 2013, made by way
of deed by Lugushwa in favour of Equity comprising fixed charges,
assignments and a floating charge. |
| |
|
| 12. |
Statement of Charge re Lugushwa debenture |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement which provides a short summary of its
particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
NAMOYA (BARBADOS) LIMITED (“NAMOYA”)
| 13. |
Namoya debenture |
| |
|
|
Description: Debenture dated April 23, 2013, made by way
of deed by Namoya in favour of Equity comprising fixed charges,
assignments and a floating charge. |
| |
|
| 14. |
Statement of Charge re Namoya debenture |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement which provides a short summary of its
particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
TWANGIZA (BARBADOS) LIMITED (“TWANGIZA ”)
| 15. |
Twangiza debenture |
| |
|
|
Description: Debenture dated April 23, 2013, made by way
of deed by Twangiza in favour of Equity comprising fixed charges,
assignments and a floating charge. |
| |
|
| 16. |
Statement of Charge re Statement of Charge and Twangiza
debenture |
| |
|
|
Description: Statement of charge, dated April 23, 2013,
pursuant to the above agreement which provides a short summary of its
particulars. The maximum sum deemed to be secured by the Charge is
US$225,000,000. |
5
| SCHEDULE 1.3 |
| |
| ONTARIO COLLATERAL DOCUMENTS |
| 1. |
Collateral Trust Agreement |
| |
|
|
Description: [filed on SEDAR] |
| |
|
| 2. |
Amended and Restated Security Agreement (21 January
2013) |
| |
|
|
Description: Agreement pursuant to which Banro grants
security interest in all of its present and after-acquired real and
personal property to Equity. This agreement amends and restates a general
security agreement between the same parties dated March 2, 2012 |
| |
|
| 3. |
Securities Account Control Agreement |
| |
|
|
Description: Agreement dated April 5, 2012, pursuant to
which Equity acquires ‘control’ (as defined in Securities Transfer
Act, 2006 (Ontario)) over securities entitlements and accounts of
Banro with RBC Dominion Securities. |
6
Schedule “A”
"Material Properties" means the material mineral
properties of the Parent and Subsidiaries, such material mineral properties
being the Twangiza, Lugushwa, Namoya and Kamituga projects, each in the
Democratic Republic of the Congo and each a "Material Property".
Name of
Company
|
Exploitation
Certificate Number
|
Exploitation
Permit
Number |
Mineral
Substances
|
Number of
Squares
|
Date of grant
|
Expiry Date
|
| KAMITUGA |
CAMI/CE/1011/2004 |
36 |
Gold |
115 |
Dec 17,1998 |
Sept 18, 2016 |
| MINING SARL |
CAMI/CE/924/2004 |
37 |
" |
356 |
" |
" |
| |
CAMI/CE/926/2004 |
39 |
" |
286 |
" |
" |
| LUGUSHWA |
CAMI/CE/925/2004 |
38 |
" |
369 |
Dec 17,1998 |
|
|
|
|
|
|
|
" |
| MINING SARL |
CAMI/CE/933/2004 |
238 |
" |
42 |
Nov 7,1994 |
|
| |
|
|
|
|
|
Nov 7, 2022 |
| |
CAMI/CE/922/2004 |
2601 |
" |
344 |
Dec 17, 1998 |
Sept 18, 2016 |
| NAMOYA |
CAMI/CE/923/2004 |
18 |
" |
203 |
Nov 4, 1998 |
July 4, 2016 |
| MINING SARL |
|
|
|
|
|
|
| TWANGIZA |
CAMI/CE/927/2004 |
40 |
" |
241 |
Dec 17, 1998 |
Sept 18, 2016 |
| MINING SARL |
CAMI/CE/928/2004 |
41 |
" |
171 |
" |
" |
| |
CAMI/CE/929/2004 |
42 |
" |
284 |
" |
" |
| |
CAMI/CE/930/2004 |
43 |
" |
251 |
Dec 17, 1998 |
" |
| |
CAMI/CE/931/2004 |
44 |
" |
271 |
Dec 17, 1998 |
" |
| |
CAMI/CE/932/2004 |
68 |
" |
140 |
April 3,1999 |
January 3, 2017 |
| BANRO |
Exploration |
Exploration |
|
|
|
|
| CONGO |
Certificate
Numbers |
Permit |
|
|
|
|
| MINING SARL |
|
Number |
|
|
|
|
| |
CAMI/CR/2883/2007
|
1548 |
Gold |
195 |
05/2/2007 |
04/2/2012 |
| |
CAMI/CR/2884/2007
|
1551 |
“ |
39 |
“ |
“ |
| |
CAMI/CR/2885/2007
|
1552 |
” |
121 |
” |
” |
| |
CAMI/CR/2886/2007
|
1557 |
” |
241 |
“ |
“ |
| |
CAMI/CR/2887/2007
|
1570 |
“ |
65 |
” |
” |
| |
CAMI/CR/2888/2007
|
1571 |
” |
44 |
“ |
“ |
| |
CAMI/CR/2889/2007
|
1572 |
“ |
213 |
” |
” |
| |
CAMI/CR/2890/2007
|
1573 |
” |
341 |
“ |
“ |
| |
CAMI/CR/2891/2007
|
1574 |
“ |
142 |
” |
” |
| |
CAMI/CR/2892/2007
|
1575 |
” |
370 |
“ |
“ |
| |
CAMI/CR/2893/2007 |
1576 |
“ |
247 |
” |
” |
Name of
Company
|
Exploitation
Certificate
Number
|
Exploitation
Permit
Number |
Mineral
Substances
|
Number of
Squares
|
Date of grant
|
Expiry Date
|
| |
CAMI/CR/2894/2007 |
1577 |
” |
221 |
“ |
“ |
| |
CAMI/CR/2907/2007 |
3874 |
Au,Sn,Cu, |
471 |
03/2/2007 |
02/2/2012 |
| |
CANI/CR/2908/2007 |
3883 |
plat.,silver, |
395 |
“ |
“ |
| |
|
|
Wolframite, |
|
|
|
| |
|
|
Co, |
|
|
|
| |
|
|
“ |
|
|
|
Schedule 3(a)
Banro Group (Barbados) Limited
Twangiza (Barbados) Limited
Namoya (Barbados) Limited
Banro Congo (Barbados) Limited
Lugushwa
(Barbados) Limited
Kamituga (Barbados) Limited
Kamituga Mining
SARL
Banro Congo Mining SARL
Lugushwa Mining SARL (DRC)
Namoya Mining
SARL (DRC)
Twangiza Mining SARL (DRC)
Banro Hydro SPRL
Banro
American Resources Inc.
Schedule 3(k)
None.
Schedule 3(l)
The Company’s press releases dated March 19, 2014 and June 19,
2014, as filed on SEDAR, stated that the Company would pay a dividend to holders
of record of Series A Preference Shares of Banro and Preferred Shares of Banro
Group (Barbados) Limited.
As well, Twangiza (Barbados) Limited and Namoya (Barbados)
Limited paid dividends on their respective outstanding preferred shares on May
31, 2014.
Schedule 3(n)
None.
Schedule 3(q)
The following documents, as filed on the Company’s SEDAR
profile, detail transactions between the Company and affiliated parties: (i)
Management Information Circular dated May 30, 2014, at pages 36-37; (ii)
Management Discussion and Analysis for the six-month period ended June 30, 2014,
at page 15; (iii) Management Discussion and Analysis for year ended December 31,
2013, at pages 23 to 24; and (iv) Management Discussion and Analysis for the
period ended September 30, 2012, at page 17.
Schedule 3(r)
The Company has outstanding warrants, notes and preference
shares, and each of Banro Group (Barbados) Limited, Twangiza (Barbados) Limited
and Namoya (Barbados) Limited has outstanding preferred shares, each being fully
described in the Company’s Annual Information Form dated March 31, 2014, Item
5.1 to Item 5.5, as filed on the Company’s SEDAR profile.
The issuance of the Warrants triggers the anti-dilution clause
pursuant to the securities purchase agreement among the Company, Namoya
(Barbados) Limited, Twangiza (Barbados) Limited and the buyers listed in the
schedule of buyers attached thereto dated February 28, 2014 (the “February SPA”)
such that the Exchange Price (as defined in the February SPA) and the number of
Common Shares issuable upon exchange of the Preferred Shares (as defined in the
February SPA) are adjusted in accordance with the terms of the February SPA.
Schedule 3(s)
The Company’s Consolidated Financial Statements for the year
ended December 31, 2013, pages 7, 31, 32 and 39, Interim Financial Statements
for the period ended June 30, 2014, pages 3, 15, 16 and, Management Discussion
and Analysis for the period ended June 30, 2014, pages 6 and 14, as filed on the
Company’s SEDAR profile, disclose the details of the Company’s indebtedness.
Subsequent to June 30, 2014, the Company made payments on its
bank loans and gold loan of US$3,692,677 and 1,558 ounces, respectively.
Schedule 3(x)
None.
Schedule 4(d)
Repayment of DRC bank debt – US$12,771,260
Funding short
term capital program at Namoya – US$2,000,000 (approximately)
Payment of
interest on currently outstanding notes – US$8,750,000
Working
capital/reduce accounts payable – US$3,822,740
Gramercy legal expenses –
US$356,000 (approximately)
Total: US$27,700,000
Schedule 7(a)(xxii)
Derrick Weyrauch
John Clarke
Peter Cowley
R.W.
Brissenden
M.J. Colson
Arnold Kondrat
Geoffrey G. Farr
Donald
Madilo
Dan Bansah
Jacobus Petrus Nel
Naomi Nemeth
Desire Sangara
[FORM OF [SERIES A-1 PRIORITY]1 [SERIES A-2 PRIORITY]2 [SERIES B-1
PARITY]3 [SERIES B-2 PARITY]4 SECURED NOTE]
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [DECEMBER [ ],
2014]5 [ ]6.
BANRO CORPORATION
[SERIES A-1 PRIORITY] [SERIES A-2 PRIORITY] [SERIES B-1
PARITY] [SERIES B-2 PARITY] SECURED NOTE
Issuance Date: [August [ ], 2014]7 [ ]8 Original
Principal Amount: U.S. $[ ]
FOR VALUE RECEIVED, Banro
Corporation, a corporation organized under the federal laws of Canada (the
"Company"), hereby promises to pay to [BUYER] or its registered assigns
(the "Holder") in cash the amount set out above as the Original Principal
Amount (as may be reduced pursuant to the terms hereof pursuant to redemption or
otherwise, and as may be increased to include the amount of any Capitalized
Interest (as defined below) [and/or any Exchange Amount (as defined
below)]9, the "Principal") when due, whether upon the Maturity
Date (as defined below), acceleration, redemption or otherwise (in each case in
accordance with the terms hereof) and to pay interest ("Interest") on any
outstanding Principal at the applicable Interest Rate from the date set out
above as the Issuance Date (the "Issuance Date") until the same becomes
due and payable, whether upon an Interest Date (as defined below), the Maturity
Date, acceleration, redemption or otherwise (in each case in accordance with the
terms hereof). This [Series A-1 Priority] [Series A-2 Priority] [Series B-1
Parity] [Series B-2 Parity] Secured Note (including all [Series A-1 Priority]
[Series A-2 Priority] [Series B-1 Parity] [Series B-2 Parity] Secured Notes
issued in exchange, transfer or replacement hereof, this "Note") is one
of an issue of [Series A-1 Priority] [Series A-2 Priority] [Series B-1 Parity]
[Series B-2 Parity] Secured Notes issued pursuant to the Transaction Documents
on [the Initial Closing Date]10
____________________
1 Insert in Initial Priority Notes (as defined in
the Securities Purchase Agreement).
2 Insert in Additional
Priority Notes (as defined in the Securities Purchase Agreement).
3 Insert in Initial Parity Notes (as defined in the Securities
Purchase Agreement).
4 Insert in Additional Parity Notes (as
defined in the Securities Purchase Agreement).
5 Insert in
Initial Parity Notes, in Initial Priority Notes and in Additional Priority Notes
issued on an Exchange Date pursuant to Section 11 of the Parity Notes.
6 Insert in Additional Parity Notes and Additional Priority Notes
issued on an Additional Closing Date (as defined in the Securities Purchase
Agreement) the date that is 4 months and 1 day after the applicable Additional
Closing Date.
7 Insert Initial Closing Date (as defined in the
Securities Purchase Agreement) in Initial Priority Notes and in Initial Parity
Notes.
8 Insert, as applicable (i) the Additional Parity Closing
Date (as defined in the Securities Purchase Agreement) in Additional Parity
Notes, (ii) the applicable Additional Priority Closing Date (as defined in the
Securities Purchase Agreement) in Additional Priority Notes or (iii) the
applicable Exchange Date in Additional Priority Notes issued on an Exchange Date
pursuant to Section 11 of the Parity Notes.
9 Insert in
Additional Priority Notes issued on an Exchange Date pursuant to Section 11 of
the Parity Notes.
10 Insert in Initial Priority Notes and in
Initial Parity Notes.
[the Additional Parity Closing Date
(as defined in the Securities Purchase Agreement)]11 [an Exchange Date (as defined in the
Parity Notes)]12 [an Additional Priority Closing Date (as defined in
the Securities Purchase Agreement)]13 (collectively, the
"Other Notes") and all such other Secured Notes, if any, that have
been issued pursuant to the Transaction Documents (as defined below)
(collectively the "Additional Notes", and together with the Other Notes,
the "Notes"). Certain capitalized terms used herein are defined in
Section 28.
(1) PAYMENTS OF PRINCIPAL;
PREPAYMENT.
(a)
On the Maturity Date, the Company shall pay to the Holder an amount in cash
representing all outstanding Principal, accrued and unpaid Interest and any
other amount due hereunder. The "Maturity Date" shall be July 31,
2016, as may be extended at the option of the Holder (i) in the event that, and
for so long as, an Event of Default (as defined in Section 4(a)) shall have
occurred and be continuing on the Maturity Date (as may be extended pursuant to
this Section 1(a)) or any event shall have occurred and be continuing on the
Maturity Date (as may be extended pursuant to this Section 1(a)) that with the
passage of time and the failure to cure would result in an Event of Default and (ii) through the date that is ten (10) Business Days after the
consummation of a Change of Control.
(b)
The Company may redeem all or a portion of the outstanding Redemption Amount on
any Interest Date (as defined in Section 2) (a "Prepayment" and the
Interest Date the Company so redeems the Note, a "Prepayment Date") at a
price equal to such portion of the Redemption Amount being redeemed (the
"Prepayment Price"), provided, however, that the Company
delivers a written notice to the Holder at least ten (10) Business Days prior to
the applicable Prepayment Date notifying the Holder of its intention to redeem
the Note and specifying the applicable Prepayment Price; provided, further, that if the Company elects to make a Prepayment (i) the Company
must prepay at least $5,000,000 of the aggregate Principal amount of all Notes
then outstanding (or such lesser aggregate Principal amount that is then
outstanding under all Notes) with any accrued and unpaid Interest on such
Principal amount and (ii) the Company must first redeem pursuant to this Section
1(b) the Priority Notes, if any, that are then outstanding and may only redeem
pursuant to this Section 1(b) the Parity Notes after the Priority Notes have
been repaid in full. If the Company elects to redeem all or a portion of the
outstanding Redemption Amount of this Note pursuant to this Section 1(b) then it
must simultaneously redeem the Other Notes in the same proportion. Other than as
specifically permitted by this Note, the Company may not optionally prepay or
redeem any portion of the outstanding Principal or accrued and unpaid Interest.
Redemptions pursuant to this Section 1(b) shall be made in accordance with the
provisions of Section 7.
____________________
11 Insert in Additional Parity Notes.
12 Insert in Additional Priority Notes issued on an Exchange Date
pursuant to Section 11 of the Parity Notes.
13 Insert in
Additional Priority Notes.
- 2 -
(2) INTEREST. Interest on
this Note shall commence accruing on the Issuance Date at the Interest Rate and
shall be computed on the basis of a 360-day year and actual number of days
elapsed and shall be payable in arrears for each calendar month on the last
Business Day of each calendar month after the Issuance Date (each, an
"Interest Date") with the first (1st) Interest Date
being August 29, 2014. Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date
in cash by wire transfer of immediately available funds pursuant to wire
instructions provided by the Holder in writing to the Company ("Cash
Interest"); provided, however, that the Company may, at its
option following written notice (an "Interest Election Notice") to the
Holder on or prior to the date that is five (5) Business Days (an "Interest
Notice Due Date") immediately preceding any Interest Date occurring on or
prior to July 31, 2015, capitalize Interest due on such Interest Date by adding
the accrued Interest at the Interest Capitalized Rate to then outstanding
Principal of this Note (the "Capitalized Interest") instead of paying
Cash Interest. Each Interest Election Notice shall be irrevocable with respect
to the next succeeding Interest Date. If the Company does not timely deliver an
Interest Election Notice on or prior to the applicable Interest Notice Due Date,
then the Interest shall be paid as Cash Interest on the applicable Interest
Date. Any election by the Company to capitalize Interest on an Interest Date
pursuant to this Section 2 must be made with respect to all outstanding Notes.
Interest on this Note shall accrue at the Interest Rate. Accrued and unpaid
Interest shall be payable by way of inclusion of the Interest in the Redemption
Amount on each Redemption Date. From and after the occurrence and during the
continuance of an Event of Default, the Interest Rate shall be increased by five
percent (5.0%). In the event that such Event of Default is subsequently cured,
the adjustment referred to in the preceding sentence shall cease to be effective
as of the date of such cure; provided, that the Interest as calculated
and unpaid at such increased rate during the continuance of such Event of
Default shall continue to apply to the extent relating to the days after the
occurrence of such Event of Default through and including the date of cure of
such Event of Default. Whenever interest or fees payable by the Company are
calculated on the basis of a period which is less than the actual number of days
in a calendar year, each rate of interest and fee determined pursuant to such
calculation is, for the purpose of the Interest Act (Canada), equivalent
to such rate multiplied by the actual number of days in the calendar year in
which such rate is to be ascertained and divided by the number of days used as
the basis of such calculation. The principle of deemed reinvestment of interest
does not apply to any interest calculation hereunder, and the rates of interest
stipulated herein are intended to be nominal rates and not effective rates or
yields.
(3) REGISTRATION; BOOK-ENTRY;
ASSIGNMENT. The Company shall maintain a register (the "Register")
for the recordation of the names and addresses of the holders of each Note and
the Principal amount of the Notes (and stated interest thereon) held by such
holders (the "Registered Notes"). The entries in the Register shall be
conclusive and binding for all purposes absent manifest error. The Company and
the holders of the Notes shall treat each Person whose name is recorded in the
Register as the owner of a Note for all purposes, including, without limitation,
the right to receive payments of Principal and Interest, if any, hereunder,
notwithstanding notice to the contrary. A Registered Note may be assigned or
sold in whole or in part only by registration of such assignment or sale on the
Register. Upon its receipt of a request to assign or sell all or part of any
Registered Note by the Holder, the Company shall record the information
contained therein in the Register and issue one or more new Registered Notes in
the same aggregate Principal amount as the Principal amount of the surrendered
Registered Note to the designated assignee or transferee pursuant to Section 13.
Notwithstanding anything to the contrary in this Section 3, the Holder may
assign any Note or any portion thereof to an Affiliate of such Holder or a
Related Fund of such Holder without delivering a request to assign or sell such
Note to the Company and the recordation of such assignment or sale in the
Register (a "Related Party Assignment"); provided, that (x) the
Company may continue to deal solely with such assigning or
selling Holder unless and until such Holder has delivered a request to assign or
sell such Note or portion thereof to the Company for recordation in the
Register; (y) the failure of such assigning or selling Holder to deliver a
request to assign or sell such Note or portion thereof to the Company shall not
affect the legality, validity, or binding effect of such assignment or sale and
(z) such assigning or selling Holder shall, acting solely for this purpose as a
non-fiduciary agent of the Company, maintain a register (the "Related Party
Register") comparable to the Register on behalf of the Company, and any such
assignment or sale shall be effective upon recordation of such assignment or
sale in the Related Party Register. Notwithstanding anything to the contrary set
forth herein, upon redemption of any portion of this Note in accordance with the
terms hereof, the Holder shall not be required to physically surrender this Note
to the Company unless (A) the entire Redemption Amount of this Note is being
redeemed or (B) the Holder physically surrendered this Note and requested that
the Company issue a new Note with the remaining unredeemed portion of the
Redemption Amount of this Note. The Holder and the Company shall maintain
records showing the Principal and Interest redeemed and the dates of such
redemptions or shall use such other method, reasonably satisfactory to the
Holder and the Company, so as not to require physical surrender of this Note
upon redemption.
- 3 -
(4) RIGHTS UPON EVENT OF
DEFAULT.
(a) Event of Default. Each of the following events shall constitute an
"Event of Default":
(i)
(A) the suspension from trading of the Common Shares for a period of three (3)
consecutive Trading Days or for more than an aggregate of ten (10) Trading Days
in any 365-day period or (B) failure of the Common Shares to be listed on the
Eligible Markets;
(ii)
the Company's failure to pay to the Holder any amount of Principal, Interest or
other amounts when and as due under this Note (including, without limitation,
the Company's failure to pay any redemption or other amounts as due), any
Collateral Document or any other Transaction Document, except, in the case of a
failure to pay Interest when and as due, in which case only if such failure
continues for a period of at least an aggregate of two (2) Business Days;
(iii)
any default under, redemption of or acceleration prior to maturity of any
Indebtedness of the Company or any of its Subsidiaries other than with respect
to the Notes and, in each case, the principal amount of such Indebtedness,
together, with the principal amount of any such other Indebtedness under which
there has been a default or which has been redeemed or accelerated prior to the
maturity of such Indebtedness, aggregates to $1,000,000 or more (or equivalent
in any other currency at the then prevailing exchange rates);
(iv)
if a decree or order of a court having jurisdiction is entered adjudging the
Company or any of its Subsidiaries a bankrupt or insolvent under the Bankruptcy and Insolvency Act (Canada), the Companies Creditors
Arrangement Act (Canada), the Winding-up and Restructuring Act (Canada) or any other bankruptcy, insolvency or analogous laws, including
any analogous laws of any other jurisdiction, including, without limitation,
Title 11, U.S. Code in the United States (collectively, "Bankruptcy
Legislation"), or issuing sequestration or process of execution against, or
against any substantial part of, the property of the Company or any of its
Subsidiaries, or appointing a receiver, receiver-manager, trustee, assignee,
liquidator or similar official (a "Custodian") for all of, or any
substantial part of, the property of the Company or any of its Subsidiaries or
ordering the winding-up or liquidation of the Company's affairs, and any such
decree or order continues unstayed and in effect for a period of sixty (60)
days;
- 4 -
(v) if
the Company or any of its Subsidiaries institutes proceedings to be adjudicated
a bankrupt or insolvent, or consents to the institution of bankruptcy or
insolvency proceedings against it under any Bankruptcy Legislation, or consents
to the filing of any such petition or to the appointment of a Custodian of, or
of any substantial part of, the property of the Company or any of its
Subsidiaries or makes a general assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they become due;
(vi)
if a resolution is passed for the winding-up or liquidation of the Company or
any of its Subsidiaries;
(vii)
if any proceedings are taken by the Company or any of its Subsidiaries with
respect to a compromise or arrangement, with respect to creditors of the Company
generally, under any Bankruptcy Legislation;
(viii)
a final judgment or judgments for the payment of money aggregating in excess of
$1,000,000 (or equivalent in any other currency at the then prevailing exchange
rates) are rendered against the Company or any of its Subsidiaries and which
judgments are not, within sixty (60) days after the entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within sixty (60)
days after the expiration of such stay; provided, however, that
any judgment which is covered by insurance or an indemnity from a credit worthy
party shall not be included in calculating the $1,000,000 amount (or equivalent
in any other currency at the then prevailing exchange rates) set forth above so
long as the Company provides the Holder a written statement from such insurer or
indemnity provider (which written statement shall be reasonably satisfactory to
the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company will receive the proceeds of such insurance or
indemnity within thirty (30) days of the issuance of such judgment;
(ix)
other than as specifically set forth in another clause of this Section 4(a), the
Company or any of its Subsidiaries breaches any representation, warranty,
covenant or other term or condition of any Transaction Document, except, in the
case of a breach of a covenant or other term or condition of any Transaction
Document which is curable, only if such breach continues for a period of at
least an aggregate of five (5) Business Days;
(x)
the Company or any Subsidiary shall fail to perform or comply with any covenant
or agreement contained in any Collateral Document;
- 5 -
(xi)
any material provision of any Collateral Document (as determined by the
Collateral Agent (as defined in the Collateral Trust Agreement)) shall at any
time for any reason (other than pursuant to the express terms thereof) cease to
be valid and binding on or enforceable against the Company or any Subsidiary
intended to be a party thereto, or the validity or enforceability thereof shall
be contested by any party thereto, or a proceeding shall be commenced by the
Company or any Subsidiary or any governmental authority having jurisdiction over
any of them, seeking to establish the invalidity or unenforceability thereof, or
the Company or any Subsidiary shall deny in writing that it has any liability or
obligation purported to be created under any Collateral Document;
(xii)
any Collateral Document or any other security document, after delivery thereof
pursuant hereto, shall for any reason fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
[Priority Lien]14 [Parity Lien]15 in favor of the
Collateral Agent for the benefit of the holders of the Notes on any Collateral
(as defined in the Collateral Documents) purported to be covered thereby;
(xiii)
any bank at which any deposit account, blocked account, or lockbox account of
the Company or any Subsidiary is maintained shall fail to comply with any
material term of any deposit account, blocked account, lockbox account or
similar agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of the Company or any
Subsidiary shall fail to comply with any of the terms of any investment property
control agreement to which such Person is a party (it being understood that only
accounts pursuant to which the Collateral Agent has requested account control
agreements should be subject to this clause (xiii));
(xiv)
If (a) there shall occur and be continuing any "Event of Default" (or any
comparable term) under, and as defined in, the Indenture Documents, (b) the
Priority Notes for any reason shall cease to be "Priority Lien Debt", (c) any
Indebtedness other than (I) the Priority Notes and (II) the 24 month amortizing
facility from Ecobank DRC SARL, as lender, to Namoya Mining SARL, as borrower,
in the maximum principal amount of $15,000,000 pursuant to an indicative term
sheet dated January 24, 2013, shall constitute "Priority Lien Debt", (d) any
holder of the Indenture Notes shall fail to perform or comply with any of the
subordination provisions in the Collateral Trust Agreement, or (e) the
Collateral Trust Agreement shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable against any
holder of the Indenture Notes;
(xv)
any material damage to, or loss, theft or destruction of, any Collateral or a
material amount of property of the Company, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15)
consecutive days, the cessation or substantial curtailment of revenue producing
activities at any facility of the Company or any Subsidiary, if any such event
or circumstance could reasonably be expected to have a Material Adverse Effect
(as defined in the Securities Purchase Agreement);
____________________
14 Insert in Initial Priority Notes and Additional
Priority Notes.
