EXECUTION COPY
PURCHASE AGREEMENT
BETWEEN
XXXXXXX GOLDFIELDS TEBEREBIE LIMITED
AND
PIONEER GOLDFIELDS II LIMITED
AND
THE PIONEER GROUP, INC.
AND
XXXXXXX GOLDFIELDS COMPANY LIMITED
TABLE OF CONTENTS
1 Purchase and Sale of the Shares 1
2 Purchase and Sale of the Intercompany Loans 3
3 Representations of the Seller Regarding the Shares and of PGI
Regarding the Intercompany Loans 4
4 Representations of the Seller Regarding PGL 5
5 Representations of the Buyer 13
6 Access to Information; Public Announcements 14
7 Pre-Closing Covenants of the Seller 14
8 Pre-Closing Covenants of the Buyer 16
9 Conditions to Obligations of the Buyer 16
10 Resolutions and Waivers 19
11 Conditions to Obligations of the Seller 20
12 Best Efforts of the Buyer and the Seller 21
13 Post-Closing Covenant of the Buyer and Seller 21
14 Indemnification 22
15 Termination of Agreement 24
16 Dispute Resolution 25
17 Brokers 26
18 Guarantees 26
19 Notices 27
20 Successors and Assigns 28
21 Entire Agreement; Amendments; Attachments 28
22 Severability 29
23 Expenses 29
24 Governing Law 29
25 Jurisdiction; Service of Process 29
26 Section Headings 29
27 Counterparts 29
PURCHASE AGREEMENT
This agreement (the "AGREEMENT") is made as of May 11, 2000 by and among Xxxxxxx
Goldfields Company Limited, a Ghana corporation with its principal office at
Gold House, Xxxxxxx Xxxxxxx Road, Xxxxx Xxxxx, X.X. Xxx 0000, Xxxxx, Xxxxx
("AGC"), Pioneer Goldfields II Limited, a Guernsey, Channel Islands company with
its principal office at x/x Xxxxx Xxxxxxxx, 0 Xxx Xxxxxx, Xx Xxxxx Port,
Guernsey, Channel Islands (the "SELLER"), The Pioneer Group Inc., a Delaware
Corporation, with its principal office at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
("PGI") and Xxxxxxx Goldfields (Teberebie) Limited, a Cayman Islands corporation
with its principal office at Xxxxxx House, PO Box 309, South Church Street,
Tortola, Grand Cayman, Cayman Islands ("BUYER").
PRELIMINARY STATEMENT
1. The Seller beneficially owns 75,000,000 ordinary shares (collectively,
the "SHARES"), nominal value $0.01 per share, of Pioneer Goldfields
Limited, a Guernsey company (number 227 00) ("PGL"), which Shares
represent all of the issued and outstanding shares of PGL. PGL, in turn,
owns 1,860,000 class A ordinary shares of no par value in the share
capital of Teberebie Goldfields Limited, a Ghana company ("Teberebie"),
representing 90% of the issued and outstanding shares of Teberebie.
Teberebie holds certain licenses from the Government of Ghana to conduct
mining operations in Ghana.
2. The Buyer desires to purchase, and the Seller desires to sell, the Shares
for the consideration set forth below, subject to the terms and
conditions of this Agreement.
3. Teberebie has various notes outstanding which are repayable to PGI as
more particularly set out in Schedule 4.11 which amount to an aggregate
of Twenty Million Seven Hundred Ninety Three Thousand Nine Hundred Twenty
Six U.S. Dollars ($20,793,926) (the "INTERCOMPANY LOANS").
4. PGI has agreed to sell and the Buyer has agreed to buy the Intercompany
Loans for the consideration set forth below, subject to the terms and
conditions of this Agreement.
5. AGC and PGI have executed a non-binding letter agreement dated December
14, 1999, as qualified by a letter from PGI to AGC dated December 16,
1999 and as amended by letters dated March 31, 2000 and April 28, 2000,
with respect to the transactions contemplated by this Agreement.
6. PGI and AGC have each agreed to give guarantees on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1 PURCHASE AND SALE OF THE SHARES
1.1 Purchase of the Shares from the Seller. Subject to and upon the terms and
conditions of this Agreement, at and with effect from the closing of the
transactions contemplated by this Agreement (the "CLOSING"), the Seller
shall sell, transfer, convey, assign and deliver to the Buyer, and the
Buyer shall purchase, acquire and accept from the Seller, all of the
Shares. At the Closing the Seller shall deliver to the Buyer certificates
evidencing the Shares, together with share transfer forms duly executed
by the legal owner of the Shares transferring the Shares to the Buyer or
as the Buyer shall direct and shall otherwise comply with Section 9.17.
1.2 Further Assurances. At any time and from time to time after the Closing,
at the Buyer's request and without further consideration, the Seller
shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take all such other action
as the Buyer may reasonably request, more effectively to transfer, convey
and assign to the Buyer, and to confirm the Buyer's title to, all of the
Shares, to put the Buyer in actual possession and operating control of
the assets, properties and business of PGL and Teberebie, to assist the
Buyer in exercising all rights with respect thereto and to carry out the
purpose and intent of this Agreement.