15 Insert in Initial Parity Notes and Additional
Parity Notes.
- 6 -
(xvi) a false or inaccurate
certification by the Company as to whether any Event of Default has occurred;
(xvii) any Event of Default (as defined in the Other Notes) occurs with respect
to any Other Notes; or
(xviii) any Event of Default (as defined in the
Additional Notes) occurs with respect to any Additional Notes.
(b) Redemption Right. Upon the occurrence of an Event of Default with respect
to this Note, any Other Notes or any Additional Notes, the Company shall within
one (1) Business Day deliver written notice thereof via facsimile or electronic
mail and overnight courier (an "Event of Default Notice") to the Holder.
At any time after the earlier of the Holder's receipt of an Event of Default
Notice and the Holder becoming aware of an Event of Default, the Holder may
require the Company to redeem (an "Event of Default Redemption") all or
any portion of this Note by delivering written notice thereof (the "Event of
Default Redemption Notice") to the Company, which Event of Default
Redemption Notice shall indicate the portion of this Note the Holder is electing
to require the Company to redeem. Each portion of this Note subject to
redemption by the Company pursuant to this Section 4(b) shall be redeemed by the
Company in cash by wire transfer of immediately available funds pursuant to wire
instructions provided by the Holder in writing to the Company at a price equal
to the Redemption Amount being redeemed (the "Event of Default Redemption Price"). Redemptions required by this Section 4(b) shall be
made in accordance with the provisions of Section 7. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent
jurisdiction to be prepayments of the Note by the Company, such redemptions
shall be deemed to be voluntary prepayments.
(c) Indemnification. In addition to any other rights contemplated hereunder,
upon the occurrence of an Event of Default, the Company shall indemnify and hold
the Holder harmless from and against all costs, fees and expenses directly or
indirectly incurred by the Holder as a result of, or arising out of, or relating
to, such Event of Default, including, without limitation, for any costs, fees
and expenses incurred by the Holder to collect the applicable Event of Default
Redemption Price and/or to restructure the Company's obligation under this Note
and/or any of the other Transaction Documents.
- 7 -
(5) RIGHTS UPON FUNDAMENTAL
TRANSACTION AND CHANGE OF CONTROL.
(a) Assumption. The Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of the
obligations of the Company under this Note and the other Transaction Documents
in accordance with the provisions of this Section 5(a) pursuant to written
agreements in form and substance satisfactory to the Required Holders and approved by the Required Holders
prior to such Fundamental Transaction, including agreements, if so requested by
the Required Holders, to deliver to each holder of Notes in exchange for such
Notes a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Note, including, without
limitation, having a principal amount and interest rate equal to the principal
amounts and the interest rates of this Note held by such holder and having
similar ranking and security to this Note, and reasonably satisfactory to the
Required Holders. No later than (i) thirty (30) days prior to the occurrence or
consummation of any Fundamental Transaction or (ii) if later, the first Business
Day following the date the Company first becomes aware of the occurrence or
potential occurrence of a Fundamental Transaction, the Company shall deliver
written notice thereof via facsimile or electronic mail and overnight courier to
the Holder. Upon the occurrence or consummation of any Fundamental Transaction,
and it shall be a required condition to the occurrence or consummation of any
Fundamental Transaction that, the Company and the Successor Entity or Successor
Entities, jointly and severally, shall succeed to, and the Company shall cause
any Successor Entity or Successor Entities to jointly and severally succeed to,
and be added to the term "Company" under this Note (so that from and after the
date of such Fundamental Transaction, each and every provision of this Note
referring to the "Company" shall refer instead to each of the Company and the
Successor Entity or Successor Entities, jointly and severally), and the Company
and the Successor Entity or Successor Entities, jointly and severally, may
exercise every right and power of the Company prior thereto and shall assume all
of the obligations of the Company prior thereto under this Note with the same
effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company in this Note. Provisions
made pursuant to the preceding sentence shall be in form and substance
reasonably satisfactory to the Required Holders. The provisions of this Section
5(a) shall apply similarly and equally to successive Fundamental
Transactions.
(b) Redemption Right. No sooner than fifteen (15) days nor later than ten
(10) days prior to the consummation of a Change of Control, but not prior to the
public announcement of such Change of Control, the Company shall deliver written
notice thereof via facsimile or electronic mail and overnight courier to the
Holder (a "Change of Control Notice"). At any time during the
period beginning on the earlier to occur of (x) any oral or written agreement by
the Company or any of its Subsidiaries, upon consummation of which the
transaction contemplated thereby would reasonably be expected to result in a
Change of Control, (y) the Holder becoming aware of a Change of Control and (z)
the Holder's receipt of a Change of Control Notice and ending twenty-five (25)
Business Days after the date of the consummation of such Change of Control, the
Holder may require the Company to redeem (a "Change of Control
Redemption") all or any portion of this Note by delivering written notice
thereof ("Change of Control Redemption Notice") to the Company, which
Change of Control Redemption Notice shall indicate the Redemption Amount the
Holder is electing to require the Company to redeem. The portion of this Note
subject to redemption pursuant to this Section 5(b) shall be redeemed by the
Company in cash by wire transfer of immediately available funds pursuant to wire
instructions provided by the Holder in writing to the Company at a price equal
to the Redemption Amount being redeemed (the "Change of Control Redemption
Price"). Redemptions required by this Section 5 shall be made in accordance
with the provisions of Section 7 and shall have priority to payments to
shareholders in connection with a Change of Control. To the extent redemptions
required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note
by the Company, such redemptions shall be deemed to be voluntary
prepayments.
- 8 -
(6) OFFER TO REPURCHASE.
If, at any time while this Note is outstanding, the Company or any Subsidiary
receives any cash [(A) in connection with any Gold Streaming Transaction or
(B)]16 not in the ordinary course of business, including, without
limitation if the Company or any if its Subsidiaries (i) consummates a
Fundamental Transaction that is not a Change of Control, (ii) effects any
Subsequent Placement, (iii) receives any proceeds of any insurance company or a
as a result of any litigation relating to an insurance claim, (iv) receives any
foreign, United States, state or local tax refunds, (v) effects any Major Asset
Sale, (vi) receives any pension plan reversions, (vii) receives any cash in
connection with any judgments, or receives proceeds of settlements in connection
with any cause of action, (viii) receives condemnation awards (and payments in
lieu thereof), (ix) receives indemnity payments (other than to the extent such
indemnity payments are (1) immediately payable to a Person that is not the
Company or an Affiliate of the Company or any of its Subsidiaries or (2)
received by the Company or any of its Subsidiaries as reimbursement for any
payment previously made to such Person), (x) receives any purchase price
adjustment in connection with any purchase or similar agreement (each, an
"Offer to Repurchase Event"), the Company shall deliver a written notice
thereof within two (2) Business Days prior to the occurrence of such Offer to
Repurchase Event by confirmed facsimile and overnight courier to all, but not
less than all, of the holders of the Notes (an "Offer to Repurchase
Notice") and offer to repurchase (an "Offer to Repurchase") in cash
the Holder Repurchase Amount of this Note at a price equal to the Holder
Repurchase Amount of this Note (the "Offer to Repurchase Price"); provided, however, that the Company must first make an Offer to
Repurchase the Priority Notes, if any, that are then outstanding and may only
make an Offer to Repurchase the Parity Notes after the Priority Notes have been
repaid in full. At any time after the receipt by the Holder of an Offer to
Repurchase Notice, the Holder may require the Company or its Subsidiary, as
applicable, to redeem, with the Available Proceeds up to the Holder Repurchase
Amount of this Note by delivering written notice thereof (the "Acceptance
Notice") to the Company, which Acceptance Notice shall indicate the
Redemption Amount of the Note the Holder is electing to redeem and the date
chosen by the Holder on which the Offer to Repurchase shall occur (the "Offer
to Repurchase Date"). Each Offer to Repurchase Notice shall (A) describe the
Offer to Repurchase Event, including, without limitation a certification by the
Company's or such Subsidiary's, as the case may be, Chief Financial Officer
demonstrating the calculation of the aggregate Available Proceeds received by
the Company or such Subsidiary in connection with such event and (B) state the
maximum Offer to Repurchase Price to be paid to the Holder on such date. The
Company shall publicly disclose (as part of an Annual Report on Form 40-F and
Annual Information Form and other required documents filed in accordance with
the Company's continuous disclosure requirements under applicable Canadian
securities laws or on a Current Report on Form 6-K and a material change report
on Form 51-102F3 or otherwise) that (1) an Offer to Repurchase Event has
occurred and that, pursuant to the terms of the Notes, the Holder may require
the Company or such Subsidiary, as applicable, to redeem at the Offer to
Repurchase Price the applicable portion of the Notes with any Available Proceeds
received therefrom and (2) the amount of proceeds received from such Offer to
Repurchase Event.
____________________
16 Insert in Additional Parity Notes.
- 9 -
In the event that the Company or such Subsidiary shall
subsequently determine after the Offer to Repurchase Date that the actual
Available Proceeds received exceeded the amount set forth in the applicable
Offer to Repurchase Notice, the Company or such Subsidiary, as applicable, shall
promptly make an additional Offer to Repurchase of the Notes in an amount equal
to such excess, and the Company or such Subsidiary shall concurrently therewith
(1) deliver to each holder of Notes a certificate of the Chief Financial Officer
demonstrating the derivation of such excess and (2) publicly disclose (as part
of a Current Report on Form 6-K and a material change report on Form 51-102F3,
or otherwise) the making of such additional Offer to Repurchase, including,
without limitation, the additional amount that may be repurchased. If one or
more holders of Other Notes or Additional Notes does not elect to require the
Company or its Subsidiary, as applicable, to redeem its Note with its full
Holder Repurchase Amount, the Company or the applicable Subsidiary shall
promptly make additional Offers to Repurchase for Notes held by the holders of
Notes that previously elected to require the Company or applicable Subsidiary to
redeem its Note for its full Holder Repurchase Amount. Such additional Offers to
Repurchase shall be repeated pursuant to the terms of this Section 6 until all
Available Proceeds have been used to redeem Notes or all holders of Notes have
failed to elect to have their Notes redeemed for their maximum amount hereunder.
On the Offer to Repurchase Date the Company shall deliver or shall cause to be
delivered to the Offer to Repurchase Price in cash by wire transfer of
immediately available funds pursuant to wire instructions provided by the Holder
in writing to the Company. Offers to Repurchase made pursuant to this Section 6
shall be made in accordance with Section 7. To the extent redemptions required
by this Section 6 are deemed or determined by a court of competent jurisdiction
to be prepayments of the Note by the Company, such redemptions shall be deemed
to be voluntary prepayments. [Notwithstanding anything herein to the contrary,
if in connection with any proposed Offer to Repurchase the Company shall also be
required to make an Asset Disposition Offer (as defined in the Indenture) with
respect to the Indenture Notes, the Offer to Repurchase shall be made within
twenty (20) Business Days following the occurrence of such Offer to Repurchase
Event and in conformity with the terms and conditions set forth in the
Indenture and not as set forth herein, including that the proceeds of
such Offer to Repurchase shall be applied, as required by the Indenture, on a pro rata basis on the basis of the aggregate principal amount of the
Parity Notes or Indenture Notes tendered for repurchase.]17
____________________
17 Insert in Initial Parity Notes and in Additional
Parity Notes.
- 10 -
(7) REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Prepayment Price to
the Holder in the applicable Prepayment Date. The Company shall deliver the
applicable Event of Default Redemption Price to the Holder within three (3)
Business Days after the Company's receipt of the Holder's Event of Default
Redemption Notice (the "Event of Default Redemption Date"). If the Holder
has submitted a Change of Control Redemption Notice in accordance with Section
5(b), the Company shall deliver the applicable Change of Control Redemption
Price to the Holder (i) concurrently with the consummation of such Change of
Control if such notice is received at least three (3) Business Days prior to the
consummation of such Change of Control and (ii) within three (3) Business Days
after the Company's receipt of such notice otherwise (such date, the "Change
of Control Redemption Date"). The Company shall deliver the applicable Offer
to Repurchase Price to the Holder on the applicable Offer to Repurchase Date[, subject, however, to the last sentence of
Section 6]18. The Company shall pay the applicable Redemption Price
to the Holder in cash by wire transfer of immediately available funds pursuant
to wire instructions provided by the Holder in writing to the Company on the
applicable due date. In the event of a redemption of less than all of the
Redemption Amount of this Note, the Company shall promptly cause to be issued
and delivered to the Holder a new Note (in accordance with Sections 3 and 14(d))
representing the outstanding Principal which has not been redeemed. Any accrued
Interest on such unredeemed Principal shall continue to accrue and be
outstanding. In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time
thereafter and until the Company pays such unpaid Redemption Price in full, the
Holder shall have the option, in lieu of redemption, to require the Company to
promptly return to the Holder all or any portion of this Note representing the
Redemption Amount that was submitted for redemption and for which the applicable
Redemption Price has not been paid. Upon the Company's receipt of such notice,
(x) the applicable Redemption Notice shall be null and void with respect to such
Redemption Amount and (y) the Company shall immediately return this Note, or
issue a new Note (in accordance with Sections 3 and 14(d)) to the Holder
representing such Redemption Amount that the Holder elected not to be redeemed
pursuant to the immediately preceding sentence.
(b) Redemption by Other Holders. Upon the Company's receipt of notice from
any of the holders of the Other Notes or Additional Notes for redemption or
repayment as a result of an event or occurrence substantially similar to the
events or occurrences described in Section 4(b), Section 5(b) or Section 6 or
pursuant to equivalent provisions set forth in the Other Notes or the Additional
Notes, as applicable (each, an "Other Redemption Notice"), the Company
shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by facsimile or electronic mail a copy of such
notice. If the Company receives a Redemption Notice and one or more Other
Redemption Notices, during the seven (7) Business Day period beginning on and
including the date which is three (3) Business Days prior to the Company's
receipt of the Holder's Redemption Notice and ending on and including the date
which is three (3) Business Days after the Company's receipt of the Holder's
Redemption Notice and the Company is unable to redeem all principal, interest
and other amounts designated in such Redemption Notice and such Other Redemption
Notices received during such seven (7) Business Day period, then the Company
shall redeem a pro rata amount from the Holder and each holder of the Notes
(including the Holder) based on the Principal amount of this Note and the Notes
submitted for redemption pursuant to such Redemption Notice and such Other
Redemption Notices received by the Company during such seven (7) Business Day
period.
(c) Insufficient Assets. If upon a Redemption Date, the assets of the Company
are insufficient to pay the applicable Redemption Price, the Company shall (i)
take all appropriate action reasonably within its means to maximize the assets
available for paying the applicable Redemption Price, (ii) redeem out of all
such assets available therefor on the applicable Redemption Date the maximum
possible Redemption Amount that it is able to redeem on such date, pro rata
among the Holder and the holders of the Other Notes and the Additional Notes to
be redeemed in proportion to the aggregate Principal amount of this Note, the
Other Notes and the Additional Notes outstanding on the applicable Redemption
Date and (iii) following the applicable Redemption Date, at any time and from
time to time when additional assets of the Company become available to redeem
the remaining Redemption Amount of the Notes, the Company shall use such assets,
at the end of the then current fiscal quarter, to redeem the balance of such
Redemption Amount of the Notes, or such portion thereof for which assets are
then available, on the basis set forth above at the applicable Redemption Price,
and such assets will not be used prior to the end of such fiscal quarter for any
other purpose. Interest on the Principal amount of the Notes that have not been
redeemed shall continue to accrue until such time as the Company redeems the
Notes. The Company shall pay to the Holder the applicable Redemption Price
without regard to the legal availability of funds unless expressly prohibited by
applicable law or unless the payment of the applicable Redemption Price could
reasonably be expected to result in personal liability to the directors of the
Company.
____________________
18 Insert in Initial Parity Notes and in Additional
Parity Notes.
- 11 -
(8) VOTING RIGHTS. The
Holder shall have no voting rights as the holder of this Note, except as
required by law and as expressly provided in this Note.
(9) SECURITY. This Note
and the Other Notes are [Priority Lien Debt]19 [Parity Lien
Debt]20 creating [Priority Lien Obligations]21 [Parity
Lien Obligations]22 and are secured by the Collateral Documents.
(10) COVENANTS.
(a) Rank. All payments due under this Note (i) shall rank pari passu with the payment under all Other Notes and the Additional Notes and all other
Indebtedness of the Company and its Subsidiaries (other than any Indebtedness of
the Company or any its Subsidiaries to any of its respective Affiliates as set
forth in clause (ii) below) that is outstanding on the Subscription Date and
(ii) shall rank in priority to the payment of (x) Indebtedness that is incurred
after the Subscription Date that is permitted to be incurred by clauses (2)
through (19) of Section 4.09(b) of the Indenture and (y) Indebtedness owed to
any Affiliates of the Company or any of its Subsidiaries that is outstanding on
the Subscription Date (including, without limitation, that certain Promissory
Note of the Company to Banro Group (Barbados) Limited, dated as of April 25,
2013, in the principal amount of $26,398,800). Further, the Indebtedness
set forth in clauses (x) and (y) above (A) shall be made expressly subordinate
in right of payment to the Indebtedness evidenced by this Note, as reflected in
a written agreement acceptable to the Required Holders and approved by the
Required Holders in writing, and (B) except for Indebtedness in clause (y) owed
to any entity with respect to which the Company owns, directly or indirectly,
all of the voting common shares that has executed and delivered the Guarantee
Agreement, provided that such Guarantee Agreement is not in any way limited by
financial assistance rules or restrictions on the giving of a guarantee in any
applicable jurisdiction, shall not provide at any time for the payment,
prepayment, repayment, repurchase or defeasance, directly or indirectly, of any
principal or premium, if any, thereon until the date that is after one (1) year
and one (1) day after the indefeasible repayment in full of the Notes.
____________________
19 Insert in Initial Priority Notes and Additional
Priority Notes.
20 Insert in Initial Parity Notes and in
Additional Parity Notes.
21 Insert in Initial Priority Notes and
Additional Priority Notes.
22 Insert in Initial Parity Notes and
in Additional Parity Notes.
- 12 -
(b) Incurrence of Indebtedness. Until all of the Notes have been redeemed or
all obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to
exist any Indebtedness, other than (i) the Indebtedness evidenced by the Notes,
(ii) Indebtedness that is outstanding and as in effect on the Subscription Date
and (iii) Indebtedness permitted by clauses (2) through (19) of Section 4.09(b)
of the Indenture (provided that Section 10(a) above is complied with). In
addition, from and after the Subscription Date while any Parity Notes remain
outstanding, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, incur any additional Parity Lien Debt.
(c) Existence of Liens. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, allow or suffer to exist any Liens upon
or in any property or assets (including accounts and contract rights) owned by
the Company or any of its Subsidiaries other than (i) Permitted Liens and (ii)
Liens in connection with gold sale transactions, such as gold streaming and gold
forward sales, that are made expressly subordinate to the Notes and the
Indenture Notes in writing in a manner satisfactory to the Required Holders. For
the avoidance of doubt, until all of the Notes have been redeemed or otherwise
satisfied in accordance with their terms, the Company shall not, and the Company
shall not permit any of its Subsidiaries to, directly or indirectly, allow or
suffer to exist any Permitted Prior Liens.
(d) Restricted Payments. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or
make any payments in respect of, by the payment of cash or cash equivalents (in
whole or in part, whether by way of open market purchases, tender offers,
private transactions or otherwise), all or any portion of any Indebtedness
(other than the Notes), whether by way of payment in respect of principal of (or
premium, if any) or interest on, such Indebtedness if at the time such payment
is due or is otherwise made or, after giving effect to such payment, an event
constituting, or that with the passage of time and without being cured would
constitute, an Event of Default has occurred and is continuing.
(e) Restriction on Redemption and Cash Dividends. Until all of the Notes have
been redeemed or all obligations under the Notes are otherwise satisfied in
accordance with their terms, the Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, redeem or repurchase
its Equity Interests (except on a pro rata basis among all holders thereof) or
declare or pay any cash dividend or distribution on any Common Equity Interest
of the Company without, in each case, the prior express written consent of the
Required Holders.
(f) Change in Nature of Business. Until all of the Notes have been redeemed
or all obligations under the Notes are otherwise satisfied in accordance with
their terms, the Company shall not (i) make, or permit any of its Subsidiaries
to make, any change in the nature of its business as described in the Company's most
recent Annual Report filed on Form 40-F with the SEC or (ii) modify its
corporate structure or purpose.
- 13 -
(g) Intellectual Property. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall not, and the Company shall not permit any of its
Subsidiaries, directly or indirectly, to encumber or allow any Liens on, any of
its copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, any patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trade-marks, trade names, service marks and,
to the extent permitted under applicable law, any applications therefor, whether
registered or not, and the goodwill of the business of the Company and its
Subsidiaries connected with and symbolized thereby, know-how, operating manuals,
trade secret rights, rights to unpatented inventions, and any claims for damage
by way of any past, present, or future infringement of any of the foregoing,
other than Permitted Liens.