1
1.3 Purchase Price for the Shares. The Purchase price to be paid by the Buyer
for the Shares shall be one US dollar (US$1.00) plus an amount equal to
amounts payable by the Buyer pursuant to Section 2.3(g) in respect of the
Shares ("SHARE PURCHASE PRICE").
1.4 Closing. The Closing shall take place at the offices of Xxxxxxx Xxxx and
Xxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx, Xxxxxx XX0X 0XX at 10:00 a.m.,
London Time, on May 24, 2000, or at such other place, time or date (being
no later than May 26, 2000) as may be mutually agreed upon in writing by
the parties (the "CLOSING DATE"). The transfer of the Shares by the
Seller to the Buyer shall be deemed to occur at 9:00 a.m., London Time,
on the Closing Date.
1.5 Closing Balance Sheet
(a) The Seller shall procure that a balance sheet of Teberebie and a
consolidated balance sheet of PGL as of March 31, 2000 (the
"CLOSING BALANCE SHEETS") shall be prepared by PGL and Teberebie,
pursuant to U.S. generally accepted accounting principles applied
consistently with past practice, and examined by its auditors (the
"AUDITORS") within 30 days after the Closing Date and that the
Auditors' working papers will be made available to the Buyer's
nominated accountants (the "BUYER'S Accountants") so as to allow
the Buyer's Accountants to review the same in accordance with
Section 1.6(a).
(b) The Buyer and the Seller shall use their respective reasonable
efforts to procure that the Auditors and the Buyer's Accountants
issue their joint certificate pursuant to Section 1.6(a) by not
later than 60 days after the Closing Date, but if such joint
certificate has not been issued by such date there shall be deemed
to be a dispute for the purposes of Section 1.6 and the provisions
as to the settlement of disputes contained therein shall apply.
(c) The Seller shall bear the costs of the Auditors and the Buyer
shall bear the costs of the Buyer's Accountants in connection with
preparation of the Closing Balance Sheets.
(d) If the Closing Balance Sheets shall show any liabilities (whether
actual or contingent) other than pursuant to the Credit Agreement
dated March 11, 1996 between Skandinaviska Enskilda Banken and
Teberebie, as amended pursuant to the agreements dated September
20, 1996, October 11, 1996 and March 24, 1999 (the "CREDIT
AGREEMENT"), or the reclamation obligation reflected on the Current
Audited Balance Sheets (as defined in Section 4.5(a)) or the
Intercompany Loans which will be acquired by the Buyer as at
Closing pursuant to Section 2 of this Agreement, ("EXCESS
LIABILITIES") then the Seller shall within 7 days after the
Auditors and the Buyer's Accountants shall have issued their
joint certificate as provided by Section 1.6 pay to the Buyer by
wire transfer of immediately available funds to an account
designated by the Buyer an amount equal to the Excess Liabilities.
If the Seller shall not make any such payment as prescribed by this
Section (d), the Buyer may if it so decides in its absolute
discretion deduct an amount equal to any such Excess Liabilities
from the amounts due to the Seller pursuant to Sections 2.3(b) and
(c) together with (if relevant) interest at a rate of 6% per annum
on any Excess Liabilities which are required to be paid by PGL or
Teberebie calculated from the date of such payment to the date on
which the Buyer makes the aforementioned deductions.
1.6 Preparation of Closing Balance Sheets
(a) The Closing Balance Sheets shall be prepared by PGL and Teberebie
and examined by the Auditors. The Buyer's Accountants shall then
review such Closing Balance Sheets and the Auditors' work
(including their working papers thereon), after which the Auditors
and the Buyer's Accountants shall jointly certify the amount of
the Excess Liabilities (if any) to each of the Seller and the
Buyer.
2
(b) The Closing Balance Sheets shall be prepared under the historical
cost convention and in accordance with U.S. generally accepted
accounting principles and practices consistently applied and on
bases consistent in all material respects with those adopted in
the Current Audited Balance Sheets.
(c) As regards the Auditors and the Buyer's Accountants:
(i) their joint report shall be conclusive and binding on the
parties save in the case of manifest error;
(ii) they shall be deemed to act as experts and not as
arbitrators;
(iii) any disputes, differences and/or questions which may arise
between them in connection with the said report shall be
referred to the decision of an internationally recognized
"big-five" accounting firm that is not retained by any of
PGI, PGL, Teberebie, the Seller or the Buyer, to be agreed on
between them within a period of 14 days or in default of such
agreement to be selected (on the application of the Buyer or
the Seller) by the President for the time being of the
Institute of Chartered Accountants in England and Wales; such
firm (whose costs shall be payable as it shall direct) shall
act as expert and not as arbitrator in connection with the
giving of such decision; and the decision of such firm shall
be final and binding on the parties save in the case of
manifest error.
2 PURCHASE AND SALE OF THE INTERCOMPANY LOANS
2.1 Sale, Purchase and Assignment.
PGI as the legal and beneficial owner, agrees to assign to the Buyer, and
the Buyer agrees to accept the assignment of, the Intercompany Loans,
free from any encumbrances, on and subject to the terms and conditions of
this Agreement.
2.2 Title, Property and Risk.
Title to and risk of the Intercompany Loans:
(a) remains solely with PGI until Closing; and
(b) shall be deemed to have passed to the Buyer on and from Closing.
2.3 Purchase Price
(a) The base purchase price to be paid by the Buyer for the
Intercompany Loans shall be Eighteen Million Seven Hundred and
Ninety-Nine Thousand Nine Hundred and Ninety-Nine U.S. Dollars
(US$18,799,999) (the "BASE PURCHASE PRICE"). The Base Purchase
Price shall be payable in the manner described in paragraphs (b)
and (c) of this Section 2.3.
(b) At the Closing, the Buyer shall deliver to PGI, by wire transfer
of immediately available funds to an account designated by PGI in
writing at least five (5) business days prior to the Closing Date
(as defined below), the sum of Four Million Nine Hundred and
Ninety Nine Thousand Nine Hundred and Ninety Nine US Dollars
(US$4,999,999).
(c) In addition, the Buyer shall make further cash payments, as
evidenced by a Note in the form attached hereto as Exhibit A, by
wire transfer of immediately available funds to an account
designated by PGI in writing at least five (5) business days prior
to the due date for the relevant payment, as set out below:
(i) Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) on March 31,
2001;
(ii) Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) on March 31,
2002,
(iii) Three Million U.S. Dollars (US$3,000,000) on March 31, 2003;
3
(iv) Three Million Seven Hundred Fifty Thousand U.S. Dollars (US$3,750,000) on
March 31, 2004; and
(v) Two Million Fifty Thousand U.S. Dollars (US$2,050,000) on March 31, 2005.
(d) (i) The Buyer shall also make supplemental payments (the "SUPPLEMENTAL
PAYMENTS"), totaling up to a maximum of Five Million U.S. Dollars
(US$5,000,000), as follows: For each calendar quarter with effect
from the calendar quarter commencing on April 1, 2001 and ending
March 31, 2006 during which:
(1) the average daily price of gold (which for this purpose shall be the
arithmetic mean of the London pm fix spot price on each day in the
relevant calendar quarter on which such price is quoted on the Reuters
Screen NMRB), based on the London pm fix spot price per xxxx ounce of
loco London good delivery gold bullion of not less than 0.995 fineness,
is at least US$325.00 per ounce; and
(2) at least 35,000 xxxx ounces of gold are produced from the processing of
ore located on the property covered by (i) the Mining Lease between the
Government of Ghana and Teberebie dated February 2, 1988 and (ii) the
Mining Lease between the Government of Ghana and Teberebie dated June 18,
1992, the Buyer shall make a Supplemental Payment of Two Hundred Fifty
Thousand U.S. Dollars (US$250,000). To the extent that in any
relevant calendar quarter in which a Supplemental Payment may be
payable, the conditions in this Section 2.3(d) are not satisfied,
no such Supplemental Payment shall be due for that calendar
quarter.
(e) To the extent that a Supplemental Payment is due for any calendar
quarter during the period identified in paragraph (d) above, the
Buyer shall make such Supplemental Payment, by wire transfer of
immediately available funds to an account designated by the Seller
in writing at least five (5) business days prior to the date on
which payment is due, within 14 business days following the end of
such calendar quarter.
(f) The right to receive any or all of the cash payments due to the
Seller under this Section 2 may be transferred by the Seller to
PGI or any other company or entity under the common control of
PGI. Subject to the consent of the Buyer (which consent may not be
unreasonably withheld), the Seller or PGI may assign the right to
receive any or all of the cash payments due to the Seller or PGI
under this Section 2.3 to a company or entity not under the common
control of PGI.
(g) The first One Million Nine Hundred and Ninety Three Thousand Nine
Hundred Twenty Six U.S. Dollars ($1,993,926) of the Supplemental
Payments shall be paid in respect of the Intercompany Loans. All
other Supplemental Payments will be paid in respect of the Shares.
3 REPRESENTATIONS OF THE SELLER REGARDING THE SHARES AND OF PGI REGARDING
THE INTERCOMPANY LOANS.
3.1 The Seller represents and warrants to the Buyer as follows:
(a) The Seller has good and marketable title to the Shares, free and
clear of any and all covenants, conditions, restrictions, voting
trust arrangements, liens, charges, encumbrances, options and
adverse claims or rights whatsoever.
(b) The Seller has the full right, power and authority to transfer,
convey and sell the Shares to the Buyer at the Closing and, upon
consummation of the purchase contemplated hereby, the Buyer will
acquire from the Seller the Shares with good and marketable title,
free and clear of all covenants, conditions, restrictions, voting
trust arrangements, liens, charges, encumbrances, options and
adverse claims or rights whatsoever.
(c) The Seller is not a party to, subject to or bound by any agreement
or any judgment, order, writ, prohibition, injunction or decree of
any court or other governmental body which would prevent the
execution or delivery of
4
this Agreement by the Seller or the transfer, conveyance and sale
of the Shares to the Buyer pursuant to the terms hereof.