(h) Preservation of Existence, Etc. Until all of the Notes have been redeemed
or all obligations under the Notes are otherwise satisfied in accordance with
their terms, the Company shall maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, its existence, rights and privileges, and
become or remain, and cause each of its Subsidiaries to become or remain, duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
(i) Maintenance of Properties, Etc. Until all of the Notes have been redeemed
or all obligations under the Notes are otherwise satisfied in accordance with
their terms, the Company shall maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties which are necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted, and comply, and cause each of its
Subsidiaries to comply, at all times with the provisions of all leases to which
it is a party as lessee or under which it occupies property, so as to prevent
any loss or forfeiture thereof or thereunder.
(j) Maintenance of Insurance. Until all of the Notes have been redeemed or
all obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall maintain, and cause each of its Subsidiaries to
maintain, insurance with responsible and reputable insurance companies or
associations (including, without limitation, comprehensive general liability
insurance) with respect to its properties (including all real properties leased
or owned by it) and business, in such amounts and covering such risks as is
required by any governmental authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated.
- 14 -
(k) Transactions with Affiliates. Until all of the Notes have been redeemed
or all obligations under the Notes are otherwise satisfied in accordance with
their terms, the Company shall not, nor shall it permit any of its Subsidiaries
to, enter into, renew, extend or be a party to, any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services of
any kind) with any Affiliate, except (i) in the ordinary course of business in a
manner and to an extent consistent with past practice and necessary or desirable
for the prudent operation of its business, for fair consideration and on terms
no less favorable to it and its Subsidiaries than would be obtainable in a
comparable arm's length transaction with a Person that is not an Affiliate
thereof and (ii) any transaction solely among the Company and any entity with
respect to which the Company owns, directly or indirectly, all of the voting
common shares that has executed and delivered the Guarantee Agreement, provided
that such Guarantee Agreement is not in any way limited by financial assistance
rules or restrictions on the giving of a guarantee in any applicable
jurisdiction.
(l) Indenture Notes. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, neither the Company nor any Guarantor shall amend, modify, alter,
increase, or change, directly or indirectly, any of the terms or conditions of
the Indenture without the prior written consent of the Required Holders. Neither
the Company nor any Guarantor shall optionally prepay or optionally redeem any
Indebtedness under the Indenture Notes without the prior written consent of the
Required Holders.
(m) Gold Streaming. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall not, and the Company shall not permit any of its
Subsidiaries, directly or indirectly, to raise capital through (i) gold
streaming, whereby cash payments are exchanged for future gold production by the
Company or any its Subsidiaries, as applicable, (ii) forward sales of gold,
(iii) the granting of licenses or royalties for the mining of gold, (iv) hedging
transactions; to the extent settlement requires physical delivery of gold or (v)
any transactions similar to the transactions contemplated in clauses (i) through
(iv) above (each, a "Gold Streaming Transaction"), to the extent, that,
in any four (4) consecutive Calendar Quarters such transactions, individually or
cumulatively, would require the Company and its Subsidiaries to transfer,
pledge, grant an interest in or license in, in the aggregate, fifteen percent
(15%) or more of the anticipated gold production of all of the gold mines of the
Company and its Subsidiaries, as disclosed in the operating plan for July 2014
to December 2016 provided to the Holder prior to the Subscription Date as set
forth in Schedule 10(m) attached hereto with respect to such four (4)
Calendar Quarter period.
(n) Governmental Permits. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall maintain, and cause each of its Subsidiaries to
maintain all authorizations, approvals, license, permits and other rights
(including but not limited to those pertaining to the mining and production of
gold) from any applicable governmental authorities necessary and appropriate for
the continued operation of the Company's and the Subsidiaries' respective
businesses.
- 15 -
(o) Further Assurances. Until all of the Notes have been redeemed or all
obligations under the Notes are otherwise satisfied in accordance with their
terms, the Company shall take such action and execute, acknowledge and deliver,
and cause each of its Subsidiaries to take such action and execute, acknowledge and
deliver, at its sole cost and expense, such agreements, instruments or other
documents as the Collateral Agent may reasonably require from time to time in
order (A) to carry out the purposes of this Note and the other Transaction
Documents, (B) to subject to valid and perfected [Priority Liens]23 [Parity Liens]24 on any of the Collateral, (C) to establish and
maintain the validity and effectiveness of any of the Transaction Documents and
the validity, perfection and priority of the Liens intended to be created
thereby and (D) to better assure, convey, grant, assign, transfer and confirm
unto the Collateral Agent and the Holder the rights now or hereafter intended to
be granted to it under this Note or any other Transaction Document.
(11) [EXCHANGE. In the
event the Company obtains any availability to incur additional Priority Lien
Debt pursuant to Section 4.09(b)(1) of the Indenture, the Company shall not, at
any time while the Notes are outstanding, issue any Priority Lien Debt to any
Person other than to the Holder and the holders of Other Notes. In the event the
Company shall at any time and from time to time after September 30, 2014 while
any of the Notes are outstanding obtain availability to incur at least $500,000
of additional Priority Lien Debt ("Available Priority Indebtedness")
pursuant to Section 4.09(b)(1) of the Indenture (the date the Company obtains
Available Priority Indebtedness, an "Exchange Date"), it shall promptly
but in any event within one (1) Business Day of such Exchange Date so notify the
Holder in writing specifying the amount of Available Priority Indebtedness. On
each Exchange Date, the Redemption Amount under this Note that is equal to the
Holder Pro Rata Amount of such Available Priority Indebtedness (or such lesser
Redemption Amount that is then outstanding) (such portion of the Redemption
Amount, the "Exchange Amount") shall promptly but in any event within
five (5) Business Days of such Exchange Date (an "Exchange Deadline") be
exchanged for an Additional Priority Note (as defined in the Securities Purchase
Agreement) in the form attached to the Securities Purchase Agreement as Exhibit A with a Redemption Amount equal to the Exchange Amount and a
portion of the Redemption Amount of this Note equal to the Exchange Amount shall
be deemed cancelled (the foregoing, an "Exchange"). The Company shall
take, or cause to be taken, all necessary steps required under the Collateral
Trust Agreement or otherwise to convert the Exchange Amount under this Note into
a Priority Lien Obligation by no later than the applicable Exchange Deadline and
shall take such other actions, at its expense (such as issuing a new Additional
Priority Note with a Redemption Amount that is equal to the Exchange Amount and
re-issuing this Note with a Redemption Amount that is decreased to give account
to the Exchange Amount, if any Redemption Amount remains outstanding hereunder
after giving effect to such Exchange) as the Holder may request to further
effectuate the foregoing, in which case the Holder shall return this Note to the
Company for cancellation as soon as is reasonably practicable.]25 [Intentionally omitted.]26
____________________
23 Insert in Initial Priority Notes and in
Additional Priority Notes.
24 Insert in Initial Parity Notes and
in Additional Parity Notes.
25 Insert in Initial Parity Notes and
in Additional Parity Notes.
26 Insert in Initial Priority Notes
and Additional Priority Notes.
- 16 -
(12) VOTE TO ISSUE, OR CHANGE
THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such
purpose or the written consent without a meeting of (i) the Supermajority
Holders shall be required for any change or amendment or waiver or any
provisions to the Notes relating to the Principal, Interest, the ranking of the
Notes and the Maturity Date and (ii) the Required Holders shall be required for
any change or amendment or waiver of any other provision to the Notes. Any
change, amendment or waiver by the Required Holders or the Supermajority
Holders, as applicable, and the Company and shall be binding on the Holder of
this Note and all holders of the Other Notes and Additional Notes.
(13) TRANSFER. This Note
may be offered, sold, assigned or transferred by the Holder without the consent
of the Company, subject only to the provisions of Section 2(b) of the Securities
Purchase Agreement and Section 3 above.
(14) REISSUANCE OF THIS
NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender
this Note to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 14(d) and
subject to Section 3), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less than the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 14(d)) to the Holder representing the outstanding Principal not
being transferred. The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that following redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 14(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This Note is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Note or Notes (in accordance with Section 14(d) and in Principal
amounts of at least $100,000) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of
such outstanding Principal as is designated by the Holder at the time of such
surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 14(a) or Section 14(c), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same rights and
conditions as this Note, and (v) shall represent accrued and unpaid Interest
from the Issuance Date.
- 17 -
(15) NON-CIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment
of its articles, bylaws and other constating documents or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, and will at all times in good faith carry out all of the
provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note.
(16) REMEDIES, CHARACTERIZATIONS,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided
in this Note shall be cumulative and in addition to all other remedies available
under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder's right to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Note.
Amounts set forth or provided for herein with respect to payments and the like
(and the computation thereof) shall be the amounts to be received by the Holder
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.
(17) PAYMENT OF COLLECTION,
ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands
of an attorney for collection or enforcement or is collected or enforced through
any legal proceeding or the Holder otherwise takes action to collect amounts due
under this Note or to enforce the provisions of this Note or (b) there occurs
any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors' rights and involving a claim under this Note, then
the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees
and disbursements.
(18) CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and
all the Buyers and shall not be construed against any person as the drafter
hereof. The headings of this Note are for convenience of reference and shall not
form part of, or affect the interpretation of, this Note.
(19) FAILURE OR INDULGENCE NOT
WAIVER. No failure or delay on the part of the Holder in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
- 18 -
(20) DISPUTE RESOLUTION.
In the case of a dispute as to the determination of the arithmetic calculation
of any Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile or electronic mail within one (1) Business
Day of receipt, or deemed receipt, of the Redemption Notice or other event
giving rise to such dispute, as the case may be, to the Holder. If the Holder
and the Company are unable to agree upon such determination or calculation
within one (1) Business Day of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall, within one
Business Day submit via facsimile or electronic mail the disputed arithmetic
calculation of any Redemption Price to an independent, outside accountant,
selected by the Holder and approved by the Company, such approval not to be
unreasonably withheld, conditioned or delayed. The Company, at the Company's
expense, shall cause the accountant to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
five (5) Business Days from the time it receives the disputed determinations or
calculations. Such accountant's calculation shall be binding upon all parties
absent demonstrable error.
(21) NOTICES; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with Section
9(f) of the Securities Purchase Agreement. The Company shall provide the Holder
with prompt written notice of all actions taken pursuant to this Note, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company shall give written
notice to the Holder (i) at least twenty (20) days prior to the date on which
the Company closes its books or takes a record for determining rights to vote
with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder. For
greater certainty, in interpreting Section 9(f) of the Securities Purchase
Agreement for the purposes of this Note, all references to the "Buyers" shall be
read as referring to the Holders.
(b) Payments. Whenever any payment of cash is to be made by the Company to
any Person pursuant to this Note, such payment shall be made in lawful money of
the United States of America by a check drawn on the account of the Company and
sent via overnight courier service to such Person at such address as previously
provided to the Company in writing (which address, in the case of each of the
Buyers, shall initially be as set forth on the Schedule of Buyers attached to
the Securities Purchase Agreement); provided, that the Holder may elect
to receive a payment of cash via wire transfer of immediately available funds by
providing the Company with prior written notice at least five (5) Business Days
prior to the applicable payment date setting out such request and the Holder's
wire transfer instructions. Whenever any amount expressed to be due by the terms
of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day.
(22) CANCELLATION. After
all Principal, accrued Interest and other amounts at any time owed on this Note
have been paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be reissued.
- 19 -
(23) WAIVER OF NOTICE. To
the extent permitted by law, the Company hereby waives demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Securities Purchase
Agreement.
(24) GOVERNING LAW;
JURISDICTION; JURY TRIAL. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. The Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to the Company at the address set forth in Section 9(f)
of the Securities Purchase Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder. The Company hereby appoints CT Corporation System, with offices at
111 Eighth Avenue, New York, New York 10011, as its agent for service of process
in New York. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(25) SEVERABILITY. If any
provision of this Note is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Note so long as this Note as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
- 20 -
(26) CURRENCY; TAXES; JUDGMENT
CURRENCY.
(a) Currency. All principal, interest and other amounts owing under this Note
or any Transaction Document that, in accordance with their terms, are paid in
cash shall be paid in U.S. dollars. All amounts denominated in other currencies
shall be converted in the U.S. dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation.
(b) Taxes.
(i) All
payments or other transfers of property or rights by the Company to the Holder
in regard or in connection with this Note (including the payment or the accrual
of interest) shall be made free and clear of and without deduction for any
present or future income, excise, stamp, documentary, property or franchise
taxes and any other taxes, levies, fees, duties, withholdings or other charges
of any nature whatsoever ("Taxes"), of any governmental agency or
authority in Barbados, Canada, the Democratic Republic of the Congo or the
United States of America, and including any stamp taxes or any other similar
taxes which may be required for enforcement purposes. In the event that any
withholding or deduction from any interest, distribution, accrual or payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation (determined, unless otherwise mutually
agreed by the Company and the Holder, on the assumption that the payor is not
entitled to determine such withholding or deduction requirement by "looking
through" any partnership or other fiscally transparent entity), then the Company
shall promptly:
(1)
pay directly or caused to be paid directly to the relevant authority the full
amount required to be so withheld or deducted;
(2)
forward to the applicable Holder an official receipt or other documentation
satisfactory to such Holder evidencing such payment to such authority promptly
after receipt of same; and
(3)
except as provided in (ii) below, pay to the Holder such additional amount or
amounts as is necessary to ensure that the net amount actually received by the
Holder will equal the full amount the Holder would have received had no such
withholding or deduction been required.
(ii) The
Company and the Subsidiaries will not be required to pay any additional amounts
under (i)(3) above to any Holder, or be obligated to indemnify such Holder under
(iv) below, in respect of any Taxes:
(1)
imposed on, or deducted or withheld from, payments in respect of the Securities
to a Holder or a beneficial owner of Securities by reason of the existence of
any present or former connection (including, without limitation, carrying on
business or having a permanent establishment or fixed base) between such Holder
or beneficial owner (or between a fiduciary, settlor, beneficiary, member,
shareholder or other equity owner of, or possessor of power over, such
beneficial owner, if such beneficial owner is an estate, trust, partnership,
limited liability company, corporation or other entity) and the taxing
jurisdiction (including, without limitation, any Taxes imposed on such Holder or
beneficial owner’s net income) other than connections solely arising from such
recipient having executed, delivered, become a party to, performed obligations under, received
payments under, received or perfected a security interest under, engaged in any
other transaction pursuant to, or enforced any Securities, or sold or assigned
an interest in any Security;
- 21 -
(2)
imposed on or measured by the Holder’s or beneficial owner’s overall net income
or capital, branch taxes or franchise taxes, under the laws of which the Holder
or beneficial owner is organized, centrally managed, controlled or in which it
maintains a lending office;
(3)
imposed on, or deducted or withheld from, payments in respect of the Securities
to a Holder or beneficial owner as a result of the failure of such Holder or
beneficial owner to take commercially reasonable steps to comply with any
applicable certification, identification, information, documentation, or similar
reporting requirements concerning the nationality, residence, entitlement to
treaty benefits, identity or connection with the relevant taxing jurisdiction of
such Holder or beneficial owner (except to the extent that such failure to
comply arises from the Holder not being in possession of sufficient information
to effect such compliance); or
(4)
any combination of items (1) through (3).
(iii) The
Company further agrees that if any present or future taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, including franchise taxes and taxes imposed on or measured by the
Holder's net income or receipts ("Further Taxes") are directly or
indirectly asserted against the Holder with respect to any payment of any
additional amount described in paragraph (i)(3) above and received by the Holder
hereunder, the Holder may pay such Further Taxes and the Company will promptly
pay to the Holder such additional amounts (including all penalties, interest or
expenses) that the Holder specifies as necessary to preserve the after-tax
return that the Holder would have received if such Taxes or Further Taxes had
not been imposed.
(iv) If
the Company fails to pay any Taxes described in (i), above, when due to the
appropriate taxing authority or fails to remit to the Holder the required
receipts or other required documentary evidence for such payment of Taxes or
fails to pay to the Holder additional amounts as described in (i)(3), above, the
Company shall indemnify the Holder for any incremental Taxes, interest,
penalties, unpaid additional amounts, expenses and costs that may become payable
or are incurred by the Holder as a result of any such failure. In addition to
the foregoing, the Company hereby indemnify and hold the Holder harmless for any
and all payments made by the Holder of any Taxes and Further Taxes and for any
liabilities (including penalties, interest, legal costs and expenses) incurred
by the Holder or which may be imposed on the Holder in connection therewith or
any delays in their payment.
The
obligations of the Company and the Subsidiaries under this Section 26(b) shall
survive the payment of the Notes.
(c) Judgment Currency. If for the purpose of obtaining or enforcing judgment
against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this
Section 26(c) referred to as the "Judgment Currency") an amount due in U.S. dollars
under this Note, the conversion shall be made at the Exchange Rate prevailing on
the Business Day immediately preceding:
- 22 -
(i) the
date of actual payment of the amount due, in the case of any proceeding in the
courts of New York or Toronto, as the case may be, or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date:
or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section 26(c)(ii) being hereinafter referred to as the
"Judgment Conversion Date").
(iii) If
in the case of any proceeding in the court of any jurisdiction referred to in
Section 26(c)(ii) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of U.S. dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date. Any amount due from the Company
under this provision shall be due as a separate debt and shall not be affected
by judgment being obtained for any other amounts due under or in respect of this
Note.
(27) USURY.
(a) Usury. This Note is subject to the express condition that at no time
shall the Company be obligated or required to pay Interest hereunder at a rate
which could subject the Holder to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Company is permitted
by applicable law to contract or agree to pay. If by the terms of this Note, the
Company is at any time required or obligated to pay Interest hereunder at a rate
in excess of such maximum rate, the Interest Rate shall be deemed to be
immediately reduced to such maximum rate and the Interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of this Note.
(b) Criminal Rate of Interest. If any provision of this Note would oblige the
Company to make any payment of interest or other amount payable to the Holder in
an amount or calculated at a rate which would be prohibited by law or would
result in a receipt by the Holder of "interest" at a "criminal rate" (as such
terms are construed under the Criminal Code (Canada)), then,
notwithstanding such provision, such amount or rate shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as
the case may be, as would not be so prohibited by applicable law or so result in
a receipt by the Holder of "interest" at a "criminal rate," such adjustment to
be effected, to the extent necessary (but only to the extent necessary), as
follows: (i) first, by reducing the amount or rate of interest; and (ii) thereafter, by reducing any fees, commissions, costs, expenses,
premiums and other amounts required to be paid which would constitute interest
for purposes of section 347 of the Criminal Code (Canada).
- 23 -
(28) CERTAIN DEFINITIONS.
For purposes of this Note, the following terms shall have the following
meanings:
(a)
"Additional Closing Date" shall have the meaning ascribed to such term in
the Securities Purchase Agreement.
(b)
"Additional Priority Notes" shall have the meaning ascribed to such term
in the Securities Purchase Agreement.
(c)
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
"control" of a Person means the power directly or indirectly either to vote 10%
or more of the shares having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
(d)
"Approved Share Plan" means any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer or director for
services provided to the Company.
(e)
"Available Proceeds" means, with respect to any Offer to Repurchase
Event, 100% of the cash proceeds generated by such event, net of bona fide
transaction fees and expenses incurred by the Company or the Company's
Subsidiary, as applicable, with respect thereto.
(f)
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York or Toronto, Canada are authorized
or required by law to remain closed.
(g)
"Buyer" shall have the meaning ascribed to such term in the Securities
Purchase Agreement.
(h)
"Calendar Quarter" means each of: the period beginning on and including
January 1 and ending on and including March 31; the period beginning on and
including April 1 and ending on and including June 30; the period beginning on
and including July 1 and ending on and including September 30; and the period
beginning on and including October 1 and ending on and including December 31.
(i)
"Change of Control" means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Shares in
which holders of the Company's voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the holders of the voting power of the Successor
Entity (or Successor Entities with the authority or voting power to elect the
members of the board of directors (or their equivalent if other than a
corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification or (ii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the Company.
- 24 -
(j)
"Collateral Documents" means, collectively, the Collateral Trust
Agreement, the Guarantee Agreement and the Indenture.
(k)
"Collateral Trust Agreement" means that certain Collateral Trust
Agreement dated as of March 2, 2012 among the Company, the guarantors named on
the signature pages thereto and Equity Financial Trust Company, as indenture
trustee and collateral agent, as may be amended, restated, modified or
supplemented from time to time in accordance with the terms thereof.
(l)
"Common Equity Interests" means (a) all shares of capital
denominated as common capital, equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting and (b) all
securities convertible into or exchangeable for any of the foregoing and all
warrants, options or other rights to purchase, subscribe for or otherwise
acquire any of the foregoing, whether or not presently convertible, exchangeable
or exercisable.
(m)
"Common Shares" means (i) the Company's common shares, without nominal or
par value and (ii) any share capital into which such Common Shares shall have
been changed or any share capital resulting from a reclassification of such
Common Shares.
(n)
"Common Shares Equivalents" means, collectively, Options and Convertible
Securities.
(o)
"Convertible Securities" means any shares or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for Common Shares.
(p)
"Eligible Markets" means the TSX and one of the following: The New York
Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The
NASDAQ Capital Market or the NYSE MKT LLC.
(q)
"Equity Interests" means (a) all shares of capital (whether denominated
as common capital or preferred capital), equity interests, beneficial,
partnership or membership interests, joint venture interests, participations or
other ownership or profit interests in or equivalents (regardless of how
designated) of or in a Person (other than an individual), whether voting or
non-voting and (b) all securities convertible into or exchangeable for any of
the foregoing and all warrants, options or other rights to purchase, subscribe
for or otherwise acquire any of the foregoing, whether or not presently
convertible, exchangeable or exercisable.
(r)
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
- 25 -
(s)
["Exchange Amount" shall have the meaning ascribed to such term in the
Parity Notes.]27 [Intentionally omitted.]28
(t)
"Exchange Rate" means, in relation to any amount of currency to be
converted into U.S. dollars pursuant to this Note, the U.S. dollar exchange rate
as published in the Wall Street Journal on the relevant date of calculation (it
being understood and agreed that where an amount is calculated with reference
to, or over, a period of time, the date of calculation shall be the final date
of such period of time).
(u)
"Fundamental Transaction" means (A) that the Company shall, directly or
indirectly, including through Subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its "significant subsidiaries" (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Shares be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding Common Shares, (y)
50% of the outstanding Common Shares calculated as if any Common Shares held by
all Subject Entities making or party to, or Affiliated with any Subject Entities
making or party to, such purchase, tender or exchange offer were not
outstanding; or (z) such number of Common Shares such that all Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to,
such purchase, tender or exchange offer, become collectively the beneficial
owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the
outstanding Common Shares, or (iv) consummate a share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more Subject
Entities whereby such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding Common Shares, (y) at least
50% of the outstanding Common Shares calculated as if any Common Shares held by
all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such share purchase agreement or other business
combination were not outstanding; or (z) such number of Common Shares such that
the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding Common
Shares, or (v) reorganize, recapitalize or reclassify its Common Shares, (B)
that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding Common Shares, merger,
consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or
otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Shares, (y)
at least 50% of the aggregate ordinary voting power represented by issued and
outstanding Common Shares not held by all such Subject Entities as of the
date of this Note calculated as if any Common Shares held by all such Subject
Entities were not outstanding, or (z) a percentage of the aggregate ordinary
voting power represented by issued and outstanding Common Shares or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their Common Shares without approval of the
shareholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the
issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such
instrument or transaction.
____________________
27 Insert in Additional Priority Notes issued on an
Exchange Date pursuant to Section 11 of the Parity Notes.
28 Insert in Initial Priority Notes, in Initial Parity Notes and in Additional
Parity Notes.