(d) Except as set forth in Section 17 hereof, no broker or finder has
acted for the Seller in connection with this agreement or the
transactions contemplated hereby, and no broker or finder is
entitled to any brokerage or finder's fee or other commissions in
respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Seller.
3.2 PGI represents and warrants to the Buyer as follows:
(a) PGI has good and marketable title to the Intercompany Loans free
and clear of any and all covenants, conditions, restrictions,
liens, charges, encumbrances, options and adverse claims or rights
whatsoever.
(b) PGI has the full right, power and authority to transfer, convey
and sell the Intercompany Loans to the Buyer at the Closing and,
upon consummation of the purchase contemplated hereby, the Buyer
will acquire from the Seller the Intercompany Loans with good and
marketable title, free and clear of all covenants, conditions,
restrictions, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(c) PGI is not a party to, subject to or bound by any agreement or any
judgement , order, writ, prohibition, injunction or decree of any
court or other governmental body which would prevent the execution
or delivery of this Agreement by PGI or the transfer, conveyance
and sale of the Intercompany Loans to the Buyer pursuant to the
terms hereof.
4 REPRESENTATIONS OF THE SELLER REGARDING PGL
The Seller represents and warrants to the Buyer that:
4.1 Organization. PGL is a corporation duly organized, validly existing and
in good standing under the laws of Guernsey, Channel Islands, and has all
requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute
and deliver this Agreement and the agreements contemplated herein, and to
consummate the transactions contemplated hereby and thereby. Schedule 4.1
sets forth all jurisdictions in which PGL is qualified or holds licences
to do business as a foreign corporation. The Seller has heretofore
delivered to the Buyer true and complete copies of PGL's Memorandum and
Articles of Association as currently in effect.
4.2 Capitalization of PGL. PGL's authorized share capital consists of
75,000,000 ordinary shares, all of which are in issue on the date hereof
and held of record by the Seller or its nominees beneficially for the
Seller. All outstanding Shares have been duly authorized and validly
issued and are fully paid and non-assessable. There are no options,
warrants, convertibles or other securities of PGL issued or outstanding.
There are no outstanding obligations of PGL or Teberebie to repurchase,
redeem or otherwise acquire any Shares.
4.3 Subsidiaries
(a) Except for Teberebie, there is no corporation, partnership, joint
venture or other entity in which PGL has, directly or indirectly,
any equity interest.
(b) Schedule 4.3 sets forth:
(i) the capitalization of Teberebie;
(ii) the names of the officers and directors of Teberebie; and
(iii) the jurisdictions in which Teberebie is qualified or holds
licenses to do business as a foreign corporation.
5
(c) Except as set forth in Schedule 4.3, PGL owns of record and
beneficially all of the outstanding shares of capital stock of
Teberebie free and clear of all covenants, conditions,
restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
(d) Teberebie is a corporation duly organized and validly existing and
in good standing under the laws of the Republic of Ghana and has
all requisite power and authority to own its properties and carry
on its business as now being conducted. The Seller has heretofore
delivered to the Buyer true and complete copies of Teberebie's
Regulations as currently in effect.
(e) Except as set forth in Schedule 4.3, Teberebie does not hold
shares of its capital stock in its treasury, and there are not,
and on the Closing Date there will not be, outstanding any (i)
options, warrants or other rights with respect to the capital
stock of Teberebie, (ii) any securities convertible into or
exchangeable for shares of such stock; (iii) any other commitments
of any kind for the issuance of additional shares of capital stock
or options, warrants or other securities or (iv) obligations of
PGL or Teberebie to repurchase, redeem or otherwise acquire any
outstanding securities of Teberebie.
4.4 Authorization. The Seller is a corporation duly incorporated and validly
existing under the laws of Guernsey, Channel Islands and has all
requisite power and authority (corporate and other) to carry on its
business now conducted. The execution and delivery by the Seller of this
Agreement and the agreements provided for herein, and the consummation by
the Seller of all transactions contemplated hereunder and thereunder by
the Seller, have been duly authorized by all requisite corporate action.
This Agreement has been duly executed by the Seller. This Agreement and
all other written agreements entered into and undertaken in connection
with the transactions contemplated hereby to which the Seller is a party
constitute the valid and legally binding obligations of the Seller,
enforceable against it in accordance with their respective terms. Except
as set forth on Schedule 4.4 the execution, delivery and performance by
the Seller of this Agreement and the agreements provided for herein, and
the consummation by the Seller of the transactions contemplated hereby
and thereby, will not, with or without the giving of notice or the
passage of time or both, (a) violate the provisions of any current law,
rule or regulation applicable to PGL, Teberebie or the Seller; (b)
violate the provisions of the Memorandum and Articles of Association of
the Seller or the Memoranda and Articles of Association of PGL or the
Regulations of Teberebie; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator; or (d) conflict with
or result in the breach or termination of any term or provision of, or
constitute a default under, or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon the properties or assets
of PGL or Teberebie pursuant to, any indenture, mortgage, deed of trust
or other instrument or agreement to which PGL or Teberebie is a party or
by which PGL or Teberebie or any of their properties is or may be bound,
except where the breach, termination, default, acceleration, or creation
of any lien, charge, or encumbrance would not have a material adverse
effect on the condition (financial or otherwise), business assets, or
results of operation of PGL and Teberebie taken as a whole ("MATERIAL
ADVERSE EFFECT") or on the ability of the parties to consummate the
transactions contemplated by this Agreement. For the purposes of the
definition of Material Adverse Effect, an act, event or omission shall
constitute a Material Adverse Effect if it creates or would reasonably be
expected to create a liability on PGL and Teberebie taken as a whole of
$100,000 or more. The Seller has heretofore delivered to the Buyer true
and complete copies of its Memorandum and Articles of Association as
currently in effect.
4.5 Financial Statements.
(a) The Seller has previously delivered to the Buyer the audited
consolidated balance sheet of PGL as of December 31, 1998 (the
"1998 AUDITED BALANCE SHEET") and the related consolidated
statements of income, shareholders' equity, retained earnings and
changes in financial condition of PGL
6
for the five fiscal years then ended (collectively, the
"1998 AUDITED FINANCIAL STATEMENTS"). The Seller has
also previously delivered to the Buyer the audited balance
sheets of each of PGL and Teberebie as of December 31, 1999
(the "CURRENT AUDITED BALANCE SHEETS") and the related statements
of income, shareholders' equity, retained earnings and changes in
financial condition of each of PGL and Teberebie for the fiscal
year then ended (collectively, the "CURRENT AUDITED FINANCIAL
STATEMENTS"). The 1998 Audited Financial Statements and the Current
Audited Financial Statements (collectively, the "FINANCIAL
STATEMENTS") have been prepared in accordance with generally
accepted accounting principles applied consistently with past
practices and, in the case of the 1998 Audited Financial
Statements, have been certified without qualification (but with a
going concern modification) by Xxxxxx Xxxxxxxx LLP, PGL's
independent public accountants, and, in the case of the Current
Audited Financial Statements, have been certified without
qualification (but with a going concern modification) by PGL's and
Teberebie's independent accountants. The date of the Current
Audited Balance Sheets is hereinafter referred to as the "BALANCE
SHEET DATE."
(b) The Financial Statements fairly present, in all material respects,
as of their respective dates, the financial condition, retained
earnings, assets and liabilities of PGL and Teberebie, and the
results of operations of PGL's and Teberebie's business, for the
periods indicated. With respect to contracts and commitments for
the sale of goods or the provision of services by PGL and
Teberebie, the Financial Statements contain and reflect adequate
reserves, which are consistent with previous reserves taken, for
all reasonably anticipated material losses and costs and expenses.
The amounts shown as accrued for current and deferred income and
other taxes in the Financial Statements are sufficient for the
payment of all accrued and unpaid national, state and local income
taxes, interest, penalties, assessments or deficiencies applicable
to PGL or Teberebie, whether disputed or not, for the applicable
period then ended and periods prior thereto.
4.6 Absence of Undisclosed Liabilities. Except as and to the extent (a)
reflected and reserved against in the Current Audited Balance Sheets or,
(b) set forth on Schedule 4.6, neither PGL nor Teberebie has any
liability or obligation, secured or unsecured, whether accrued, absolute
or contingent.
4.7 Properties
(a) Except as set forth on Schedule 4.7, PGL and Teberebie have good
title to, or in the case of leased property have valid leasehold
interests in, all property and assets (whether real or personal,
tangible or intangible) reflected on the Current Audited Balance
Sheets or acquired after the Balance Sheet Date, except for
property and assets sold since the Balance Sheet Date in the
ordinary course of business consistent with past practices. None
of such property or assets is subject to any liens or other
encumbrances, except liens or encumbrances disclosed on the
Current Audited Balance Sheets or on Schedule 4.7;
(b) Except for the shut down of the Teberebie mine as of December 31,
1999, there are no developments affecting any such property or
assets (whether real or personal) pending or, to the actual
knowledge having made reasonable enquiries ("KNOWLEDGE") of the
Seller, threatened, which might materially detract from the value
of such property or assets or materially interfere with any
present or intended use of any such property or assets as of March
31, 2000.
4.8 Litigation. Except as set forth on Schedule 4.8(a), there is no action,
suit or proceeding to which PGL or Teberebie is a party (either as a
plaintiff or defendant) pending or, to the Knowledge of the Seller,
threatened before any court or governmental agency, authority, body or
arbitrator and, to the Knowledge of the Seller, there is no basis for any
such action, suit or proceeding; (b) neither PGL nor Teberebie has been
permanently or temporarily enjoined by any order, judgment or decree of
any court or any governmental agency, authority or body from engaging in
or continuing any conduct or practice in connection with
7
the business, assets, or properties of PGL or Teberebie; and (c) there is
not in existence on the date hereof any order, judgment or decree of any
court, tribunal or agency or any undertaking given by PGL or Teberebie
enjoining or requiring PGL or Teberebie to take any action of any kind
with respect to its business, assets or properties.