- 26 -
(v)
"Group" means a "group" as that term is used in Section 13(d) of the
Exchange Act and as defined in Rule 13d-5 thereunder.
(w)
"Guarantee Agreement" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
(x)
"Guarantors" shall have the meaning ascribed to such term in the
Guarantee Agreement.
(y)
"Holder Pro Rata Amount" means a fraction (i) the numerator of which is
the outstanding Principal amount of this Note as of the applicable date of
determination and (ii) the denominator of which is the aggregate outstanding
principal amount of all Notes as of the applicable date of determination.
(z)
"Holder Repurchase Amount" means the Holder Pro Rata Amount of the
Available Proceeds relating to the applicable Offer to Repurchase Event.
(aa)
"Indebtedness" shall have the meaning ascribed to such term in the
Indenture.
(bb)
"Indenture" means that certain Indenture dated as of March 2, 2012 among
the Company, the guarantors named on the signature pages thereto and Equity
Financial Trust Company, as trustee and collateral agent, as may be amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
(cc)
"Indenture Documents" means the Indenture, the Indenture Notes, the Note
Guarantee Agreement and the Collateral Documents.
(dd)
"Indenture Notes" means those certain senior secured notes in the
aggregate principal amount of $175,000,000 with an interest rate of 10% and a
maturity date of March 1, 2017 issued on March 2, 2012 pursuant to the
Indenture.
(ee)
"Initial Closing Date" shall have the meaning ascribed to such term in
the Securities Purchase Agreement.
- 27 -
(ff)
"Interest Cash Rate" means [(i) from the Issuance Date, inclusive,
to December 31, 2014, inclusive, 10.00% per annum, (ii) from January 1, 2015,
inclusive, to June 30, 2015, inclusive, 12.50% per annum, (iii) from July 1,
2015, inclusive, to December 31, 2015, inclusive, 15.0% per annum and (iv) from
January 1, 2016, inclusive, to the Maturity Date, inclusive, 20.0% per annum, in
each case, subject to adjustment as described in Section 2.]29 [(i)
from the Issuance Date, inclusive, to December 31, 2014, inclusive, 15.00% per
annum, (ii) from January 1, 2015, inclusive, to June 30, 2015, inclusive, 17.50%
per annum, (iii) from July 1, 2015, inclusive, to December 31, 2015, inclusive,
20.0% per annum and (iv) from January 1, 2016, inclusive, to the Maturity Date,
inclusive, 25.0% per annum, in each case, subject to adjustment as described in
Section 2.]30
(gg)
"Interest Capitalized Rate" means the then applicable Interest Cash Rate
plus 2.00% per annum, subject to adjustment as set forth in Section 2.
(hh)
"Interest Rate" means the Interest Cash Rate; provided, however, that if the Company delivers an Interest Election Notice to the
Holder on or prior to the applicable Interest Notice Due Date indicating it
shall pay Capitalized Interest on the next applicable Interest Date and Interest
is capitalized on the next applicable Interest Date by adding the accrued
Interest to the then outstanding Principal of this Note, the Capitalized
Interest payable on such Interest Date shall be calculated at the Interest
Capitalized Rate.
(ii)
"Lead Investor" means one or more Affiliates of Gramercy Funds Management
LLC.
(jj)
"Lien" shall have the meaning ascribed to such term in the Indenture.
(kk)
"Major Asset Sale" means any sale, disposition or other transfer of any
assets or property of the Company or any of its Subsidiaries. For the avoidance
of doubt, sales of products and services to customers in the ordinary course of
the Company's business, consistent with past practice, shall not constitute a
Major Asset Sale.
(ll)
"Options" means any rights, warrants or options to subscribe for or
purchase (i) Common Shares or (ii) Convertible Securities.
(mm)
"Parent Entity" of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common capital or
equivalent equity security is quoted or listed on the Eligible Markets (or, if
so elected by the Required Holders, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Required Holders or in the absence of such
designation, such Person or entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.
____________________
29 Insert in Initial Priority Notes and in
Additional Priority Notes.
30 Insert in Initial Parity Notes and
in Additional Parity Notes.
- 28 -
(nn)
["Parity Lien" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.]31 [Intentionally omitted.]32
(oo)
"Parity Lien Debt" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.
(pp)
["Parity Lien Obligations" shall have the meaning ascribed to such term
in the Collateral Trust Agreement.]33 [Intentionally
omitted.]34
(qq)
"Parity Notes" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
(rr)
"Permitted Liens" shall have the meaning ascribed to such term in the
Indenture.
(ss)
"Permitted Prior Liens" shall have the meaning ascribed to such term in
the Collateral Trust Agreement.
(tt)
"Person" means an individual, a limited liability company, a partnership,
a limited partnership, a joint venture, a corporation, a company, a trust, an
unincorporated organization, any other entity and a government or any department
or agency thereof.
(uu)
"Principal Market" means the TSX, or, if the TSX is not the principal
trading market for the Common Shares in Canada, then on the NYSE MKT LLC, or if
the NYSE MKT LLC is not the principal trading market for the Common Shares, then
on the principal securities exchange or securities market on which the Common
Shares are then traded.
(vv)
["Priority Lien" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.]35 [Intentionally omitted.]36
(ww)
"Priority Lien Debt" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.
(xx)
"Priority Lien Obligations" shall have the meaning ascribed to such term
in the Collateral Trust Agreement.
(yy)
"Priority Notes" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
____________________
31 Insert in Initial Parity Notes and in Additional
Parity Notes.
32 Insert in Initial Priority Notes and Additional
Priority Notes.
33 Insert in Initial Parity Notes and in
Additional Parity Notes.
34 Insert in Initial Priority Notes and
Additional Priority Notes.
35 Insert in Initial Priority Notes
and Additional Priority Notes.
36 Insert in Initial Parity Notes
and in Additional Parity Notes.
- 29 -
(zz)
"Redemption Amount" means the sum of (A) the portion of the Principal
(including, without limitation, Capitalized Interest, if any[, and any Exchange Amount]37) to be redeemed or otherwise with respect
to which this determination is being made and (B) accrued and unpaid Interest
with respect to such Principal.
(aaa)
"Redemption Dates" means, collectively, a Prepayment Date, an Event of
Default Redemption Date, a Change of Control Redemption Date and an Offer to
Repurchase Date, each of the foregoing, individually, a Redemption Date.
(bbb)
"Redemption Notices" means, collectively, the Event of Default Redemption
Notices, the Change of Control Redemption Notices and Acceptance Notices, each
of the foregoing, individually, a Redemption Notice.
(ccc)
"Redemption Prices" means, collectively, the Prepayment Price, the Event
of Default Redemption Price, the Change of Control Redemption Price and the
Offer to Repurchase Price, each of the foregoing, individually, a Redemption
Price.
(ddd)
"Related Fund" means, with respect to any Person, a fund or account
managed by such Person or an Affiliate of such Person.
(eee)
"Required Holders" means the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding and
shall include the Lead Investor so long as the Lead Investor holds any Notes.
(fff)
"SEC" means the United States Securities and Exchange Commission.
(ggg)
"Securities Purchase Agreement" means that certain securities purchase
agreement dated as of the Subscription Date by and among the Company and the
Buyers of the Notes pursuant to which the Company issued the Notes and certain
warrants to purchase Common Shares.
(hhh)
"Subject Entity" means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.
(iii)
"Subscription Date" means August 18, 2014.
(jjj)
"Subsequent Placement" means any direct or indirect, offer, sale, grant
any option to purchase, or other disposition of any of the Company's or its
Subsidiaries' debt, equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Shares or Common Shares Equivalents; provided, however, that Subsequent Placement shall not include (i)
the issuance of common or preferred equity securities, if any, at any time until
the date that is three (3) months immediately following the Issuance Date at a
price per share and/or an exercise price, conversion price or exchange price per
share, that is equal to or greater than the Floor Price (as defined in the
Warrants), as adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction occurring on or after the Subscription
Date, (ii) the issuance and exercise of equity incentive awards issued pursuant to an Approved Share
Plan, (iii) the issuance of any Common Shares issuable upon exercise of any
Options or Convertible Securities which are outstanding on the day immediately
preceding the Subscription Date, provided, that the terms of such Options
or Convertible Securities are not amended, modified or changed on or after the
Subscription Date, or (iv) the issuance of any Common Shares issuable upon
exercise of the Warrants.
____________________
37 Insert in Additional Priority Notes.
- 30 -
(kkk)
"Subsidiary" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
(lll)
"Successor Entity" means one or more Person or Persons (or, if so elected
by the Holder, the Company or Parent Entity) formed by, resulting from or
surviving any Fundamental Transaction or one or more Person or Persons (or, if
so elected by the Holder, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(mmm)"Supermajority
Holders" means the holders of Notes representing at least seventy-five
percent (75%) of the aggregate principal amount of the Notes then outstanding
and shall include the Lead Investor so long as the Lead Investor holds any
Notes.
(nnn)
"Trading Day" means any day on which the Common Shares are traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Shares, then on the principal securities exchange or
securities market on which the Common Shares are then traded; provided that
"Trading Day" shall not include any day on which the Common Shares are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Shares are suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00:00 p.m., New York time).
(ooo)
"Transaction Document" shall have the meaning ascribed to such term in
the Securities Purchase Agreement.
(ppp)
"Warrants" has the meaning ascribed to such term in the Securities
Purchase Agreement.
[Signature Page Follows]
- 31 -
IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed as of the Issuance Date set out above.
BANRO
CORPORATION
By:
________________________________
Name:
Title:
[FORM OF WARRANT]
THE HOLDER AND ANY ASSIGNEE, BY ACCEPTANCE OF THIS WARRANT,
ACKNOWLEDGES AND AGREES THAT, IN ACCORDANCE WITH THE PROVISIONS SET FORTH
HEREIN, FOLLOWING THE EXERCISE OF A PORTION OF THIS WARRANT, THE NUMBER OF
WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF AT ANY GIVEN TIME MAY BE LESS THAN
THE AMOUNT STATED ON THE FACE HEREOF.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE DECEMBER 19, 2014.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT") AND THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN AN
"OFFSHORE TRANSACTION" AS DEFINED IN REGULATION S UNDER THE 1933 ACT BY A HOLDER
THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S AND IS NOT EXERCISING THE
WARRANT ON BEHALF OF A U.S. PERSON, UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT.
BANRO CORPORATION
WARRANT TO PURCHASE COMMON SHARES
Warrant No.:
Number of Common Shares:_____________
Date
of Issuance: August 18, 2014 ("Issuance Date")
Banro Corporation, a Canadian
corporation (the "Company"), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
[BUYER], the registered holder hereof or its permitted assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) per Common Share then
in effect, at any time or times on or after the Issuance Date, but not after
11:59 p.m., New York time, on the Expiration Date, (as defined below),
______________ (_____________)1 fully paid non-assessable Common
Shares (as defined below), subject to adjustment as provided herein (the "Warrant Shares"). Except as otherwise defined herein,
capitalized terms in this Warrant to Purchase Common Shares (including any
Warrants to Purchase Common Shares issued in exchange, transfer or replacement
hereof, this "Warrant"), shall have the meanings set forth in Section 21.
This Warrant is one of the Warrants to purchase Common Shares (the "SPA
Warrants") issued pursuant to Section 1 of that certain Securities Purchase
Agreement, dated as of August 18, 2014 (the "Subscription Date"), by and
among the Company and the investors (the "Buyers") referred to therein
(the "Securities Purchase Agreement"). Capitalized terms used herein and
not otherwise defined shall have the definitions ascribed to such terms in the
Securities Purchase Agreement.
____________________
1 Insert the Holder’s pro rata share of 13,300,000
Common Shares (the "Basic Number") (as adjusted for any share dividend, share
split, share consolidation, reclassification or similar transaction occurring
after the Subscription Date) based on the principal amount of Initial Notes
issued to the Holder on the Initial Closing Date out of the aggregate principal
amount of Initial Notes issued to the Buyers on the Initial Closing Date
pursuant to the Securities Purchase Agreement. The number of shares to be
subject to adjustment if the Floor Price is greater than
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Sections 1(f) and
1(g)), this Warrant may be exercised by the Holder at any time or times on or
after the Issuance Date, in whole or in part, by (i) delivery of a written
notice, in the form attached hereto as Exhibit A, (the "Exercise
Notice"), of the Holder's election to exercise this Warrant, which form of
Exercise Notice shall include the number of Common Shares held by the Holder and
each Person with whom the Holder is acting jointly or in concert, and (ii) (A)
payment to the Company of an amount equal to the applicable Exercise Price
multiplied by the number of Warrant Shares as to which this Warrant is being
exercised (the "Aggregate Exercise Price") in cash by wire transfer of
immediately available funds or (B) by notifying the Company that this Warrant is
being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).
The Holder shall not be required to deliver the original Warrant in order to
effect an exercise hereunder. Concurrently with delivery of the Exercise Notice
to the Company, the Company shall provide a copy of the Exercise Notice to the
TSX. For greater clarity, the requirement to deliver a copy of the Exercise
Notice shall be satisfied upon electronic delivery of such notice by the Company
to the TSX, and shall not require any receipt notification on the part of the
TSX to be deemed delivered. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. On or before the
first (1st) Trading Day following the date on which the Company has
received the Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the Exercise
Notice to the Holder and the Company's transfer agent (the "Transfer
Agent"). On or before the third (3rd) Trading Day following the
date on which the Company has received the Exercise Notice, so long as the
Company receives the Aggregate Exercise Price (or notice of a Cashless Exercise)
on or prior to the second (2nd) Trading Day following the date on
which the Company has received the Exercise Notice (the "Share Delivery
Date") (provided that if the Aggregate Exercise Price has not been delivered
by such date, the Share Delivery Date shall be one (1) Trading Day after the
Aggregate Exercise Price (or notice of a Cashless Exercise) is delivered), the
Company shall (I) provided that the Company's Common Shares are in a book-entry
only registration system and must be purchased or transferred through a
CAN$0.36, in which case the Basic Number shall be adjusted as
previously agreed between the Holder and the Company.
- 2 -
participant in the depositary service of CDS Clearing and
Depositary Services Inc. (or its nominee) ("CDS"), advise CDS or (II)
provided the Transfer Agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, advise DTC, and in
each case issue a treasury direction and take all such other actions as are
necessary to credit such aggregate number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the Holder's or its designee's balance
account with CDS or DTC, as the case may be, or (III) in the event that the
Company's Common Shares are not held or permitted to be held through a
book-entry only system or if the Warrant has been exercised for cash other than
in an Offshore Transaction by a Person that is not a U.S. Person and is not
exercising the Warrant on behalf of a U.S. Person, then for purposes of the
foregoing the Company shall issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate, registered in the
Company's share register in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise. The Company shall be responsible for all fees and expenses of the
Transfer Agent and all fees and expenses with respect to the issuance of Warrant
Shares via CDS and DTC, if any. Upon receipt by the Company of the Exercise
Notice and payment of the Aggregate Exercise Price, the Holder shall be deemed
for all corporate purposes to have become the beneficial holder of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of
the date such Warrant Shares are credited to the Holder's account with the DTC,
CDS or the date of delivery of the certificates evidencing such Warrant Shares,
as the case may be. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder without
surrender of this Warrant certificate shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an amount equal to
the applicable number of Warrant Shares purchased. The Holder and the Company
shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. In the event of any disputes on discrepancy, such
records of the Company establishing the number of Warrant Shares which the
Holder is entitled to purchase shall be controlling and determinative in the
absence of manifest error. If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company shall as soon
as practicable and in no event later than three (3) Trading Days after any
exercise and at its own expense, issue a new Warrant (in accordance with Section
7(d)) representing the right to purchase the number of Warrant Shares issuable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional
Warrant Shares are to be issued upon the exercise of this Warrant, but rather
the number of Warrant Shares to be issued shall be rounded to the nearest whole
number. The Company shall pay any and all taxes which may be payable by it with
respect to the issuance and delivery of Warrant Shares upon exercise of this
Warrant.
(b) Exercise Price. For purposes of this Warrant, "Exercise Price"
means CAN$0.269, subject to adjustment as provided herein.
- 3 -
(c) Company's Failure to Timely Deliver Securities. If on or prior to the
Share Delivery Date, the Company shall fail for any reason or for no reason to
(i) credit the Holder's balance account with DTC, if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer Program, (ii) credit
such aggregate number of Common Shares to which the Holder shall be entitled to the Holder's or its
designee's balance account with CDS or (iii) if the foregoing are not
applicable, issue and deliver a certificate to the Holder to issue to the
Holder, for such number of Common Shares to which the Holder is entitled upon
the Holder's exercise of this Warrant, then, in addition to all other remedies
available to the Holder, (X) the Company shall pay in cash to the Holder for
each day after the fifth (5th) Trading Day after the date of delivery
of the Exercise Notice that the issuance of such Common Shares are not timely
effected an amount equal to 1.0% of the product of (A) the sum of the number of
Common Shares not issued to the Holder on or prior to the Share Delivery Date
and to which the Holder is entitled, and (B) the Closing Sale Price of the
Common Shares on the Trading Date immediately preceding the last possible date
which the Company could have issued such Common Shares to the Holder without
violating Section 1(a), and (Y) the Holder, upon written notice to the Company,
may void its Exercise Notice with respect to, and retain or have returned, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the voiding of an Exercise
Notice shall not affect the Company's obligations to make any payments which
have accrued prior to the date of such notice pursuant to this Section 1(c) or
otherwise. In addition to the foregoing, if on or prior to the Share Delivery
Date the Company shall fail to (i) credit the Holder's balance account with DTC,
if the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, (ii) credit such aggregate number of Common Shares to which
the Holder shall be entitled to the Holder's or its designee's balance account
with CDS or (iii) if the foregoing are not applicable, issue and deliver a
certificate to the Holder to issue to the Holder for the number of Common Shares
to which the Holder is entitled upon the Holder's exercise hereunder or pursuant
to the Company's obligation pursuant to clause (ii) below, and if on or after
such Share Delivery Date the Holder purchases (in an open market transaction or
otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of
Common Shares that the Holder anticipated receiving from the Company issuable
upon such exercise (a "Buy-In"), then the Company shall, within three (3)
Trading Days after the Holder's request and in the Holder's discretion, either
(i) pay cash to the Holder in an amount equal to the Holder's total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the Common Shares so purchased (the "Buy-In Price"), at which point
the Company's obligation to deliver such certificate (and to issue such Common
Shares) or credit such Holder's balance account with DTC or CDS, as the case may
be, for such Common Shares shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing
such Common Shares or credit such Holder's balance account with DTC or CDS, as
the case may be, as applicable, and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
Common Shares, times (B) the Closing Bid Price of the Common Shares on the date
of exercise. Nothing shall limit the Holder's right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company's failure to timely deliver certificates representing Common Shares (or
to electronically deliver such Common Shares) upon the exercise of this Warrant
as required pursuant to the terms hereof.
(d) Cashless Exercise. Notwithstanding anything contained herein to
the contrary, the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the "Net Number" of Common Shares determined according to the
following formula (a "Cashless Exercise"):
- 4 -
Net Number = (A x B) - (A x C)
B
For purposes of the foregoing formula:
A= the total number of shares with
respect to which this Warrant is then being exercised.
B= the arithmetic average of the
Weighted Average Prices of the Common Shares for the five (5) consecutive
Trading Days ending on the date immediately preceding the date of the Exercise
Notice.
C= the Exercise Price then in effect
for the applicable Warrant Shares at the time of such exercise.
For purposes of Rule 144(d)
promulgated under the 1933 Act and applicable Canadian securities laws, as in
effect on the date hereof, it is intended that the Warrant Shares issued in a
Cashless Exercise shall, in respect of any applicable hold period, be deemed to
have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally
issued pursuant to the Securities Purchase Agreement. Upon an exercise of the
Warrant for Warrant Shares, the Warrant Shares shall (i) be delivered to the
Holder in accordance with Section 1, (ii) be DTC eligible or CDS eligible and
(iii) be freely tradable on the TSX from and after December 19, 2014, subject
to any restrictions applicable to Affiliates of the Company if the Holder is an
Affiliate of the Company.
(e) Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 12.
(f) Limitations on Exercises – Exchange Cap. Unless the Company first obtains
shareholder approval in accordance with sections 604(a) and 607(g) of the TSX
Company Manual, as applicable (which shareholder approval shall, for greater
certainty, also include a waiver of the applicability of the Rights Plan), in no
circumstances shall the Company issue Common Shares upon the exercise of
Warrants, and the Holders (either individually or in the aggregate, as the case
may be) shall not have the right to effect an exercise of Warrants or receive
Common Shares upon exercise of Warrants, to the extent the issuance of such
Common Shares pursuant to such exercise would (i) in respect of issuances to any
Holder (including any Person acting in combination or in concert with such
Holder) (any Holder and any such Persons are referred to herein as an
"Investor Group"), result in such Investor Group holding 19.9% or more of
the issued and outstanding number of Common Shares (including, for greater
certainty, securities held by the Investors prior to the date hereof)
immediately after giving effect to such exercise; and (ii) in respect to all
issuances hereunder in the aggregate, result in the issuance of 63,025,167 or
more Common Shares (representing a maximum of 25% of the issued and outstanding number of Common Shares calculated as of
immediately prior to the Subscription Date; provided, however, that such maximum
number of Common Shares is to be adjusted for any stock dividend, stock split,
stock combination, reclassification or similar transaction after the date
hereof) (the percentage set forth in clause (i) or (ii), as applicable, the
"Exchange Cap").
- 5 -
For the avoidance of doubt, any issuances that are made
in contravention of the foregoing Exchange Cap shall be deemed void ab initio.
For greater certainty, upon receipt of any such shareholder approval by the
Company, the foregoing limitations shall not apply and the Company shall
thereafter be required to issue all such Common Shares as are issuable pursuant
to the terms set forth in this Warrant. Until any such requisite approval is
obtained, no Holder shall be issued in the aggregate, upon exercise of Warrants,
Common Shares in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the number of SPA Warrants
issued to such Holder pursuant to the Securities Purchase Agreement on the
Initial Closing Date and the denominator of which is the aggregate number of all
SPA Warrants issued to the Buyers pursuant to the Securities Purchase Agreement
on the Initial Closing Date (with respect to each such Holder, the "Exchange
Cap Allocation"). In the event that any Holder shall sell or otherwise
transfer any of such Holder's Warrants, the transferee shall be allocated a pro
rata portion of such Holder's Exchange Cap Allocation, and the restrictions of
the prior sentence shall apply to such transferee with respect to the portion of
the Exchange Cap Allocation allocated to such transferee. In the event that any
Holder shall exercise all of such Holder's Warrants into a number of shares of
Common Shares which, in the aggregate, is less than such Holder's Exchange Cap
Allocation, then the difference between such Holder's Exchange Cap Allocation
and the number of Common Shares actually issued to such Holder shall be
allocated to the respective Exchange Cap Allocations of the remaining Holders on
a pro rata basis in proportion to the Common Shares underlying the SPA Warrants
then held by each holder thereof.
(g) Insufficient Authorized Shares. The Company hereby represents and
warrants that it has an unlimited authorized share capital and covenants and
agrees that, while this Warrant remains outstanding, it will not take any steps
or actions to decrease its authorized share capital.
2. ADJUSTMENT OF EXERCISE
PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of
Warrant Shares shall be adjusted from time to time as follows:
(a) Adjustment Upon Issuance of Common Shares. If and whenever on or after
the Subscription Date, the Company issues or sells, or in accordance with this
Section 2 is deemed to have issued or sold, any Common Shares (including the
issuance or sale of Common Shares owned or held by or for the account of the
Company, but excluding Common Shares deemed to have been issued or sold, or
deemed issued or sold, by the Company in connection with any Excluded
Securities) for a consideration per share (the "New Issuance Price") less
than a price (the "Applicable Price") equal to the Exercise Price in
effect immediately prior to such issue or sale or deemed issuance or sale (the
foregoing a "Dilutive Issuance"), then immediately after such Dilutive
Issuance, the Exercise Price then in effect shall be reduced to an amount equal
to the New Issuance Price. For purposes of determining the adjusted Exercise
Price under this Section 2(a), the following shall be applicable:
- 6 -
(i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one Common Share is issuable
upon the exercise of any such Option or upon conversion, exercise or exchange of
any Convertible Securities issuable upon exercise of any such Option is less
than the Applicable Price, then such Common Share shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 2(a)(i), the "lowest price per share for which one Common Share is
issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such
Option" shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one Common Share
upon the granting or sale of the Option, upon exercise of the Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option less any consideration paid or payable by the Company
with respect to such one Common Share upon the granting or sale of such Option,
upon exercise of such Option and upon conversion exercise or exchange of any
Convertible Security issuable upon exercise of such Option. No further
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Shares or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Shares upon conversion,
exercise or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner issues
or sells any Convertible Securities and the lowest price per share for which one
Common Share is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such Common Share shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such Convertible Securities for such price per share. For
the purposes of this Section 2(a)(ii), the "lowest price per share for which one
Common Share is issuable upon the conversion, exercise or exchange thereof"
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to any one Common Share upon
the issuance or sale of the Convertible Security and upon conversion, exercise
or exchange of such Convertible Security less any consideration paid or payable
by the Company to the holder of such Convertible Security with respect to such
one Common Share upon the issuance or sale of such Convertible Security and upon
conversion, exercise or exchange of such Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Shares upon conversion, exercise or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which adjustment of this Warrant has been or is
to be made pursuant to other provisions of this Section 2(a), no further
adjustment of the Exercise Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for Common Shares increases or
decreases at any time, the Exercise Price in effect at the time of such increase
or decrease shall be adjusted to the Exercise Price, which would have been in
effect at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 2(a)(iii), if the terms of any
Option or Convertible Security that was outstanding as of the Subscription Date
are increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the Common Shares deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 2(a) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.
- 7 -
(iv) Calculation of Consideration Received. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction, (x) the Options will be deemed to have
been issued for the Option Value of such Options and (y) the other securities
issued or sold in such integrated transaction shall be deemed to have been
issued or sold for the difference of (I) the aggregate consideration received by
the Company less any consideration paid or payable by the Company pursuant to
the terms of such other securities of the Company, less (II) the Option Value.
If any Common Shares, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration other than cash
received therefor will be deemed to be the net amount received by the Company
therefor. If any Common Shares, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in which case
the amount of consideration received by the Company will be the Closing Sale
Price of such publicly traded securities on the date of receipt. If any Common
Shares, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Shares, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or publicly traded securities will be determined jointly by the Company and
the Required Holders. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the
"Valuation Event"), the fair value of such consideration will be
determined within five (5) Business Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders. The determination of such
appraiser shall be final and binding upon all parties absent manifest error and
the fees and expenses of such appraiser shall be borne by the Company.
(v) Record Date. If the Company takes a record of the holders of Common
Shares for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Shares,
Options or in Convertible Securities or (B) to subscribe for or purchase Common
Shares, Options or Convertible Securities, then such record date will be deemed
to be the date of the issue or sale of the Common Shares deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
- 8 -
(b) Voluntary Adjustment By Company. The Company may at any time during the
term of this Warrant, with the prior written consent of the Required Holders,
and subject to TSX approval, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the board of directors
of the Company.
(c) Adjustment Upon Subdivision or Consolidation of Common Shares. If the
Company at any time on or after the Subscription Date subdivides (by any share
split, share dividend, recapitalization or otherwise) one or more classes of its
outstanding Common Shares into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of Warrant Shares will be proportionately increased. If the Company
at any time on or after the Subscription Date combines (by consolidation,
reverse share split or otherwise) one or more classes of its outstanding Common
Shares into a smaller number of shares, the Exercise Price in effect immediately
prior to such consolidation will be proportionately increased and the number of
Warrant Shares will be proportionately decreased. Any adjustment under this
Section 2(c) shall become effective at the close of business on the date the
subdivision or consolidation becomes effective.
(d) Other Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of share appreciation rights,
phantom share rights or other rights with equity features), then the Company's
board of directors will make an appropriate adjustment in the Exercise Price and
the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(d) will
increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2.
(e) Floor Price. Until such time as the Company receives any shareholder
approval that may be required under any applicable rules or regulations of any
exchange or market on which any of the securities of the Company are listed or
designated in order to allow the Exercise Price to be less than the Floor Price
(as defined below), and subject to TSX approval, no adjustment pursuant to
Sections 2(a) or 2(d) shall cause the Exercise Price to be less than CAN$0.2239,
as adjusted for any share dividend, share split, share consolidation,
reclassification or similar transaction occurring after the Subscription Date
(the " Floor Price").
3. RIGHTS UPON DISTRIBUTION OF
ASSETS. In addition to any adjustments pursuant to Section 2 above, if the
Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of Common Shares, by way of return
of capital or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction), except to the extent an adjustment was already made pursuant to
Section 2(a) above (a "Distribution"), at any time after the issuance of
this Warrant, then, in each such case, the Company shall reserve and put aside
the maximum Distribution amount the Holder would have been entitled to receive
if the Holder had held the number of Common Shares acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof)
immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of
Common Shares are to be determined for the participation in such Distribution.
Upon exercise of this Warrant, in whole or in part, the Company shall,
contemporaneously with the delivery of the Warrant Shares, distribute to the
Holder a pro rata portion of such Distribution based on the portion of the
Warrant that has been exercised. The Company agrees that, while its Common
Shares are listed on the TSX, it shall not make any Distributions without the
prior approval of the TSX, if required, which approval, if required, shall be
required to approve the Distributions to the Holder contemplated pursuant to
this Section 3.
- 9 -
4. FUNDAMENTAL
TRANSACTIONS.
(a) Fundamental Transactions. The Company shall not enter into or be party to
a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section 4(a) pursuant to
written agreements in form and substance reasonably satisfactory to the Required
Holders and reasonably approved by the Required Holders prior to such
Fundamental Transaction, including agreements, if so requested by the Holder, to
deliver to each holder of the SPA Warrants in exchange for such SPA Warrants a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant, including, without limitation, an
adjusted exercise price equal to the value for the Common Shares reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital equivalent to the Common Shares acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and
satisfactory to the Required Holders, and with an exercise price which applies
the exercise price hereunder to such shares of capital (but taking into account
the relative value of the Common Shares pursuant to such Fundamental Transaction
and the value of such shares of capital, such adjustments to the number of
shares of capital and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the occurrence or
consummation of such Fundamental Transaction). No later than (i) thirty (30)
days prior to the occurrence or consummation of any Fundamental Transaction or
(ii) if later, the first Business Day following the date the Company first
becomes aware of the occurrence or potential occurrence of a Fundamental
Transaction, the Company shall deliver written notice thereof via facsimile or
electronic mail and overnight courier to the Holder. Any security issuable or
potentially issuable to the Holder pursuant to the terms of this Warrant on the
consummation of a Fundamental Transaction shall be registered and freely
tradable by the Holder without any restriction or limitation or the requirement
to be subject to any restricted or holding period pursuant to any applicable
securities laws, to the same extent that securities issuable by the Company upon
exercise of this Warrant would be freely tradable.
- 10 -
Upon the occurrence or
consummation of any Fundamental Transaction, and it shall be a required condition to the occurrence or consummation of any
Fundamental Transaction that, the Company and the Successor Entity or Successor
Entities, jointly and severally, shall succeed to, and the Company shall cause
any Successor Entity or Successor Entities to jointly and severally succeed to,
and be added to the term "Company" under this Warrant (so that from and after
the date of such Fundamental Transaction, each and every provision of this
Warrant referring to the "Company" shall refer instead to each of the Company
and the Successor Entity or Successor Entities, jointly and severally), and the
Company and the Successor Entity or Successor Entities, jointly and severally,
may exercise every right and power of the Company prior thereto and shall assume
all of the obligations of the Company prior thereto under this Warrant with the
same effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company in this Warrant, and,
solely at the request of the Holder, if the Successor Entity and/or Successor
Entities is a publicly traded corporation whose common shares are quoted on or
listed for trading on the Eligible Markets, shall deliver (in addition to and
without limiting any right under this Warrant) to the Holder in exchange for
this Warrant a security of the Successor Entity and/or Successor Entities
evidenced by a written instrument substantially similar in form and substance to
this Warrant and exercisable for a corresponding number of shares of capital of
the Successor Entity and/or Successor Entities (the "Successor Capital")
equivalent to the Common Shares acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction (such corresponding number of shares of
Successor Capital to be delivered to the Holder shall be equal to the greater of
(A) the quotient of (i) the aggregate dollar value of all consideration
(including cash consideration and any consideration other than cash
("Non-Cash Consideration"), in such Fundamental Transaction, as such
values are set forth in any definitive agreement for the Fundamental Transaction
that has been executed at the time of the first public announcement of the
Fundamental Transaction or, if no such value is determinable from such
definitive agreement, as determined in accordance with Section 12 with the term
"Non-Cash Consideration" being substituted for the term "Exercise Price") that
the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction or the record, eligibility or other determination date
for the event resulting in such Fundamental Transaction, had this Warrant been
exercised immediately prior to such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such
Fundamental Transaction (without regard to any limitations on the exercise of
this Warrant) (the "Aggregate Consideration") divided by (ii) the per
share Closing Sale Price of such Successor Capital on the Trading Day
immediately prior to the consummation or occurrence of the Fundamental
Transaction and (B) the product of (i) the Aggregate Consideration and (ii) the
highest exchange ratio pursuant to which any shareholder of the Company may
exchange Common Shares for Successor Capital), and such security shall be
satisfactory to the Holder, and with an identical exercise price to the Exercise
Price hereunder (such adjustments to the number of shares of capital and such
exercise price being for the purpose of protecting after the consummation or
occurrence of such Fundamental Transaction the economic value of this Warrant
that was in effect immediately prior to the consummation or occurrence of such
Fundamental Transaction, as elected by the Holder solely at its option).
- 11 -
Upon
occurrence or consummation of the Fundamental Transaction, and it shall be a
required condition to the occurrence or consummation of such Fundamental
Transaction that, the Company and the Successor Entity or Successor Entities
shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
occurrence or consummation of the Fundamental Transaction, as elected by the
Holder solely at its option, Common Shares, Successor Capital or, in lieu of the
Common Shares or Successor Capital (or other securities, cash, assets or other
property purchasable upon the exercise of this Warrant prior to such Fundamental
Transaction), such shares, securities, cash, assets or any other property
whatsoever (including warrants or other purchase or subscription rights), which
for purposes of clarification may continue to be Common Shares, if any, that the
Holder would have been entitled to receive upon the happening of such
Fundamental Transaction or the record, eligibility or other determination date
for the event resulting in such Fundamental Transaction, had this Warrant been
exercised immediately prior to such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such
Fundamental Transaction (without regard to any limitations on the exercise of
this Warrant), as adjusted in accordance with the provisions of this Warrant. In
addition to and not in substitution for any other rights hereunder, prior to the
occurrence or consummation of any Fundamental Transaction pursuant to which
holders of Common Shares are entitled to receive securities, cash, assets or
other property with respect to or in exchange for Common Shares (a "Corporate
Event"), the Company shall make appropriate provision to insure that, and
any applicable Successor Entity or Successor Entities shall ensure that, and it
shall be a required condition to the occurrence or consummation of such
Corporate Event that, the Holder will thereafter have the right to receive upon
exercise of this Warrant at any time after the occurrence or consummation of the
Corporate Event, Common Shares or Successor Capital or, if so elected by the
Holder, in lieu of the Common Shares (or other securities, cash, assets or other
property, which shall continue to be receivable on the Common Shares or on the
such shares, securities, cash, assets or any other property otherwise receivable
with respect to or in exchange for Common Shares) purchasable upon the exercise
of this Warrant prior to such Corporate Event, such shares, securities, cash,
assets or any other property whatsoever (including warrants or other purchase or
subscription rights and any Common Shares) which the Holder would have been
entitled to receive upon the occurrence or consummation of such Corporate Event
or the record, eligibility or other determination date for the event resulting
in such Corporate Event, had this Warrant been exercised immediately prior to
such Corporate Event or the record, eligibility or other determination date for
the event resulting in such Corporate Event (without regard to any limitations
on exercise of this Warrant). Provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the Holder. The
provisions of this Section 4(a) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events.
(b)
Notwithstanding the foregoing, in the event of a Fundamental Transaction, at the
request of the Holder delivered before the ninetieth (90th) day after
the occurrence or consummation of such Fundamental Transaction, the Company (or
the Successor Entity) shall purchase this Warrant from the Holder by paying to
the Holder, within five (5) Business Days after such request (or, if later, on
the effective date of the Fundamental Transaction), cash in an amount equal to
the Black Scholes Value of the remaining unexercised portion of this Warrant on
the date of such Fundamental Transaction.
5. NONCIRCUMVENTION. The
Company hereby covenants and agrees that the Company will not, by amendment of
its articles, bylaws and other constating documents, or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, and will at all times in good faith carry out all of
the provisions of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any Common Shares receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Common Shares
upon the exercise of this Warrant, and (iii) shall, so long as any of the SPA
Warrants are outstanding, take all action necessary to maintain an unlimited
number of authorized Common Shares.
- 12 -
6. WARRANT HOLDER NOT DEEMED A
SHAREHOLDER. Except as otherwise specifically provided herein, the Holder,
solely in such Person's capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a shareholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of shares, reclassification of shares, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a shareholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, unless the documents
in question have been filed on SEDAR, the Company shall provide the Holder with
copies of the same notices and other information given to the shareholders of
the Company generally, contemporaneously with the giving thereof to the
shareholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to
purchase the Warrant Shares then underlying this Warrant.
- 13 -
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no SPA Warrants for
fractional Warrant Shares shall be given.
(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of Common Shares underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the
face of such new Warrant which is the same as the Issuance Date, and (iv) shall
have the same rights and conditions as this Warrant.
8. NOTICES. Whenever
notice is required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with Section 9(f) of the
Securities Purchase Agreement, and if the notice is being given by a Holder in
respect of a Warrant exercise, the Holder shall e-mail a copy of same to either
the Corporate Secretary (at gfarr@banro.com) or Chief
Financial Officer (at dmadilo@banro.com) of the
Company. The Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable detail a
description of such action and the reason therefor. Without limiting the
generality of the foregoing, the Company will give written notice to the Holder
(i) immediately upon any adjustment of the Exercise Price, setting forth in
reasonable detail, and certifying, the calculation of such adjustment and (ii)
on the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Shares, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or
rights to purchase shares, warrants, securities or other property to holders of
Common Shares, unless such securities are Excluded Securities, or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation; provided in each case that such information
has been made known to the public prior to or in conjunction with such notice
being provided to the Holder. For greater certainty, in interpreting Section
9(f) of the Securities Purchase Agreement for the purposes of this Warrant, all
references to a “Buyer” shall be read as referring to the Holder.
9. AMENDMENT AND WAIVER.
Except as otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the Company
has obtained the written consent of the Holder.
- 14 -
10. GOVERNING LAW;
JURISDICTION; JURY TRIAL. This Warrant shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. The Company hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address set forth in
Section 9(f) of the Securities Purchase Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein shall be deemed
or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder. The Company hereby appoints CT Corporation System, with offices at
111 Eighth Avenue, New York, New York 10011, as its agent for service of process
in New York. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
11. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company
and all the Buyers and shall not be construed against any Person as the drafter
hereof. The headings of this Warrant are for convenience of reference and shall
not form part of, or affect the interpretation of, this Warrant.
12. DISPUTE RESOLUTION. In
the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile or electronic
mail within one (1) Business Day of receipt, or deemed receipt, of the Exercise
Notice giving rise to such dispute, as the case may be, to the Holder. If the
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within one (1) Business Day submit via
facsimile or electronic mail (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Holder and
approved by the Company, such approval not to be unreasonably withheld,
conditioned or delayed or (b) the disputed arithmetic calculation of the Warrant
Shares to the Company's independent, outside accountant. The Company shall cause
at its expense the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the Holder of the results no later than five (5) Business Days from the time it
receives the disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.
- 15 -
13. REMEDIES, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available under this
Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Warrant.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the holder of this Warrant shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
14. TRANSFER. This Warrant
and the Warrant Shares may be offered, sold, pledged, assigned or transferred
without the consent of the Company, subject only to the provisions of Section
2(b) of the Securities Purchase Agreement.
15. SEVERABILITY. If any
provision of this Warrant is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Warrant so long as this Warrant as
so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
16. DISCLOSURE. Upon
receipt or delivery by the Company of any notice in accordance with the terms of
this Warrant, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries (as defined in the Securities
Purchase Agreement), the Company shall within two (2) Business Days after any
such receipt or delivery publicly disclose such material, nonpublic information
on a Current Report on Form 6-K and a material change report on Form 51-102F3 or
otherwise. In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its Subsidiaries, the
Company so shall indicate to such Holder contemporaneously with delivery of such
notice, and in the absence of any such indication, the Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its Subsidiaries.
- 16 -
17. TAXES.
(a)
Any and all payments by the Company hereunder, including any amounts received in
cash or in kind, including the delivery of Common Shares, on an exercise or
redemption of the Warrant and any amounts on account of interest or deemed
interest, shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, withholdings or
similar charges, and all liabilities (including additions to tax, penalties and
interest) with respect thereto, imposed under the Income Tax Act (Canada) or any
other applicable law of Canada, Barbados, the Democratic Republic of the Congo
or the United States of America ("Taxes"). If the Company shall be
required to withhold or deduct any Taxes from or in respect of any sum payable
hereunder to the Holder in cash or in kind, except for payments pursuant to
Section 3 hereof, (i) subject to paragraph (b) below, the sum payable shall be
increased by the amount necessary to ensure that after making all required
withholdings or deductions (including withholdings or deductions applicable to
additional sums payable under this Section 17(a)) the Holder would receive an
amount equal to the sum it would have received had no such withholdings or
deductions been made, (ii) the Company shall make such withholdings or
deductions and (iii) the Company shall pay the full amount withheld or deducted
to the Canada Revenue Agency or other relevant governmental authority within the
time required by applicable laws.
(b)
The Company will not be required to pay any additional amounts under (a)(i)
above to any Holder, or be obligated to indemnify such Holder under (e) below,
in respect of any Taxes:
(1)
imposed on, or deducted or withheld from, payments in respect of this Warrant to
a Holder or a beneficial owner of this Warrant by reason of the existence of any
present or former connection (including, without limitation, carrying on
business or having a permanent establishment or fixed base) between such Holder
or beneficial owner (or between a fiduciary, settlor, beneficiary, member,
shareholder or other equity owner of, or possessor of power over, such
beneficial owner, if such beneficial owner is an estate, trust, partnership,
limited liability company, corporation or other entity) and the taxing
jurisdiction (including, without limitation, any Taxes imposed on such Holder or
beneficial owner’s net income) other than a connection solely arising from such
recipient having executed, delivered, become a party to, performed obligations
under, received payments under, engaged in any other transaction pursuant to,
this Warrant;
(2)
imposed on or measured by the Holder’s or beneficial owner’s overall net income
or capital, branch taxes or franchise taxes, under the laws of which the Holder or
beneficial owner is organized, centrally managed, controlled or in which it
maintains a lending office;
- 17 -
(3)
imposed on, or deducted or withheld from, payments in respect of this Warrant to
a Holder or beneficial owner as a result of the failure of such Holder or
beneficial owner to take commercially reasonable steps to comply with any
applicable certification, identification, information, documentation, or similar
reporting requirements concerning the nationality, residence, entitlement to
treaty benefits, identity or connection with the relevant taxing jurisdiction of
such Holder or beneficial owner (except to the extent that such failure to take
commercially reasonable steps arises from the Holder not being in possession of
sufficient information or documentation to effect such compliance);
(4) any
combination of items (1) through (3)
(c)
In addition, the Company agrees to pay to the relevant governmental authority in
accordance with applicable law of Canada, Barbados, the Democratic Republic of
the Congo or the United States of America, as applicable, any present or future
stamp, court or documentary taxes or any other excise or property taxes, charges
or similar levies that arise under the laws of any of such jurisdictions from
any payment made hereunder or in connection with the execution, delivery,
registration, enforcement or performance of, or otherwise with respect to, this
Warrant ("Other Taxes").
(d)
The Company shall deliver to the Holder official receipts, if any, promptly
after the Company’s receipt of same in respect of any Taxes and Other Taxes
payable hereunder, or such other evidence of payment as is reasonably acceptable
to the Holder.
(e)
The Company shall indemnify the Holder within ten (10) calendar days after
written demand therefor, for the full amount of any Taxes or Other Taxes
(excluding any Taxes referred to in paragraph (b) above, but including any Taxes
or Other Taxes imposed or asserted by the governments of Canada, the United
States of America, Barbados or the Democratic Republic of the Congo on amounts
payable under this Section 17), plus any related additions to tax, interest or
penalties, that are paid by the Holder to, or imposed on the Holder by, the
Canada Revenue Agency or other relevant governmental authorities of the United
States of America, Barbados or the Democratic Republic of the Congo, whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by
the Canada Revenue Agency or other relevant governmental authorities of the
United States of America, Barbados or the Democratic Republic of the Congo.
(f)
The obligations of the Company under this Section 17 shall survive the
termination of this Warrant.
18. CURRENCY. All
principal, interest and other amounts owing under this Warrant or any
Transaction Document that, in accordance with their terms, are paid in cash
shall be paid in U.S. dollars. All amounts denominated in other
currencies shall be converted in the U.S. dollar equivalent amount in accordance
with the Exchange Rate on the date of calculation.
- 18 -
19. PAYMENTS. Whenever any
payment of cash is to be made by the Company to any Person pursuant to this
Warrant, such payment shall be made in lawful money of the United States of
America by a check drawn on the account of the Company and sent via overnight
courier service to such Person at such address as previously provided to the
Company in writing (which address, in the case of each of the Buyers, shall
initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement); provided that the Holder may elect to receive a payment of
cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder's wire
transfer instructions. Whenever any amount expressed to be due by the terms of
this Warrant is due on any day which is not a Trading Day, the same shall
instead be due on the next succeeding day which is a Trading Day.
20. JUDGMENT
CURRENCY.
(a)
If for the purpose of obtaining or enforcing judgment against the Company in any
court in any jurisdiction it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 20 referred to
as the "Judgment Currency") an amount due in U.S. dollars under this
Warrant, the conversion shall be made at the Exchange Rate prevailing on the
Business Day immediately preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the
courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such conversion is made
pursuant to this Section 20(a)(ii) being hereinafter referred to as the
"Judgment Conversion Date").
(b)
If in the case of any proceeding in the court of any jurisdiction referred to in
Section 20(a)(ii) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of U.S. dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt
and shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Warrant.
- 19 -
21. CERTAIN DEFINITIONS.
For purposes of this Warrant, the following terms shall have the following
meanings:
(a)
"1933 Act" means the Securities Act of 1933, as amended.
(b)
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
"control" of a Person means the power directly or indirectly either to vote 10%
or more of the shares having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
(c)
"Approved Share Plan" means any employee benefit plan which has been
approved by the board of directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer or director for
services provided to the Company.
(d)
"Black Scholes Value" means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the "OV" function on Bloomberg
determined as of the day immediately following the public announcement of the
applicable Fundamental Transaction, or, if the Fundamental Transaction is not
publicly announced, the date the Fundamental Transaction is consummated, for
pricing purposes and reflecting (i) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the remaining term of this Warrant
as of such date of request, (ii) an expected volatility equal to the 100 day
volatility obtained from the HVT function on Bloomberg as of the day immediately
following the public announcement of the applicable Fundamental Transaction, or,
if the Fundamental Transaction is not publicly announced, the date the
Fundamental Transaction is consummated, (iii) the underlying price per share
used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being
offered in the Fundamental Transaction, (iv) a zero cost of borrow and (v) a 360
day annualization factor.