4.9 Tax Matters. Except as set forth on Schedule 4.9:
(a) Within the times and in the manner prescribed by law, PGL and
Teberebie have filed all national, state and local tax returns,
statements, reports and forms ("TAX RETURNS") and all Tax Returns
for foreign countries, provinces and other governing bodies having
jurisdiction to levy taxes upon them which are required to be
filed;
(b) PGL and Teberebie have paid all Taxes (as defined below),
interest, penalties, assessments and deficiencies which have
become due and payable or which have been claimed to be due,
including, without limitation, income, franchise, real estate,
sales, value added and withholding taxes and other employee
benefits, taxes and imports unless the same are being contested in
good faith by appropriate procedures;
(c) No examination of the tax returns of PGL or Teberebie is currently
in progress nor, to the Knowledge of the Seller, threatened and no
deficiencies have been asserted or assessed against either PGL or
Teberebie as a result of any audit by any applicable taxing
authority and no such deficiency has been proposed or threatened;
(d) No liability to Tax (except for any such liability which has been
paid in full prior to Closing) has arisen or to the Knowledge of
the Seller will arise in PGL or Teberebie as a result of, or by
reference to, any event, occurrence, transaction, act or omission
in or before Closing;
(e) Set forth on Schedule 4.9(e) are Teberebie's capital allowances at
December 31, 1997, as audited by the Ghana Tax Inspectorate, and
at December 31, 1999, as estimated by Teberebie. The Seller has
not and shall not decrease any net operating loss, net capital
loss, investment Tax credit, foreign Tax credit, charitable
deduction or any other credit or Tax attribute of PGL or Teberebie
which could reduce Tax payable in the future by PGL or Teberebie,
except to the extent that such decrease results from the sale of
Excluded Assets (as defined below) or from the sale of assets in
the ordinary course of business; and
(f) PGL has tax exempt status under the Income Tax (Exempt Bodies)
(Guernsey) Ordinances, 1989-1996.
For purposes of this Section, "TAX" or "TAXES" means any liability of PGL
or Teberebie to any form of taxation whenever created or imposed and
whether of Ghana, Guernsey, the United States of America or elsewhere
(and without limitation includes income tax, corporation tax, advance
corporation tax, capital gains tax, inheritance tax, stamp duty, stamp
duty reserve tax, value added tax, withholding tax, rates, customs and
excise duties, national insurance contributions, social security and
other liabilities or contributions or any pay-as-you-earn tax) and
generally any amount payable to the revenue, customs or fiscal
authorities of Ghana, Guernsey, the United States of America or
elsewhere, and all interest and/or penalties related to or arising in
respect thereof.
4.10 Books and Records. The general ledgers and books of account of PGL and
Teberebie are in all material respects complete and correct and have been
maintained in accordance with good business practice and in accordance
with all applicable procedures required by applicable laws and
regulations.
4.11 Contracts and Commitments.
(a) Schedule 4.11 contains a true, complete and correct list of the
following written contracts and agreements (collectively, the
"CONTRACTS"):
8
(i) all loan agreements, indentures, mortgages and guaranties
to which PGL or Teberebie is a party or by which PGL or
Teberebie or any of their property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, material equipment
obligations, material personal property leases and lease
purchase agreements to which PGL or Teberebie is a party or
by which PGL or Teberebie or any of their property is
bound;
(iii) all contracts, agreements, commitments, purchase orders or
other understandings or arrangements to which PGL or
Teberebie is a party or by which PGL or Teberebie or any of
their property is bound which may have a Material Adverse
Effect;
(iv) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus
plans, deferred compensation agreements, pension plans,
retirement plans, employee stock option or stock purchase
plans and group life, health and accident insurance and
other employee benefit plans, agreements, arrangements or
commitments to which PGL or Teberebie is a party or by
which PGL or Teberebie or any of their property is bound;
(v) all material contracts, agreements or other arrangements
between PGL and Teberebie (including, but not limited to,
any tax sharing arrangements) or between PGL, Teberebie and
the Seller;
(vi) all material leases, whether operating, capital or
otherwise, under which PGL or Teberebie is lessor or
lessee;
(vii) all material licenses or similar agreements relating to
mining concessions or otherwise to which the Seller, PGL or
Teberebie is a party; and
(viii) all other agreements, commitments, arrangements or plans
not made in the ordinary course of business that are
material to PGL and Teberebie taken as a whole.
(b) Except as set forth on Schedule 4.11, each agreement, commitment,
contract, arrangement plan, lease or license disclosed in any
Schedule to this Agreement or required to be disclosed pursuant to
this Section, is a valid and binding agreement of PGL or
Teberebie, as the case may be, and is in full force and effect.
Neither PGL nor Teberebie is, nor, to the Knowledge of the Seller,
is any other party thereto, in default or breach in any material
respect under the terms of any such agreement, commitment,
contract, arrangement, plan, lease or license.
(c) No agreement, commitment, contract, arrangement, plan, lease or
license disclosed in any Schedule to this Agreement or required to
be disclosed pursuant to this Section contains terms which would
prevent the execution or delivery of this Agreement by the Seller.