(e)
"Bloomberg" means Bloomberg Financial Markets.
(f)
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York or Toronto, Canada are authorized
or required by law to remain closed.
(g)
"Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or
last trade price, respectively, of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or,
if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 12. All such determinations to be appropriately adjusted for any share
dividend, share split, share consolidation, reclassification or other similar
transaction during the applicable calculation period.
- 20 -
(h)
"Common Shares" means (i) the Company's common shares, without nominal or
par value and (ii) any share capital into which such Common Shares shall have
been changed or any share capital resulting from a reclassification of such
Common Shares.
(i)
"Convertible Securities" means any shares or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for Common Shares.
(j)
"Eligible Market" means the TSX and one of the following: The New York
Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The
NASDAQ Capital Market or the NYSE MKT LLC.
(k)
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l)
"Exchange Rate" means, in relation to any amount of currency to be
converted into U.S. dollars pursuant to this Warrant, the U.S. dollar exchange
rate as published in the Wall Street Journal on the relevant date of calculation
(it being understood and agreed that where an amount is calculated with
reference to, or over, a period of time, the date of calculation shall be the
final date of such period of time).
(m)"Excluded
Securities" means any Common Shares issued or issuable: (i) in connection
with any Approved Share Plan, (ii) pursuant to the terms of the SPA Securities
(including, without limitation, pursuant to a Company Conversion (as defined in
the SPA Securities) or upon exercise of the SPA Warrants; provided, that
the terms of such SPA Securities or SPA Warrants are not amended, modified or
changed on or after the Subscription Date and (iii) upon exercise of any Options
or Convertible Securities which are outstanding on the day immediately preceding
the Subscription Date; provided, that the terms of such Options or
Convertible Securities are not amended, modified or changed on or after the
Subscription Date.
- 21 -
(n)
"Expiration Date" means the date thirty-six (36) months after the
Issuance Date or, if such date falls on a day other than a Business Day or on
which trading does not take place on the Principal Market (a "Holiday"),
the next day that is not a Holiday.
(o)
"Fundamental Transaction" means (A) that the Company shall, directly or
indirectly, including through Subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its "significant subsidiaries" (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Shares be subject to or party to one or more
Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of at least either (x) 50% of the outstanding Common Shares, (y)
50% of the outstanding Common Shares calculated as if any Common Shares held by
all Subject Entities making or party to, or Affiliated with any Subject Entities
making or party to, such purchase, tender or exchange offer were not
outstanding; or (z) such number of Common Shares such that all Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to,
such purchase, tender or exchange offer, become collectively the beneficial
owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the
outstanding Common Shares, or (iv) consummate a share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more Subject
Entities whereby such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding Common Shares, (y) at least
50% of the outstanding Common Shares calculated as if any Common Shares held by
all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such share purchase agreement or other business
combination were not outstanding; or (z) such number of Common Shares such that
the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding Common
Shares, or (v) reorganize, recapitalize or reclassify its Common Shares, (B)
that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding Common Shares, merger,
consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or
otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Shares, (y)
at least 50% of the aggregate ordinary voting power represented by issued and
outstanding Common Shares not held by all such Subject Entities as of the date
of this Warrant calculated as if any Common Shares held by all such Subject
Entities were not outstanding, or (z) a percentage of the aggregate ordinary
voting power represented by issued and outstanding Common Shares or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their Common Shares without approval of the
shareholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any
other instrument or transaction structured in a manner to circumvent, or that
circumvents, the intent of this definition in which case this definition shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this
definition or any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or transaction.
- 22 -
(p)
"Group" means a "group" as that term is used in Section 13(d) of the
Exchange Act and as defined in Rule 13d-5 thereunder.
(q)
"Lead Investor" means one or more Affiliates of Gramercy Funds Management
LLC.
(r)
"Offshore Transaction" means "offshore transaction" as defined in
Regulation S under the 1933 Act;
(s)
"Option Value" means the value of an Option based on the Black and
Scholes Option Pricing model obtained from the "OV" function on Bloomberg
determined as of (A) the Trading Day prior to the public announcement of the
issuance of the applicable Option, if the issuance of such Option is publicly
announced or (B) the Trading Day immediately following the issuance of the
applicable Option if the issuance of such Option is not publicly announced, for
pricing purposes and reflecting (i) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the remaining term of the
applicable Option as of the applicable date of determination, (ii) an expected
volatility equal to the 100 day volatility obtained from the HVT function on
Bloomberg as of (A) the Trading Day immediately following the public
announcement of the applicable Option if the issuance of such Option is publicly
announced or (B) the Trading Day immediately following the issuance of the
applicable Option if the issuance of such Option is not publicly announced,
(iii) the underlying price per share used in such calculation shall be the
highest Weighted Average Price of the Common Shares during the period beginning
on the Trading Day prior to the execution of definitive documentation relating
to the issuance of the applicable Option and ending on (A) the Trading Day
immediately following the public announcement of such issuance, if the issuance
of such Option is publicly announced or (B) the Trading Day immediately
following the issuance of the applicable Option if the issuance of such Option
is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day
annualization factor.
(t)
"Options" means any rights, warrants or options to subscribe for or
purchase Common Shares or Convertible Securities.
(u)
"Parent Entity" of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common capital or
equivalent equity security is quoted or listed on the Eligible Markets (or, if
so elected by the Required Holders, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Required Holders or in the absence of such
designation, such Person or entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.
- 23 -
(v)
"Person" means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any
other entity and a government or any department or agency thereof.
(w)"Principal
Market" means the TSX, or, if the TSX is not the principal trading market
for the Common Shares in Canada, then on the NYSE MKT LLC, or if the NYSE MKT
LLC is not the principal trading market for the Common Shares, then on the
principal securities exchange or securities market on which the Common Shares
are then traded.
(x)
"Required Holders" means the holders of the SPA Warrants representing at
least a majority of the Common Shares underlying the SPA Warrants then
outstanding and shall include the Lead Investor so long as the Lead Investor or
any of its Affiliates holds any SPA Warrants.
(y)
"SPA Securities" means the Notes issued pursuant to the Securities
Purchase Agreement.
(z)
"Subject Entity" means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.
(aa)
"Successor Entity" means one or more Person or Persons (or, if so elected
by the Holder, the Company or Parent Entity) formed by, resulting from or
surviving any Fundamental Transaction or one or more Person or Persons (or, if
so elected by the Holder, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(bb)
"Trading Day" means any day on which the Common Shares are traded on the
Principal Market, or if the Principal Market is not the principal trading market
for the Common Shares, then on the principal securities exchange or securities
market on which the Common Shares are then traded; provided that "Trading
Day" shall not include any day on which the Common Shares are scheduled to trade
on such exchange or market for less than 4.5 hours or any day that the Common
Shares are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).
(cc)
"TSX" means the Toronto Stock Exchange.
(dd)
"U.S. Person" means U.S. person as defined in Regulation S under the 1933
Act.
- 24 -
(ee)
"Weighted Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), as reported by
Bloomberg through its "Volume at Price" function or, if the foregoing does
not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time (or
such other time as such market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other time as such
market publicly announces is the official close of trading), as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 12 with the
term "Weighted Average Price" being substituted for the term "Exercise Price."
All such determinations shall be appropriately adjusted for any share dividend,
share split, share consolidation, reclassification or other similar transaction
during the applicable calculation period.
[Signature Page Follows]
- 25 -
IN WITNESS
WHEREOF, the Company has caused this Warrant to Purchase Common Shares
to be duly executed as of the Issuance Date set out above.
BANRO CORPORATION
By:
___________________________
Name:
Title:
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON SHARES
BANRO CORPORATION
The undersigned holder (the
"Holder") hereby exercises the right to purchase _________________ of the
Common Shares ("Warrant Shares") of Banro Corporation, a Canadian
corporation (the "Company"), evidenced by the attached Warrant to
Purchase Common Shares (the "Warrant"). Capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth in the
Warrant.
1. Form of Exercise Price. The
Holder intends that payment of the Exercise Price shall be made as:
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__________ |
a "Cash Exercise" with respect to
Warrant Shares; and/or |
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__________ |
a "Cashless Exercise" with respect to
Warrant Shares. |
2. Payment of Exercise Price. In
the event that the holder has elected a Cash Exercise with respect to some or
all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of CAN$___________________ to the Company in
accordance with the terms of the Warrant.
3. The Holder hereby acknowledges
that the following legends will be placed on the certificates representing the
Warrant Shares being acquired if the Warrants are exercised prior to December 19,
2014.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE DECEMBER 19, 2014.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE
TRADED THROUGH THE FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE,
AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD
DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE TSX.
4. Check one box:
[ ] (a) The Holder represents
that it is exercising the Warrants in an “offshore transaction” as defined in
Regulation S under the United States Securities Act of 1933, as amended (the
“1933 Act”) and is not a “U.S. Person” as defined in Regulation S (a
“U.S. Person”) and is not exercising the Warrants on behalf of a U.S.
Person.
[ ] (b) The Holder has included
with this notice of exercise an opinion of counsel (which must be reasonably
satisfactory in form and substance to the Company) that an exemption from
registration under the 1933 Act is available for exercise of this Warrant.
5. The Holder understands that
the Common Shares issuable upon exercise of the Warrant have not been and will
not be registered under the 1933 Act, and if the undersigned holder agrees that
if it decides to offer, sell or otherwise transfer the Warrant Shares, the
Warrant Shares may be offered, sold or otherwise transferred only (A) to the
Company, (B) outside the United States in compliance with Regulation S under the
1933 Act and within Canada or elsewhere in compliance with local law, or (C)
within the United States (i) pursuant to an effective registration statement
under the 1933 Act, (ii) in accordance with an exemption from registration under
the 1933 Act provided by Rule 144 or Rule 144A thereunder, if available, and in
compliance with applicable state securities laws , or (3) in a transaction that
does not require registration under the 1933 Act or applicable state securities
laws.
6. Delivery of Warrant Shares.
The Company shall deliver to the holder __________ Warrant Shares in accordance
with the terms of the Warrant.
7. The Holder represents and
warrants that it, together with any Person which whom the Holder is acting
jointly or in concert holds ________________ Common Shares.
Note: A party will be deemed to be acting jointly or in
concert with another party if such party is an affiliate of such other party, or
if as a result of an agreement, commitment or understanding with such other
party, such party acquires securities of the same class or offers to buy
securities of the same class. Further, two or more parties will be presumed to
be acting jointly or in concert if, as a result of an agreement, commitment or
understanding with that person, such parties elect to exercise jointly any
voting rights attached to any securities.
Date: _______________ __, ______
______________________________
Name of Registered Holder
By:
___________________________
Name:
Title:
Note: If a holder does not make the representation set forth
in paragraph 4(a) above in connection with an exercise of this Warrant, it must
deliver an opinion of counsel in form and substance satisfactory to the Company
that an exemption from registration is available under the 1933 Act. Further, if
Warrants are exercised in a Cash Exercise and the representation in paragraph
4(a) is not made, the resulting Warrant Shares may be “restricted securities” as
defined in Rule 144 under the 1933 Act, and may bear a legend restricting
transfer.
ACKNOWLEDGMENT
The Company hereby acknowledges
this Exercise Notice and hereby directs Equity Financial Trust Company to issue
the above indicated number of Common Shares in accordance with the Transfer
Agent Instructions dated August 18, 2014 from the Company and acknowledged and
agreed to by Equity Financial Trust Company.
BANRO CORPORATION
By:
________________________________
Name:
Title:
GUARANTY
GUARANTY, dated as of August
18, 2014 made by each of the undersigned (each a "Guarantor", and
collectively, the "Guarantors"), in favor of the "Buyers" (as defined
below) party to the Securities Purchase Agreement referenced below.
W I T N E S S E T H :
WHEREAS, Banro Corporation, a
company organized under the federal laws of Canada (the "Company"), and
each party listed as a "Buyer" on the Schedule of Buyers attached to the
Securities Purchase Agreement (each a "Buyer", and collectively, the
"Buyers"), are parties to that certain Securities Purchase Agreement,
dated as of August 18, 2014 (as amended, restated, supplemented or otherwise
modified from time to time, the "Securities Purchase Agreement") pursuant
to which, among other things, the Buyers shall purchase from the Company certain
Parity Notes and certain Priority Notes (each as defined in the Securities
Purchase Agreement) (as amended, restated, supplemented or otherwise modified
from time to time, collectively, the "Notes");
WHEREAS, the Buyers have
requested, and the Guarantors have agreed, that the Guarantors shall execute and
deliver to the Buyers, a guaranty guaranteeing all of the obligations of the
Company under the Securities Purchase Agreement, the Notes, the Collateral
Documents (as hereinafter defined) and the other "Transaction Documents" (as
defined in the Securities Purchase Agreement) (collectively, the "Transaction
Documents");
WHEREAS, the Company
issued 10% senior secured notes due 2017 under an indenture dated as of March 2,
2012 (as may be amended, restated, modified or supplemented from time to time,
the "Indenture") among the Company, the guarantors named on the signature
page thereto, and Equity Financial Trust Company as trustee and collateral
agent.
WHEREAS, in connection with the
transactions pursuant to the Indenture, the Company entered into a collateral
trust agreement dated as of March 2, 2012 (as may be amended, restated, modified
or supplemented from time to time the "Collateral Trust Agreement") among
the Company, the initial guarantors named on the signature pages thereto, and
Equity Financial Trust Company, as indenture trustee and collateral agent (in
such capacity, and as such capacity is further broadened in the Collateral Trust
Agreement, the "Collateral Agent").
WHEREAS, the Collateral Trust
Agreement sets forth the terms on which each Parity Lien Secured Party and each
future Priority Lien Secured Party (as such terms are defined therein) appoint
the Collateral Agent to act as the trustee for the present and future holders of
the Parity Lien Obligations and Priority Lien Obligations (as such terms are
defined therein), respectively, to receive, hold, maintain, administer and
distribute any collateral delivered to the Collateral Agent and to enforce the
collateral documents described in Schedule 1 (such documents set forth in
Schedule 1, as may be updated from time to time, are collectively, the
"Collateral Documents") and granted in favor of the Collateral Agent.
WHEREAS, upon compliance with the
procedures set forth in Section 3.8 of the Collateral Trust Agreement, including
the execution by the Priority Debt Representative (as defined in the Securities
Purchase Agreement) of the collateral trust joinder in the form attached to the
Collateral Trust Agreement and to the Securities Purchase Agreement as Exhibit H (the "Priority Joinder"), the Initial Priority Notes and
the Additional Priority Notes (each as defined in the Securities Purchase
Agreement) will be designated as Priority Lien Debt (as such term is defined in
the Collateral Trust Agreement) creating Priority Lien Obligations, will rank
senior to all outstanding and future indebtedness of the Company and its
Subsidiaries (as defined in the Securities Purchase Agreement), including the
Parity Lien Debt (as such term is defined in the Collateral Trust Agreement),
and will be secured by a Priority Lien (as such term is defined in the
Collateral Trust Agreement) on a pari passu basis with all previously existing
Priority Lien Debt, in all of the current and future assets of the Company and
its direct and indirect Subsidiaries, currently formed or formed in the future,
as evidenced by the Collateral Documents.
WHEREAS, upon compliance with the
procedures set forth in Section 3.8 of the Collateral Trust Agreement, including
the execution by the Parity Debt Representative (as defined in the Securities
Purchase Agreement) of the collateral trust joinder in the form attached to the
Collateral Trust Agreement and to the Securities Purchase Agreement as Exhibit I (the "Parity Joinder" and together with the
Priority Joinder, the "Joinders"), the Initial Parity Notes will be
Parity Lien Debt (as such term is defined in the Collateral Trust Agreement)
creating Parity Lien Obligations, will rank senior to all outstanding and future
indebtedness of the Company and its Subsidiaries other than the Priority Lien
Debt, and will be secured by a Parity Lien (as such term is defined in the
Collateral Trust Agreement) on a pari passu basis with all previously existing
Parity Lien Debt, in all of the current and future assets of the Company and its
direct and indirect Subsidiaries, currently formed or formed in the future, as
evidenced by the Collateral Documents.
WHEREAS, each Guarantor confirms
that (a) the Company is the sole holder of all of the issued and outstanding
common shares of Banro Group (Barbados) Limited solely entitled to exercise
voting rights to elect a majority of the directors of Banro Group (Barbados)
Limited, and (b) Banro Group (Barbados) Limited is the sole holder of all of the
issued and outstanding shares of each of Banro Congo (Barbados) Limited,
Lugushwa (Barbados) Limited, Namoya (Barbados) Limited, Twangiza (Barbados)
Limited and Kamituga (Barbados) Limited (each, a "Second Tier Barbados
Guarantor" and collectively, the "Second Tier Barbados Guarantors")
and Banro Group (Barbados) Limited is solely entitled to exercise voting rights
to elect a majority of the directors of each of such Second Tier Barbados
Guarantors, and as such each Second Tier Barbados Guarantor is directly or
indirectly controlled by the Company (within the meaning of the Companies
Act (Barbados)), and directly or indirectly a wholly-owned subsidiary of the
Company;
WHEREAS, each Guarantor confirms
further that the Company’s obligations under the Notes and the other Transaction
Documents incurred in respect of satisfying payment obligations (on a
consolidated basis), incurred and to be incurred on behalf of each of the
Guarantors;
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WHEREAS, each Guarantor has
determined that the execution, delivery and performance of this Guaranty
directly benefits, and is in the best interest of, such Guarantor;
NOW, THEREFORE, in consideration
of the premises and the agreements herein and for other consideration, the
sufficiency of which is hereby acknowledged, each Guarantor hereby agrees with
each Buyer as follows:
SECTION 1. Definitions.
Reference is hereby made to the Securities Purchase Agreement and the Notes. All
terms used in this Guaranty, which are defined in the Securities Purchase
Agreement or the Notes and not otherwise defined herein, shall have the same
meanings herein as set forth therein.
SECTION 2. Guaranty. The
Guarantors, jointly and severally, hereby unconditionally and irrevocably,
guaranty to the Collateral Agent, for the benefit of the Buyers (a) the punctual
payment, present or future, direct or indirect, absolute or contingent, as and
when due and payable, by stated maturity or otherwise, of all obligations and
any other amounts now or hereafter owing by the Company in respect of the
Securities Purchase Agreement, the Notes, the Collateral Documents and the other
Transaction Documents, and the transactions contemplated thereby, including,
without limitation, all interest that accrues after the commencement of any
proceeding commenced by or against any the Company or any Guarantor under any
provision of the Bankruptcy and Insolvency Act (Canada), the Companies
Creditors Arrangement Act (Canada), the Winding-up and Restructuring
Act (Canada) or the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief (an "Insolvency Proceeding"),
whether or not the payment of such interest is unenforceable or is not allowable
due to the existence of such Insolvency Proceeding, and all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to become
due under any of the Transaction Documents, and any and all expenses (including
reasonable counsel fees and expenses) reasonably incurred by the Buyers or the
Collateral Agent in enforcing any rights under this Guaranty (such obligations,
to the extent not paid by the Company, being the "Guaranteed
Obligations") and (b) the punctual and faithful performance, keeping,
observance and fulfillment by the Company of all of the agreements, conditions,
covenants and obligations of the Company contained in the Securities Purchase
Agreement, the Notes, the Collateral Documents and the other Transaction
Documents and the transactions contemplated thereby. Without limiting the
generality of the foregoing, each Guarantor's liability hereunder shall extend
to all amounts that constitute part of the Guaranteed Obligations and would be
owed by the Company to the Buyers under the Securities Purchase Agreement and
the Notes but for the fact that they are unenforceable or not allowable due to
the existence of an Insolvency Proceeding involving any Guarantor or the Company
(each, a "Transaction Party").
In the event that under any
applicable law (including a law, rule or regulation (a) limiting or restricting
the giving by a Guarantor of financial assistance by way of guarantee to the
Company, (b) relating to fraudulent conveyance or fraudulent transfer (or any
laws of similar application), or (c) enforcing currency controls in any
jurisdiction) limiting the amount of financial assistance that any Guarantor is
permitted to provide in favor of the Company, then the amount recoverable from
such Guarantor under this Guaranty in respect of the Guaranteed Obligations and all other amounts due hereunder shall be
limited to the maximum amount permitted under such applicable law; provided
that the application of such limitation in any specific case (in respect of
the Guaranteed Obligations) shall not restrict or limit the ability of the
Buyers, to claim in full the Guaranteed Obligations and all amounts due
hereunder against any other Guarantor or against such Guarantor where (a) there
is no law, rule or regulation which limits the amount of financial assistance
that such Guarantor is permitted to provide in favor of the Company, or (b)
there is an applicable exception to any limitation on the amount of financial
assistance which such Guarantor is permitted to provide in favor of any of the
Company.
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SECTION 3. Indemnity.
If any or all of the Guaranteed
Obligations are not duly performed by the Company and are not performed by any
Guarantor under Section 2 for any reason whatsoever, each Guarantor will,
as a separate and distinct obligation, indemnify and save harmless the
Collateral Agent, for the benefit of each Buyer, from and against all losses
resulting from the failure of the Company to duly perform such Guaranteed
Obligations.
SECTION 4. Guaranty Absolute;
Continuing Guaranty; Assignments.
(a) The Guarantors, jointly and
severally, guaranty that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Transaction Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Collateral Agent or the Buyers with respect
thereto. The obligations of each Guarantor under this Guaranty are independent
of the Guaranteed Obligations, and a separate action or actions may be brought
and prosecuted against any Guarantor to enforce such obligations, irrespective
of whether any action is brought against any Transaction Party or whether any
Transaction Party is joined in any such action or actions. The liability of any
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives, to the extent
permitted by law, any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(i)
any lack of validity or enforceability of any Transaction Document or any
agreement or instrument relating thereto;
(ii)
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations, or any other amendment or waiver of or
any consent to departure from any Transaction Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Transaction Party or otherwise;
(iii)
any taking, exchange, release or non-perfection of any collateral with respect
to the Guaranteed Obligations, or any taking, release or amendment or waiver of
or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations; or
(iv)
any change, restructuring or termination of the corporate, limited liability
company or partnership structure or existence of any Transaction Party.
- 4 -
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Collateral Agent
or any Buyer or any other Person upon the insolvency, bankruptcy or
reorganization of any Transaction Party or otherwise, all as though such payment
had not been made.
(b) This Guaranty is a continuing
guaranty and shall (i) remain in full force and effect until the indefeasible
payment in full in cash of all obligations under the Notes (together with any
matured indemnification obligations as of the date of such payment, but
excluding any inchoate or unmatured contingent indemnification obligations) and
payment of all other amounts payable under this Guaranty (excluding any inchoate
or unmatured contingent indemnification obligations) and (ii) be binding upon
each Guarantor and its respective successors and assigns. This Guaranty shall
inure to the benefit of and be enforceable by the Collateral Agent, the Buyers
and their respective successors, and permitted pledgees, transferees and
assigns. Without limiting the generality of the foregoing sentence, any Buyer
may pledge, assign or otherwise transfer all or any portion of its rights and
obligations under and subject to the terms of any Transaction Document to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Buyer herein or otherwise, in each
case as provided in the Securities Purchase Agreement or such Transaction
Document. Notwithstanding the foregoing and for the avoidance of doubt, this
Guaranty will expire and each Guarantor will be released from its obligation
hereunder upon the indefeasible payment in full in cash of all obligations under
the Notes (together with any matured indemnification obligations as of the date
of such payment, but excluding any inchoate or unmatured contingent
indemnification obligations) and payment of all other amounts payable under this
Guaranty (excluding any inchoate or unmatured contingent indemnification
obligations).
SECTION 5. Waivers. To the
extent permitted by applicable law, each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Buyers or
the Collateral Agent exhaust any right or take any action against any
Transaction Party or any other Person or any Collateral (as defined in the
Collateral Trust Agreement). Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 5 is knowingly made in
contemplation of such benefits. The Guarantors hereby waive any right to revoke
this Guaranty, and acknowledge that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
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SECTION 6. Subrogation. No
Guarantor may exercise any rights that it may now or hereafter acquire against
any Transaction Party or any other guarantor that arise from the existence,
payment, performance or enforcement of any Guarantor's obligations under this
Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Buyers or the Collateral Agent against
any Transaction Party or any other guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from any
Transaction Party or any other guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security solely on account of such claim,
remedy or right, unless and until the indefeasible payment in full in cash of
all obligations under the Notes (together with any matured indemnification
obligations as of the date of such payment, but excluding any inchoate or
unmatured contingent indemnification obligations) and payment of all other
amounts payable under this Guaranty (excluding any inchoate or unmatured
contingent indemnification obligations). If any amount shall be paid to a
Guarantor in violation of the immediately preceding sentence at any time prior
to the later of the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Guaranty, such amount shall be held in
trust for the benefit of the Buyers and shall forthwith be paid ratably to the
Buyers to be credited and applied to the Guaranteed Obligations and all other
amounts payable under this Guaranty, whether matured or unmatured, in accordance
with the terms of the Transaction Document, or to be held as collateral for any
Guaranteed Obligations or other amounts payable under this Guaranty thereafter
arising. If (a) any Guarantor shall make payment to the Buyers of all or any
part of the Guaranteed Obligations, and (b) the Buyers receive the indefeasible
payment in full in cash of all obligations under the Notes (together with any
matured indemnification obligations as of the date of such payment, but
excluding any inchoate or unmatured contingent indemnification obligations) and
payment of all other amounts payable under this Guaranty (excluding any inchoate
or unmatured contingent indemnification obligations), the Buyers will, at such
Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.
SECTION 7. Representations,
Warranties and Covenants.
(a) Each Guarantor hereby
represents and warrants as of the date first written above as follows:
(i)
Each Guarantor (A) is a corporation, limited liability company or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization as set forth on the signature pages
hereto, (B) has all requisite corporate, limited liability company or limited
partnership power and authority to conduct its business as now conducted and as
presently contemplated and to execute and deliver this Guaranty and each other
Transaction Document to which such Guarantor is a party, and to consummate the
transactions contemplated hereby and thereby and (C) is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary except where the failure to be so qualified
would not result in a Material Adverse Effect.
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(ii)
The execution, delivery and performance by each Guarantor of this Guaranty and
each other Transaction Document to which such Guarantor is a party (A) have been
duly authorized by all necessary corporate, limited liability company or limited
partnership action, (B) do not and will not contravene its charter or by-laws,
its limited liability company or operating agreement or its certificate of
partnership or partnership agreement or any other applicable constating
documents, or any applicable law or any contractual restriction binding on such
Guarantor or its properties do not and will not result in or require the
creation of any lien (other than pursuant to any Transaction Document) upon or with
respect to any of its properties, and (C) do not and will not result in any
default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to it or its operations or any of its properties.
(iii)
No authorization or approval or other action by, and no notice to or filing
with, any governmental authority is required in connection with the due
execution, delivery and performance by such Guarantor of this Guaranty or any of
the other Transaction Documents to which such Guarantor is a party (other than
expressly provided for in any of the Transaction Documents).
(iv)
Each of this Guaranty and the other Transaction Documents to which each
Guarantor is or will be a party, when delivered, will be, a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
other similar laws and equitable principles (regardless of whether enforcement
is sought in equity or at law).
(v)
There is no pending or, to the best knowledge of each Guarantor, threatened
action, suit or proceeding against such Guarantor or to which any of the
properties of such Guarantor is subject, before any court or other governmental
authority or any arbitrator that (A) if adversely determined, could reasonably
be expected to have a Material Adverse Effect or (B) relates to this Guaranty or
any of the other Transaction Documents to which such Guarantor is a party or any
transaction contemplated hereby or thereby.
(vi)
Each Guarantor (A) has read and understands the terms and conditions of the
Securities Purchase Agreement, the Notes and the other Transaction Documents,
and (B) now has and will continue to have independent means of obtaining
information concerning the affairs, financial condition and business of the
Company and the other Transaction Parties, and has no need of, or right to
obtain from the Collateral Agent or any Buyer, any credit or other information
concerning the affairs, financial condition or business of the Company or the
other Transaction Parties that may come under the control of the Collateral
Agent or any Buyer.
(b) Each Guarantor covenants and
agrees that until the indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the
date of such payment, but excluding any inchoate or unmatured contingent
indemnification obligations) and payment of all other amounts payable under this
Guaranty (excluding any inchoate or unmatured contingent indemnification
obligations), it will comply with each of the covenants (except to the extent
applicable only to a public company) which are set forth in Section 4 of the
Securities Purchase Agreement as if such Guarantor were a party thereto.
SECTION 8. Right of
Set-off. Upon the occurrence and during the continuance of any Event of
Default, the Collateral Agent and any Buyer may, and is hereby authorized to, at
any time and from time to time, without notice to the Guarantors (any such
notice being expressly waived by each Guarantor) and to the fullest extent
permitted by law, set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by any Buyer to or for the credit or the account of any Guarantor against any
and all obligations of the Guarantors now or hereafter existing under this
Guaranty or any other Transaction Document, irrespective of whether or not
Collateral Agent or any Buyer shall have made any demand under this Guaranty or
any other Transaction Document and although such obligations may be contingent
or unmatured. Collateral Agent and each Buyer agrees to notify the relevant
Guarantor promptly after any such set-off and application made by such Buyer,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Collateral Agent or any Buyer
under this Section 8 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Collateral
Agent or such Buyer may have under this Guaranty or any other Transaction
Document in law or otherwise.
- 7 -
SECTION 9. Notices, Etc. All notices and other communications provided for hereunder shall be in
writing and shall be mailed (by overnight mail or by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to any
Guarantor, to the address for such Guarantor set forth on the signature page
hereto, or if to any Buyer, to it at its respective address set forth in the
Securities Purchase Agreement; or as to any Person at such other address as
shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective as set forth in Section 9(f)
of the Securities Purchase Agreement.
SECTION 10. CONSENT TO
JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GUARANTOR HEREBY IRREVOCABLY
ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE BUYERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH GUARANTOR IN ANY
OTHER JURISDICTION. ANY GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GUARANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS.
- 8 -
SECTION 11. WAIVER OF JURY
TRIAL, ETC. EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY OR
THE OTHER TRANSACTION DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY OR THE OTHER TRANSACTION
DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GUARANTOR CERTIFIES THAT NO
OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY COLLATERAL AGENT OR BUYER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY BUYER WOULD NOT, IN THE EVENT OF
ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.
EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE BUYERS ENTERING INTO THE OTHER TRANSACTION DOCUMENTS.
SECTION 12. Taxes.
(a) All payments or other
transfers of property or rights by any Guarantor to the Buyers in regard or in
connection with this Agreement, the other Transaction Documents or any of the
Securities (including the payment or the accrual of interest) shall be made free
and clear of and without deduction for any present or future income, excise,
stamp, documentary, property or franchise taxes and any other taxes, levies,
fees, duties, withholdings or other charges of any nature whatsoever
("Taxes"), of any governmental agency or authority in Barbados, Canada,
the Democratic Republic of Congo or the United States of America, and including
any stamp taxes or any other similar taxes which may be required for enforcement
purposes or any stamp tax due upon issuance of the Common Shares issuable upon
exercise of the Warrants. In the event that any withholding or deduction from
any interest, distribution, accrual or payment to be made by any Guarantor
hereunder, the other Transaction Documents or any of the Securities is required
in respect of any Taxes pursuant to any applicable law, rule or regulation
(determined, unless otherwise mutually agreed by the Company and the relevant
Buyers, on the assumption that the payor is not entitled to determine such
withholding or deduction requirement by "looking through" any partnership or
other fiscally transparent entity), then such Guarantor shall promptly:
(1)
pay directly or caused to be paid directly to the relevant authority the full
amount required to be so withheld or deducted;
(2)
forward to the applicable Buyer an official receipt or other documentation
satisfactory to such Buyer evidencing such payment to such authority promptly
after receipt of the same; and
(3)
except as provided in (b) below, pay to the applicable Buyer such additional
amount or amounts as is necessary to ensure that the net amount actually received by such Buyer will equal the full amount such Buyer
would have received had no such withholding or deduction been required.
- 9 -
(b) The Company and the
Subsidiaries will not be required to pay any additional amounts under (a)(3)
above to any Buyer, or be obligated to indemnify the Collateral Agent or any
Buyer under (d) below, in respect of any Taxes or Further Taxes (as defined
below):
(1)
imposed on, or deducted or withheld from, payments in respect of the Securities
to a Buyer or a beneficial owner of Securities by reason of the existence of any
present or former connection (including, without limitation, carrying on
business or having a permanent establishment or fixed base) between such Buyer
or beneficial owner (or between a fiduciary, settlor, beneficiary, member,
shareholder or other equity owner of, or possessor of power over, such
beneficial owner, if such beneficial owner is an estate, trust, partnership,
limited liability company, corporation or other entity) and the taxing
jurisdiction (including, without limitation, any Taxes imposed on such Buyer or
beneficial owner’s net income) other than connections solely arising from such
recipient having executed, delivered, become a party to, performed obligations
under, received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to, or enforced any Securities, or
sold or assigned an interest in any Security;
(2)
imposed on or measured by the Buyer’s or beneficial owner’s overall net income
or capital, branch taxes or franchise taxes, under the laws of which the Buyer
or beneficial owner is organized, centrally managed, controlled or in which it
maintains a lending office;
(3)
imposed on, or deducted or withheld from, payments in respect of the Securities
to a Buyer or beneficial owner as a result of the failure of such Buyer or
beneficial owner to take commercially reasonable steps to comply with any
applicable certification, identification, information, documentation, or similar
reporting requirements concerning the nationality, residence, entitlement to
treaty benefits, identity or connection with the relevant taxing jurisdiction of
such Buyer or beneficial owner (except to the extent that such failure to comply
arises from the Buyer or beneficial owner not being in possession of sufficient
information to effect such compliance); or
(4)
any combination of items (1) through (3).
(c) Each Guarantor further agrees
that if any present or future taxes, fees, duties, withholdings or other charges
of any nature whatsoever imposed by any taxing authority in Barbados, Canada,
the Democratic Republic of Congo or the United States of America, including
franchise taxes and taxes imposed on or measured by any Buyer's net income or
receipts ("Further Taxes") are directly or indirectly asserted against
such Buyer with respect to any payment of any additional amount described in
paragraph (a)(3) and received by such Buyer hereunder, such Buyer may pay such
Further Taxes and the applicable Guarantor will promptly pay to such Buyer such
additional amounts (including all penalties, interest or expenses) that such
Buyer specifies as necessary to preserve the after-tax return that such Buyer
would have received if such Taxes or Further Taxes had not been imposed.
- 10 -
(d) If any Guarantor fails to pay
any Taxes described in (a), above, when due to the appropriate taxing authority
or fails to remit to the applicable Buyer the required receipts or other
required documentary evidence for such payment of Taxes or fails to pay to the
applicable Buyer the additional amounts as described in (i)(3), above, the
Guarantors shall jointly and severally indemnify such Buyer for any incremental
Taxes, interest, penalties, unpaid additional amounts, expenses and costs that
may become payable or are incurred by such Buyer as a result of any such
failure. In addition to the foregoing, the Guarantors hereby jointly and
severally indemnify and hold each Buyer harmless for any and all payments made
by any Buyer of any Taxes and Further Taxes and for any liabilities (including
penalties, interest, legal costs and expenses) incurred by any Buyer or which
may be imposed on any Buyer in connection therewith or any delays in their
payment.
(e) Each Guarantor hereby
indemnifies and agrees to hold the Collateral Agent and each Buyer (each an "Indemnified Party") harmless from and against Taxes or Further Taxes
imposed by Canada, Barbados, the Democratic Republic of the Congo or the United
States of America (and, in the case only of any Taxes or Further Taxes imposed
on amounts payable under this Section 12, by any jurisdiction) paid by
any Indemnified Party as a result of any payment made hereunder or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any other Transaction Document, and any liability
(including penalties, interest and expenses for nonpayment, late payment or
otherwise) arising therefrom or with respect thereto, whether or not such Taxes
or Further Taxes were correctly or legally asserted. This indemnification shall
be paid within 30 days from the date on which such Buyer makes written demand
therefor, which demand shall identify the nature and amount of such Further or
Other Taxes.
(f) If any Guarantor fails to
perform any of its obligations under this Section 12, such Guarantor
shall indemnify the Collateral Agent and each Buyer for any taxes, interest or
penalties that may become payable as a result of any such failure. The
obligations of the Guarantors under this Section 12 shall survive the
termination of this Guaranty and the payment of the Obligations and all other
amounts payable hereunder.
SECTION 13. Judgment
Currency. If for the purpose of obtaining or enforcing judgment against any
Guarantor in any court in any jurisdiction it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 13
referred to as the "Judgment Currency") an amount due in United States
dollars under this Agreement or any other Transaction Documents, the conversion
shall be made at the Exchange Rate prevailing on the Business Day immediately
preceding:
(a) the date of actual payment of
the amount due, in the case of any proceeding in the courts of New York or
Toronto, as the case may be, or in the courts of any other jurisdiction that
will give effect to such conversion being made on such date: or
(b) the date on which the foreign
court determines, in the case of any proceeding in the courts of any other
jurisdiction (the date as of which such conversion is made pursuant to this
Section 13 being hereinafter referred to as the "Judgment Conversion
Date").
- 11 -
(c) If in the case of any
proceeding in the court of any jurisdiction referred to in Section 13(b) above,
there is a change in the Exchange Rate prevailing between the Judgment
Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the
amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of United States
dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on
the Judgment Conversion Date.
(d) Any amount due from a
Guarantor under this provision shall be due as a separate debt and shall not be
affected by judgment being obtained for any other amounts due under or in
respect of this Agreement or any other Transaction Document.
SECTION 14. Miscellaneous.
(a) Each Guarantor will make each
payment hereunder in lawful money of the United States of America and in
immediately available funds to each Buyer, at such address specified by such
Buyer from time to time by notice to the Guarantors.
(b) No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by each Guarantor and each Buyer, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(c) No failure on the part of the
Collateral Agent or any Buyer to exercise, and no delay in exercising, any right
hereunder or under any other Transaction Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder or
under any Transaction Document preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Collateral Agent
and the Buyers provided herein and in the other Transaction Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Collateral Agent and the Buyers under any
Transaction Document against any party thereto are not conditional or contingent
on any attempt by the Collateral Agent or any Buyer to exercise any of their
respective rights under any other Transaction Document against such party or
against any other Person.
(d) Any provision of this
Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
(e) This Guaranty shall (i) be
binding on each Guarantor and its respective successors and assigns, and (ii)
inure, together with all rights and remedies of the Collateral Agent and the
Buyers hereunder, to the benefit of the Collateral Agent and the Buyers and
their respective successors, transferees and assigns. Without limiting the
generality of clause (ii) of the immediately preceding sentence, the Collateral
Agent and any Buyer may assign or otherwise transfer its rights and obligations
under the Securities Purchase Agreement or any other Transaction Document to any
other Person in accordance with the terms thereof, and such other Person shall thereupon become vested with all of the benefits
in respect thereof granted to the Collateral Agent or such Buyer, as the case
may be, herein or otherwise. None of the rights or obligations of any Guarantor
hereunder may be assigned or otherwise transferred without the prior written
consent of each Buyer.
- 12 -
(f) This Guaranty reflects the
entire understanding of the transaction contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, entered into
before the date hereof.
(g) Section headings herein are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
(h) THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 13 -
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed by its respective duly authorized officer, as of the date first
above written.
|
BANRO CONGO MINING SARL, a
Democratic Republic of the Congo corporation |
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By: “Desire
Sangara”
|
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Name: Desire Sangara |
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Title: Director |
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Address for Notices: |
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14, AVENUE SERGEUT MOKE |
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CONCESSION SAFRICAS |
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KINSHASA, NGALIEMA, DRC |
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Facsimile:416-366-7722 |
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LUGUSHWA MINING SARL, a
Democratic Republic of the Congo corporation |
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By: “Desire
Sangara” |
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Name: Desire Sangara |
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Title: Director |
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|
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Address for Notices: |
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14, AVENUE SERGEUT MOKE |
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CONCESSION SAFRICAS |
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KINSHASA, NGALIEMA, DRC |
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Facsimile:416-366-7722
|
Banro Guaranty
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NAMOYA MINING SARL, a Democratic
Republic of the Congo corporation |
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By: “Desire
Sangara” |
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Name: Desire Sangara |
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Title: Director |
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Address for Notices: |
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14, AVENUE SERGEUT MOKE |
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CONCESSION SAFRICAS |
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KINSHASA, NGALIEMA, DRC |
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Facsimile:416-366-7722 |
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TWANGIZA MINING SARL, a
Democratic Republic of the Congo corporation |
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By: “Desire
Sangara” |
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Name: Desire Sangara |
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Title: Director |
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Address for Notices: |
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14, AVENUE SERGEUT MOKE |
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CONCESSION SAFRICAS |
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KINSHASA, NGALIEMA, DRC |
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Facsimile:416-366-7722 |
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KAMITUGA MINING SARL, a
Democratic Republic of the Congo corporation |
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By: “Desire
Sangara” |
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Name: Desire Sangara |
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Title: Director |
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Address for Notices: |
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14, AVENUE SERGEUT MOKE |
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CONCESSION SAFRICAS |
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KINSHASA, NGALIEMA, DRC |
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Facsimile:416-366-7722 |
Banro Guaranty
FORM OF LOCK-UP AGREEMENT
August 18, 2014
Banro Corporation
1 First Canadian Place
100 King
Street West, Suite 7070
Toronto, Ontario, Canada M5X 1E3
Re:
Banro Corporation - Lock-Up Agreement
Dear Sirs:
This
Lock-Up Agreement is being delivered to you in connection with the Securities
Purchase Agreement (the "Purchase Agreement"), dated as of August 18,
2014, by and among Banro Corporation (the "Company"), and the investors
listed on the Schedule of Buyers attached thereto (the "Buyers"), with
respect to (i) the issuance of parity secured notes and priority secured notes
(collectively, the "Notes") and (ii) the issuance of warrants (the
"Warrants"), which are exercisable to purchase common shares of the
Company, no par value (the "Common Shares"). Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement.
In
order to induce the Buyers to enter into the Purchase Agreement, the undersigned
agrees that, commencing on the date hereof and ending on August 18, 2015 (the
"Lock-Up Period"), the undersigned will not, and will cause all
affiliates (as defined in Rule 144) of the undersigned or any person in privity
with the undersigned or any affiliate of the undersigned not to, (i) sell, offer
to sell, contract or agree to sell, hypothecate, pledge, grant any option to
purchase, make any short sale or otherwise dispose of or agree to dispose of,
directly or indirectly, any Common Shares (or equivalent equity securities), or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities and
Exchange Act of 1934, as amended and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder with respect to any Common Shares
(or equivalent equity securities) owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the Securities and Exchange
Commission (collectively, the "Undersigned's Shares"), (ii) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any of the Undersigned's
Shares, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Shares or other securities, in cash or
otherwise, (iii) make any demand for or exercise any right or cause to be filed
a registration statement, including any amendments thereto, with respect to the
registration of any Common Shares (or equivalent equity securities) or (iv)
publicly disclose the intention to do any of the foregoing.
The
foregoing restriction is expressly agreed to preclude the undersigned, and any
affiliate of the undersigned and any person in privity with the undersigned or
any affiliate of the undersigned, from engaging in any hedging or other
transaction which is designed to or which reasonably could be expected to lead
to or result in a sale or disposition of the Undersigned's Shares even if the
Undersigned's Shares would be disposed of by someone other than the undersigned.
Such prohibited hedging or other transactions would include, without limitation,
any short sale or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any of the Undersigned's
Shares or with respect to any security that includes, relates to, or derives any
significant part of its value from the Undersigned's Shares.
Notwithstanding
the foregoing, the undersigned may transfer the Undersigned's Shares (i) as a
bona fide gift or gifts, or by will or intestacy and, provided that the
donee or donees, or transferee or transferees, as applicable, thereof agree to
be bound in writing by the restrictions set forth herein or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this Lock-Up
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. The undersigned now has, and,
except as contemplated by the immediately preceding sentence, for the duration
of this Lock-Up Agreement will have, good and marketable title to the
Undersigned's Shares, free and clear of all liens, encumbrances, and claims
whatsoever. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent (the "Transfer
Agent") and registrar against the transfer of the Undersigned's Shares
except in compliance with the foregoing restrictions.
In
order to enforce this covenant, the Company shall impose irrevocable
stop-transfer instructions preventing the Transfer Agent from effecting any
actions in violation of this LockUp Agreement.
The
undersigned acknowledges that the execution, delivery and performance of this
Lock-Up Agreement is a material inducement to each Buyer to complete the
transactions contemplated by the Purchase Agreement and that the Company shall
be entitled to specific performance of the undersigned's obligations hereunder.
The undersigned hereby represents that the undersigned has the power and
authority to execute, deliver and perform this Lock-Up Agreement, that the
undersigned has received adequate consideration therefor and that the
undersigned will indirectly benefit from the closing of the transactions
contemplated by the Purchase Agreement.
The
undersigned understands and agrees that this Lock-Up Agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors, and assigns.
This
Lock-Up Agreement may be executed in two counterparts, each of which shall be
deemed an original but both of which shall be considered one and the same
instrument.
This Lock-Up Agreement will be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflicting provision or rule (whether of the
State of New York, or any other jurisdiction) that would cause the laws of any
2
jurisdiction other than the State of New York to be applied. In
furtherance of the foregoing, the internal laws of the State of New York will
control the interpretation and construction of this LockUp Agreement, even if
under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
[Remainder of page intentionally left blank]
3
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Very truly yours, |
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Exact Name of Signatory |
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Authorized Signature |
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Title |
Agreed to and Acknowledged:
BANRO CORPORATION
By:
_______________________
Name:
Title:
4
FORM 51-102F3 – MATERIAL CHANGE REPORT
| 1. |
Name and Address of
Company |
Banro Corporation (“Banro” or
the “Company”)
1 First Canadian Place
Suite 7070, 100 King Street
West
Toronto, Ontario
M5X 1E3
| 2. |
Date of Material Change |
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August 18, 2014 |
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| 3. |
News Release |
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The news release (the "News Release") attached
hereto as Schedule "A" was issued through Marketwired on August 18,
2014. |
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| 4. |
Summary of Material Change |
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See the attached News Release, which News Release is incorporated herein. |
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| 5. |
Full Description of Material Change |
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5.1 |
Full Description of Material Change |
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See the attached News Release, which News Release is
incorporated herein. |
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5.2 |
Disclosure for Restructuring
Transactions |
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Not applicable. |
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| 6. |
Reliance on subsection 7.1(2) of National Instrument
51-102 |
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Not applicable. |
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| 7. |
Omitted Information |
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Not applicable. |
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| 8. |
Executive Officer |
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Arnold T. Kondrat (Executive Vice President) – (416)
366-2221. |
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| 9. |
Date of Report |
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August 18, 2014. |
Schedule "A"
Banro Announces Financing Plan and Certain
Senior Management Changes
- Banro closes a US$35.5 million liquidity backstop facility
- Banro signs a non-binding Memorandum of Understanding for
gold sale/streaming transactions for aggregate proceeds of US$121 million
- Banro announces certain changes to senior management team
Toronto, Canada – August 18, 2014 – Banro Corporation
("Banro" or the "Company") (NYSE MKT - "BAA"; TSX - "BAA") announces that it has
developed a comprehensive financing plan to stabilize the financial condition of
the Company and secure the funds required to achieve full production capacity at
its Namoya mine. The financing plan includes the closing of a US$35.5 million
liquidity backstop facility today with investment funds managed by Gramercy
Funds Management LLC, and the signing of a memorandum of understanding with a
private gold group for a US$41 million gold forward sale and a US$80 million
gold streaming transaction, both of which are targeted to close in October 2014.