4.12 Compliance with Agreements, Laws and Court Orders.
(a) PGL and Teberebie each have all material licenses, permits and
certificates from all applicable authorities necessary to conduct
their respective businesses and own and operate their respective
assets, and in particular lawfully to conduct mining activities in
Ghana.
(b) Neither PGL nor Teberebie is in violation of, nor has since
December 31, 1998 violated, any applicable law, rule, regulation,
judgment, injunction, order or decree except for violations that
have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(c) Except as set forth on Schedule 4.12, neither PGL nor Teberebie is
in default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, any
agreement or other instrument binding upon PGL or Teberebie or any
license, franchise, permit or similar authorization held by PGL or
Teberebie, which defaults or potential defaults, individually or
in the aggregate, would reasonably be expected to have a Material
Adverse Effect.
9
4.13 Insurance Coverage. The Seller has furnished to the Buyer a list of all
insurance policies and fidelity bonds relating to the assets, business,
operations, employees, officers or directors of PGL or Teberebie. Except
as set forth on Schedule 4.13, there is no claim by PGL or Teberebie
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or
bond or in respect of which such underwriters have reserved their rights.
All premiums payable under all such policies and bonds have been paid
timely and PGL and Teberebie have otherwise complied fully with the terms
and conditions of all such policies and bonds. Such policies of insurance
and bonds (or other policies and bonds providing substantially similar
insurance coverage) have been in effect since December 31, 1998 and
remain in full force and effect. Such policies and bonds are of the type
and in amounts customarily carried by persons conducting businesses
similar to those of PGL or Teberebie. The Seller does not know of any
threatened termination of, premium increase with respect to, or material
alteration of coverage under, any of such policies or bonds, except that
such policies or bonds will terminate as of the Closing Date.
4.14 Employee Relations
(a) There are no employees of PGL or Teberebie as of the date hereof.
(b) None of the employees of PGL or Teberebie is represented by any
labor union.
(c) Schedule 4.14 sets forth a true, correct and complete list of the
aggregate payroll of PGL and Teberebie as of December 31, 1999,
including the job title and salary or wage rates of each
expatriate employee or categories thereof, showing separately for
each such person who received an annual salary in excess of
$25,000 the maximum amounts paid or payable as salary and bonus
payments for the fiscal year ended December 31, 1999.
(d) Except as set forth on Schedule 4.14 to the Knowledge of the
Seller there are no outstanding claims of any nature from any
person who was an employee of either PGL or Teberebie and there
are no amounts due to any person who was an employee of PGL or
Teberebie.
(e) PGL and Teberebie are in compliance with all currently applicable
laws representing employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged
in any unfair labor practice, failure to comply with which or
engagement in which, as the case may be, would reasonably be
expected to have a Material Adverse Effect. There is no unfair
labor practice complaint pending or, to the Knowledge of the
Seller, threatened against PGL or Teberebie before any
governmental entity that overseas national labor relations.
4.15 Absence of Certain Changes or Events. Except as set forth on Schedule
4.15, since the Balance Sheet Date, neither PGL nor Teberebie has entered
into any transaction which is not in the usual and ordinary course of
business, and, without limiting the generality of the foregoing, neither
PGL nor Teberebie has:
(a) experienced any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be
expected to have a Material Adverse Effect;
(b) declared, set aside or paid any dividend or other distribution
with respect to any Shares or any repurchase, redemption or other
acquisition by PGL or Teberebie of any outstanding shares or other
securities of, or other ownerships in, PGL or Teberebie;
(c) incurred any material obligation or liability for borrowed money;
(d) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability other than liabilities
reflected in the Current Audited Balance Sheet;
10
(e) mortgaged, pledged or subjected to any material lien, charge or
other encumbrance of any of their respective properties or assets;
(f) suffered any material losses of personal or real property, whether
insured or uninsured, and whether or not in the control of PGL or
Teberebie, as the case may be, in excess of $100,000 in the
aggregate, or waived any material rights;
(g) made, or committed to make, any material changes in the
compensation payable to any officer, director, employee or agent
of PGL or Teberebie, or any bonus payment or similar arrangements
made to or with any of such officers, directors, employees or
agents or to any deferred compensation, severance, retirement or
other similar agreement entered into with any director, officer,
employee or agent of PGL or Teberebie (or any amendment to any
such agreement) or granted any severance or termination pay to any
director, officer, employee or agent of PGL or Teberebie, except
as described in Schedule 4.15(g);
(h) incurred capital expenditures in excess of $100,000 in the
aggregate;
(i) suffered any material adverse change in the consolidated results
of operations, financial condition, assets, liabilities (whether
absolute, accrued or contingent) or business of PGL and Teberebie
taken as a whole;
(j) changed any method of accounting or accounting practice; or
(k) suffered any labor dispute.