The Company developed this program after reviewing financing alternatives with
its financial advisors, CIBC World Markets Inc. and Mining Research Group Inc.
The Company also announces that Kevin Jennings will be joining Banro as Senior
Vice President and Chief Financial Officer effective September 1, 2014 at which
date Donat Madilo, the Company's current Chief Financial Officer, will be
appointed by Banro to the new role of Senior Vice President, Commercial and DRC
Affairs.
“We are pleased to announce this comprehensive financing plan,
which has been initiated to address the financial issues that have arisen from
the delay in reaching full production at Namoya, Banro’s second gold mine in the
DRC,” commented Banro board chairman Richard Brissenden. “With these financing
transactions, Banro will be able to operate from a stable financial position to
realize value for its stakeholders. We are also excited to announce that we are
supplementing our management team with the addition of Kevin Jennings, whose
extensive gold industry experience includes CFO of African Barrick Gold. This
will permit Donat Madilo to focus on the important work within the DRC to
further strengthen our commercial and governmental relationships. These
financing transactions, together with the announced management changes, are part
of a comprehensive plan to position Banro to deliver value to all stakeholders
as it completes its transition from an exploration and development company to an
operating company.”
The Liquidity Backstop Facility
Banro closed today a liquidity backstop facility to provide for
the private placement of securities comprising senior secured notes (“Notes”)
and warrants (“Warrants) for gross aggregate proceeds of up to US$35.5 million
(the “Financing”), of which US$27.7 million in gross proceeds is being funded
today. The facility is provided by investment funds managed by Gramercy Funds
Management LLC. The net proceeds of this Financing will be used for the
repayment of certain bank loans in the Democratic
Republic of the Congo (“DRC”) totaling US$12.8 million, to pay the upcoming interest payment due on the Company’s currently outstanding notes (issued March 2012), for funding the short-term capital program to acquire an
agglomeration plant at Namoya as outlined in the Company's July 9, 2014 press release, to reduce accounts payable, and for general working capital purposes.
Notes issued under the facility will mature on July 31, 2016, but may be prepaid at any time in whole or in part without penalty. The Notes will benefit from support under Banro’s Collateral Trust Agreement and will constitute “Priority
Lien” or “Parity Lien” Notes depending upon available capacity. Interest will be payable monthly, and the initial interest rate for Priority Lien Notes will be 10% per annum and for Parity Lien Notes will be 15% per annum. Such
interest rates, after December 31, 2014, will increase in periodic increments over the life of the Notes. Any interest payable on or before July 31, 2015 may be capitalized to provide greater financial flexibility.
The Warrants have a three-year term and entitle the holders to purchase a total of 13.3 million common shares of the Company at an exercise price of Cdn$0.269 per share. The Warrants will be exercisable for cash, or by a cashless exercise, at
the option of the holder.
Copies of the main transaction documents for the Financing will be filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Gold Stream Arrangements Memorandum of Understanding (“MOU”)
In addition, Banro has signed a non-binding MOU with a private gold group (the “Buyer”) for two gold sale transactions, one for US$41 million relating to the Twangiza mine and the second for US$80 million relating to the Namoya
mine.
The Twangiza transaction contemplates the prepayment by the Buyer of US$41 million for its purchase of 40,000 ounces of gold from the Twangiza mine, with the gold deliverable over four years, at 10,000 ounces per year.
The Namoya transaction contemplates a gold stream transaction involving the payment by the Buyer of a deposit in the amount of US$80 million (the “Deposit”) and the delivery to the Buyer over time of 10% of the life-of-mine (LOM)
gold production from the Namoya mine (or any other projects located within 20 kilometres from the current Namoya gold mine if the gold is processed at the current Namoya processing facility). The amount of gold under the Namoya transaction is
subject to a maximum of 12,000 ounces per year. The ongoing payments to Namoya upon delivery of the gold are US$300 per ounce increasing to US$350 per ounce after delivery of the first 200,000 ounces.
Under both the Twangiza and the Namoya arrangements, it is contemplated that the Buyer will have an option to purchase an additional 10% of the gold produced at spot prices. The Namoya gold streaming arrangement may be terminated at any time upon
payment to the Buyer of a one-time termination amount that would result in the Buyer receiving an amount equal to an IRR of 15% on the Deposit.
The contemplated use of proceeds from the Twangiza and the Namoya arrangements with the Buyer would include:
-
Repayment of the Notes issued under the liquidity backstop facility;
-
Ensuring accounts payable are reduced and brought current; and
-
Providing funds for ongoing capital requirements and for working capital.
2
The completion of the Twangiza and the Namoya arrangements, which both have a targeted closing date of October 15, 2014, is subject to completion of due diligence and the entering into of definitive documentation.
Management Changes
Kevin Jennings will be joining Banro as Senior Vice President and Chief Financial Officer effective September 1, 2014. Kevin has over 20 years’ experience in corporate finance, corporate development, strategy and senior management positions
with global mining companies. Most recently, Kevin served as CFO of SUN Gold. Prior to that, he led the successful IPO of African Barrick Gold where he held the role of CFO, and over his career has managed mining international acquisitions,
divestitures and project investments worth more than US$10 billion. Kevin has also served in senior corporate roles with Barrick Gold, (Vice President, Corporate Development), Xstrata Nickel, (Director, Business Optimization), Falconbridge
(Director, Business Development), and American Racing Equipment (CFO). Kevin is a Chartered Accountant with a BA in Administrative studies (Honours Accounting) from York University and a BA in Economics from the University of Western Ontario.
Also effective September 1, 2014, Donat Madilo, currently Chief Financial Officer, will be appointed by Banro to the role of Senior Vice President, Commercial and DRC Affairs. Donat has been with the Company for over 17 years, including as CFO
since 2007, and has played a major and valuable role in the development of Banro from an exploration company to having two producing gold mines in the DRC. In his new role, he will continue to make a significant contribution going forward as
Banro’s operations grow in the DRC.
Additional changes to supplement the senior management team are planned.
Corporate Update
Banro also announces the resignation of Matthys J. Terblanche from the Board of Directors, owing to personal circumstances. Mr. Terblanche has agreed to remain available to the Company on a consulting basis. The Company would like to thank Mr.
Terblanche for his contribution during his tenure to the development of the Company’s financing plan. The Company has initiated a search for a qualified independent director to serve as his replacement.
Kappes Cassiday and Associates
Banro engaged the services of Kappes Cassiday and Associates (“KCA”) in July (see the Company’s press release dated July 23, 2014), a firm which specializes in the development, engineering and
implementation of extractive metallurgical processes for the mining industry, with particular specialist focus on heap leach operations. KCA staff visited site at Namoya at the end of July to assess the current plant and to start to assist in the
evaluation and development of options. A central focus of both KCA’s initial evaluation and of management’s prior planning objectives is the introduction of a traditional agglomeration stage, with cement additions, into the Namoya plant
circuit. This will allow the opportunity to fully manage the high fines content of the Namoya ore. A suitable agglomeration drum will be procured while the current installed plant continues to be reviewed and optimised. Namoya will continue
production during this procurement and parallel evaluation process.
3
Forward-Looking Guidance
Banro reaffirms previously released production guidance:
For 2014:
Twangiza – 90,000 to 100,000 ounces
Namoya – 25,000 to 30,000 ounces
2014 TOTAL – 115,000 to 130,000 ounces
For 2015:
Twangiza – 110,000 to 120,000 ounces
Namoya 1H 2015 – monthly production of up to 5,000 ounces
Namoya 2H 2015 – monthly production of up to 8,000 ounces
John Clarke, Chief Executive Officer of Banro, stated “We are pleased to be able to reaffirm the guidance on our production that we provided in early July. Once both mines are stabilized, we expect annual gold production from both Twangiza and
Namoya to total 200,000 to 220,000 ounces. At this production level we expect cash costs in the range of US$725 to US$825 per ounce and all-in sustaining costs of US$875 to US$975 per ounce.”
This press release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have
not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or the securities laws of any state of the United States and may not be offered or sold within the United States or to US
persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.
Banro Corporation is a Canadian gold mining company focused on production from the Twangiza mine, which began commercial production September 1, 2012, and completion of its second gold mine at Namoya located approximately 200
kilometres south of the Twangiza gold mine. The Company’s longer term objectives include the development of two additional major, wholly-owned gold projects, Lugushwa and Kamituga. The four projects, each of which has a mining license, are
located along the 210 kilometre long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the Democratic Republic of the Congo. Led by a management team with extensive gold and African experience, the initial focus of the Company is
on the mining of oxide material, which has a low capital intensity to develop but also attracts a lower technical and financial risk to the Company. All business activities are followed in a socially and environmentally responsible manner.
Gramercy Funds Management LLC is a US$4 billion dedicated emerging markets investment manager based in Greenwich, CT with offices in London, Hong Kong, Singapore, Mexico City, and Buenos Aires. The firm, founded in 1998, seeks to
generate superior risk-adjusted returns through a comprehensive approach to emerging markets supported by a transparent and robust institutional platform. Gramercy invests through both alternative and long-only strategies across all asset classes
(sovereign USD and local currency debt, investment grade and high yield corporate debt, distressed debt, equity, private equity and special situations).
www.gramercy.com.
4
Cautionary Note Concerning Forward-Looking Statements This press release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the
Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the closing of the Twangiza and Namoya gold sale transactions with the Buyer (the “Gold Sale Transactions”),
future gold production and cost estimates, and the anticipated effect of the Financing and Gold Sale Transactions on the Company’s operations and financial condition) are forward-looking statements. These forward-looking statements reflect
the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ
materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company.
Factors that could cause actual results or events to differ materially from current expectations include, among other things: failure to negotiate and enter into definitive documentation in respect of, or complete, either of the Gold Sale
Transactions; the need to satisfy regulatory and legal requirements and other conditions to closing with respect to the Gold Sale Transactions; the fact that the Buyer’s commitment is non-binding and that the Buyer’s continued
cooperation will be necessary to complete the Gold Sale Transactions; the possibility that the completion of the Gold Sale Transactions may be delayed, or that the amount or terms of the Gold Sale Transactions may be renegotiated; uncertainty of
estimates of capital and operating costs, production estimates and estimated economic return of the Company’s projects; the possibility that actual circumstances will differ from the estimates and assumptions used in the economic studies of
the Company’s projects; failure to establish estimated mineral resources and mineral reserves (the Company’s mineral resource and mineral reserve figures are estimates and no assurance can be given that the intended levels of gold will
be produced); fluctuations in gold prices and currency exchange rates; inflation; gold recoveries being less than those indicated by the metallurgical testwork carried out to date (there can be no assurance that gold recoveries in small scale
laboratory tests will be duplicated in large tests under on-site conditions or during production); uncertainties relating to the availability and costs of financing needed in the future; changes in equity markets; political developments in the
Democratic Republic of the Congo; lack of infrastructure; failure to procure or maintain, or delays in procuring or maintaining, permits and approvals; lack of availability at a reasonable cost or at all, of plants, equipment or labour; the
possibility of accidents, equipment breakdowns or other events resulting in interruptions in production; inability to attract and retain key management and personnel; changes to regulations affecting the Company's activities; the uncertainties
involved in interpreting drilling results and other geological data; and the other risks disclosed under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 29, 2014 filed on SEDAR at www.sedar.com and EDGAR
at www.sec.gov. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement,
whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
For further information, please visit our website at www.banro.com, or contact:
Naomi Nemeth, Investor Relations, +1 (416) 366-9189, +1-800-714-7938, Ext. 2802,
IR@banro.com, and follow the Company on Twitter @banrocorp.
5
Banro Announces Financing Plan and Certain
Senior Management Changes
- Banro closes a US$35.5 million liquidity backstop facility
- Banro signs a non-binding Memorandum of Understanding for
gold sale/streaming transactions for aggregate proceeds of US$121 million
- Banro announces certain changes to senior management team
Toronto, Canada – August 18, 2014 – Banro Corporation
("Banro" or the "Company") (NYSE MKT - "BAA"; TSX - "BAA") announces that it has
developed a comprehensive financing plan to stabilize the financial condition of
the Company and secure the funds required to achieve full production capacity at
its Namoya mine. The financing plan includes the closing of a US$35.5 million
liquidity backstop facility today with investment funds managed by Gramercy
Funds Management LLC, and the signing of a memorandum of understanding with a
private gold group for a US$41 million gold forward sale and a US$80 million
gold streaming transaction, both of which are targeted to close in October 2014.
The Company developed this program after reviewing financing alternatives with
its financial advisors, CIBC World Markets Inc. and Mining Research Group Inc.
The Company also announces that Kevin Jennings will be joining Banro as Senior
Vice President and Chief Financial Officer effective September 1, 2014 at which
date Donat Madilo, the Company's current Chief Financial Officer, will be
appointed by Banro to the new role of Senior Vice President, Commercial and DRC
Affairs.
“We are pleased to announce this comprehensive financing plan,
which has been initiated to address the financial issues that have arisen from
the delay in reaching full production at Namoya, Banro’s second gold mine in the
DRC,” commented Banro board chairman Richard Brissenden. “With these financing
transactions, Banro will be able to operate from a stable financial position to
realize value for its stakeholders. We are also excited to announce that we are
supplementing our management team with the addition of Kevin Jennings, whose
extensive gold industry experience includes CFO of African Barrick Gold. This
will permit Donat Madilo to focus on the important work within the DRC to
further strengthen our commercial and governmental relationships. These
financing transactions, together with the announced management changes, are part
of a comprehensive plan to position Banro to deliver value to all stakeholders
as it completes its transition from an exploration and development company to an
operating company.”
The Liquidity Backstop Facility
Banro closed today a liquidity backstop facility to provide for
the private placement of securities comprising senior secured notes (“Notes”)
and warrants (“Warrants) for gross aggregate proceeds of up to US$35.5 million
(the “Financing”), of which US$27.7 million in gross proceeds is being funded
today. The facility is provided by investment funds managed by Gramercy Funds
Management LLC. The net proceeds of this Financing will be used for the
repayment of certain bank loans in the Democratic
Republic of the Congo (“DRC”) totaling US$12.8 million, to pay the upcoming interest payment due on the Company’s currently outstanding notes (issued March 2012), for funding the short-term capital program to acquire an
agglomeration plant at Namoya as outlined in the Company's July 9, 2014 press release, to reduce accounts payable, and for general working capital purposes.
Notes issued under the facility will mature on July 31, 2016, but may be prepaid at any time in whole or in part without penalty. The Notes will benefit from support under Banro’s Collateral Trust Agreement and will constitute “Priority
Lien” or “Parity Lien” Notes depending upon available capacity. Interest will be payable monthly, and the initial interest rate for Priority Lien Notes will be 10% per annum and for Parity Lien Notes will be 15% per annum. Such
interest rates, after December 31, 2014, will increase in periodic increments over the life of the Notes. Any interest payable on or before July 31, 2015 may be capitalized to provide greater financial flexibility.
The Warrants have a three-year term and entitle the holders to purchase a total of 13.3 million common shares of the Company at an exercise price of Cdn$0.269 per share. The Warrants will be exercisable for cash, or by a cashless exercise, at
the option of the holder.
Copies of the main transaction documents for the Financing will be filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Gold Stream Arrangements Memorandum of Understanding (“MOU”)
In addition, Banro has signed a non-binding MOU with a private gold group (the “Buyer”) for two gold sale transactions, one for US$41 million relating to the Twangiza mine and the second for US$80 million relating to the Namoya
mine.
The Twangiza transaction contemplates the prepayment by the Buyer of US$41 million for its purchase of 40,000 ounces of gold from the Twangiza mine, with the gold deliverable over four years, at 10,000 ounces per year.
The Namoya transaction contemplates a gold stream transaction involving the payment by the Buyer of a deposit in the amount of US$80 million (the “Deposit”) and the delivery to the Buyer over time of 10% of the life-of-mine (LOM)
gold production from the Namoya mine (or any other projects located within 20 kilometres from the current Namoya gold mine if the gold is processed at the current Namoya processing facility). The amount of gold under the Namoya transaction is
subject to a maximum of 12,000 ounces per year. The ongoing payments to Namoya upon delivery of the gold are US$300 per ounce increasing to US$350 per ounce after delivery of the first 200,000 ounces.
Under both the Twangiza and the Namoya arrangements, it is contemplated that the Buyer will have an option to purchase an additional 10% of the gold produced at spot prices. The Namoya gold streaming arrangement may be terminated at any time upon
payment to the Buyer of a one-time termination amount that would result in the Buyer receiving an amount equal to an IRR of 15% on the Deposit.
The contemplated use of proceeds from the Twangiza and the Namoya arrangements with the Buyer would include:
-
Repayment of the Notes issued under the liquidity backstop facility;
-
Ensuring accounts payable are reduced and brought current; and
-
Providing funds for ongoing capital requirements and for working capital.
2
The completion of the Twangiza and the Namoya arrangements, which both have a targeted closing date of October 15, 2014, is subject to completion of due diligence and the entering into of definitive documentation.
Management Changes
Kevin Jennings will be joining Banro as Senior Vice President and Chief Financial Officer effective September 1, 2014. Kevin has over 20 years’ experience in corporate finance, corporate development, strategy and senior management positions
with global mining companies. Most recently, Kevin served as CFO of SUN Gold. Prior to that, he led the successful IPO of African Barrick Gold where he held the role of CFO, and over his career has managed mining international acquisitions,
divestitures and project investments worth more than US$10 billion. Kevin has also served in senior corporate roles with Barrick Gold, (Vice President, Corporate Development), Xstrata Nickel, (Director, Business Optimization), Falconbridge
(Director, Business Development), and American Racing Equipment (CFO). Kevin is a Chartered Accountant with a BA in Administrative studies (Honours Accounting) from York University and a BA in Economics from the University of Western Ontario.
Also effective September 1, 2014, Donat Madilo, currently Chief Financial Officer, will be appointed by Banro to the role of Senior Vice President, Commercial and DRC Affairs. Donat has been with the Company for over 17 years, including as CFO
since 2007, and has played a major and valuable role in the development of Banro from an exploration company to having two producing gold mines in the DRC. In his new role, he will continue to make a significant contribution going forward as
Banro’s operations grow in the DRC.
Additional changes to supplement the senior management team are planned.
Corporate Update
Banro also announces the resignation of Matthys J. Terblanche from the Board of Directors, owing to personal circumstances. Mr. Terblanche has agreed to remain available to the Company on a consulting basis. The Company would like to thank Mr.
Terblanche for his contribution during his tenure to the development of the Company’s financing plan. The Company has initiated a search for a qualified independent director to serve as his replacement.
Kappes Cassiday and Associates
Banro engaged the services of Kappes Cassiday and Associates (“KCA”) in July (see the Company’s press release dated July 23, 2014), a firm which specializes in the development, engineering and
implementation of extractive metallurgical processes for the mining industry, with particular specialist focus on heap leach operations. KCA staff visited site at Namoya at the end of July to assess the current plant and to start to assist in the
evaluation and development of options. A central focus of both KCA’s initial evaluation and of management’s prior planning objectives is the introduction of a traditional agglomeration stage, with cement additions, into the Namoya plant
circuit. This will allow the opportunity to fully manage the high fines content of the Namoya ore. A suitable agglomeration drum will be procured while the current installed plant continues to be reviewed and optimised. Namoya will continue
production during this procurement and parallel evaluation process.
3
Forward-Looking Guidance
Banro reaffirms previously released production guidance:
For 2014:
Twangiza – 90,000 to 100,000 ounces
Namoya – 25,000 to 30,000 ounces
2014 TOTAL – 115,000 to 130,000 ounces
For 2015:
Twangiza – 110,000 to 120,000 ounces
Namoya 1H 2015 – monthly production of up to 5,000 ounces
Namoya 2H 2015 – monthly production of up to 8,000 ounces
John Clarke, Chief Executive Officer of Banro, stated “We are pleased to be able to reaffirm the guidance on our production that we provided in early July. Once both mines are stabilized, we expect annual gold production from both Twangiza and
Namoya to total 200,000 to 220,000 ounces. At this production level we expect cash costs in the range of US$725 to US$825 per ounce and all-in sustaining costs of US$875 to US$975 per ounce.”
This press release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have
not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or the securities laws of any state of the United States and may not be offered or sold within the United States or to US
persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.
Banro Corporation is a Canadian gold mining company focused on production from the Twangiza mine, which began commercial production September 1, 2012, and completion of its second gold mine at Namoya located approximately 200
kilometres south of the Twangiza gold mine. The Company’s longer term objectives include the development of two additional major, wholly-owned gold projects, Lugushwa and Kamituga. The four projects, each of which has a mining license, are
located along the 210 kilometre long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the Democratic Republic of the Congo. Led by a management team with extensive gold and African experience, the initial focus of the Company is
on the mining of oxide material, which has a low capital intensity to develop but also attracts a lower technical and financial risk to the Company. All business activities are followed in a socially and environmentally responsible manner.
Gramercy Funds Management LLC is a US$4 billion dedicated emerging markets investment manager based in Greenwich, CT with offices in London, Hong Kong, Singapore, Mexico City, and Buenos Aires. The firm, founded in 1998, seeks to
generate superior risk-adjusted returns through a comprehensive approach to emerging markets supported by a transparent and robust institutional platform. Gramercy invests through both alternative and long-only strategies across all asset classes
(sovereign USD and local currency debt, investment grade and high yield corporate debt, distressed debt, equity, private equity and special situations).
www.gramercy.com.
4
Cautionary Note Concerning Forward-Looking Statements This press release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the
Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the closing of the Twangiza and Namoya gold sale transactions with the Buyer (the “Gold Sale Transactions”),
future gold production and cost estimates, and the anticipated effect of the Financing and Gold Sale Transactions on the Company’s operations and financial condition) are forward-looking statements. These forward-looking statements reflect
the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ
materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company.
Factors that could cause actual results or events to differ materially from current expectations include, among other things: failure to negotiate and enter into definitive documentation in respect of, or complete, either of the Gold Sale
Transactions; the need to satisfy regulatory and legal requirements and other conditions to closing with respect to the Gold Sale Transactions; the fact that the Buyer’s commitment is non-binding and that the Buyer’s continued
cooperation will be necessary to complete the Gold Sale Transactions; the possibility that the completion of the Gold Sale Transactions may be delayed, or that the amount or terms of the Gold Sale Transactions may be renegotiated; uncertainty of
estimates of capital and operating costs, production estimates and estimated economic return of the Company’s projects; the possibility that actual circumstances will differ from the estimates and assumptions used in the economic studies of
the Company’s projects; failure to establish estimated mineral resources and mineral reserves (the Company’s mineral resource and mineral reserve figures are estimates and no assurance can be given that the intended levels of gold will
be produced); fluctuations in gold prices and currency exchange rates; inflation; gold recoveries being less than those indicated by the metallurgical testwork carried out to date (there can be no assurance that gold recoveries in small scale
laboratory tests will be duplicated in large tests under on-site conditions or during production); uncertainties relating to the availability and costs of financing needed in the future; changes in equity markets; political developments in the
Democratic Republic of the Congo; lack of infrastructure; failure to procure or maintain, or delays in procuring or maintaining, permits and approvals; lack of availability at a reasonable cost or at all, of plants, equipment or labour; the
possibility of accidents, equipment breakdowns or other events resulting in interruptions in production; inability to attract and retain key management and personnel; changes to regulations affecting the Company's activities; the uncertainties
involved in interpreting drilling results and other geological data; and the other risks disclosed under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 29, 2014 filed on SEDAR at www.sedar.com and EDGAR
at www.sec.gov. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement,
whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
For further information, please visit our website at www.banro.com, or contact:
Naomi Nemeth, Investor Relations, +1 (416) 366-9189, +1-800-714-7938, Ext. 2802,
IR@banro.com, and follow the Company on Twitter @banrocorp.
5
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