4.16 Suppliers. Schedule 4.16 sets forth a true, correct and complete list of
(a) the names and addresses of each of the suppliers of PGL and Teberebie
which accounted for a dollar volume of purchases by PGL and Teberebie in
excess of $100,000 for the fiscal year ended December 31, 1999, and (b)
any recent sole source suppliers of significant goods or services, other
than utilities, for any product with respect to which practical
alternative sources of supply are not available on comparable terms and
conditions, indicating the contractual arrangements for continued supply
from each such supplier. Except as set forth on Schedule 4.16, (i) each
of PGL and Teberebie has good relations with all of its suppliers, and
(ii) neither PGL nor Teberebie is more than 30 days in arrears in any
trade accounts payable or other payments owing to any supplier.
4.17 Maintenance of Property. All plant, machinery, vehicles and equipment
owned or used by PGL or Teberebie were in good condition and in working
order, were properly serviced and maintained on a regular basis by
competent personnel and complied with appropriate safety regulations as
at March 31, 2000. Each of PGL and Teberebie kept an up to date plant
register of fixed assets and such register was complete and accurate as
at March 31,2000 (the "PLANT REGISTER").
4.18 Prepayments and Deposits. Schedule 4.18 sets forth all prepayments and
deposits, which have been received by PGL or Teberebie as of the date
hereof, from customers for products to be shipped, or services to be
performed, after the Closing Date.
4.19 Indebtedness to and from Officers and Directors. Except as set forth on
Schedule 4.19, and except for inter-company indebtedness payable between
PGI and Teberebie, neither PGL nor Teberebie is indebted, directly or
indirectly, to any person who is an officer or director of any of the
foregoing entities or any Affiliate (as defined below) of any such person
in any amount whatsoever other than for salaries for services rendered or
reimbursable business expenses, all of which have been reflected on the
Current Financial Statements, and no such officer, director, or Affiliate
is indebted to PGL or Teberebie except for advances made to employees of
PGL or Teberebie in the ordinary course of business to meet reimbursable
business expenses anticipated to be incurred by such obligor. For
purposes of this Agreement, the term "AFFILIATE" means, with
11
respect to any person, any other person directly or indirectly
controlling, controlled by, or under common control with such person.
4.20 Regulatory Approvals. All consents, approvals, authorizations or other
requirements prescribed by any current law, rule or regulation which must
be obtained or satisfied by PGL or Teberebie and which are necessary for
the execution and delivery by the Seller of this Agreement or any
documents to be executed and delivered by the Seller, PGL or Teberebie in
connection herewith are set forth on Schedule 4.20 and have been, or
prior to the Closing Date will be, obtained and satisfied.
4.21 Assets. Except as set forth on Schedule 4.21(a), subsequent to the
Closing PGL and Teberebie will retain all assets used in their respective
businesses, including, without limitation, the assets set forth in
Schedule 4.21(b) free from any restriction, lien, charge, encumbrance,
option, adverse claim or rights whatsoever, or otherwise is subject to
any leasing or hire purchase or conditional purchase agreement.
4.22 Operation of Teberebie Mine. The Teberebie mine was operated from
December 1, 1999 through December 31, 1999 substantially in accordance
with the TGL mine plan described in the memorandum dated October 15, 1999
from Xx. X. Xxxxxxx to Xx. X. Xxxxxx, a copy of which has been delivered
to the Buyer.
4.23 Cessation of Mining Activities. PGL and Teberebie ceased mining
operations and the stacking of ore on the heaps as of January 1, 2000.
4.24 Environmental Matters
(a) Except as set forth in Schedule 4.24 (a) Teberebie has complied
with all applicable Environmental Laws (as defined below), except
for violations of Environmental Laws that do not and will not, in
the aggregate, have a Material Adverse Effect. There is no pending
or, to the Knowledge of the Seller, threatened civil or criminal
litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by
any governmental entity or any third party, relating to any
Environmental Law involving Teberebie or any of its current - or,
to the Knowledge of the Seller, past - directors, officers, senior
employees or the Teberebie mine, except for litigation, notices of
violations, formal administrative proceedings, or investigations,
inquiries or information requests that will not, in the aggregate,
have a Material Adverse Affect or that may be reasonably expected
to result in any material licences, permit or certificate being
revoked, suspended or modified.
(b) Set forth in Schedule 4.24(b) is a list of all environmental
reports, investigations and audits (whether conducted by or on
behalf of Teberebie) issued or conducted in the last two (2) years
relating to the Teberebie leasehold or Teberebie operations.
Complete copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer.
(c) There are no liabilities of or relating to Teberebie whether
vested or unvested, contingent or fixed, actual or potential which
(i) arise under or relate to matters covered by Environmental Laws
(including, without limitation, any matters disclosed or required
to be disclosed in Schedule 4.24(a)) and (ii) relate to actions
occurring or conditions existing on or prior to the Closing Date
that have had or may be reasonably expected to have a Material
Adverse Effect.
(d) For purposes of this Agreement the term "ENVIRONMENTAL LAW" means
any law, statute, rule or regulation of the Government of Ghana or
any of its agencies or subdivisions, in effect as of the Closing
Date, relating to the environment, including any such laws,
statutes, rules or regulations pertaining to (1) the treatment,
storage, disposal, generation and transportation of industrial,
toxic or hazardous substances or wastes,
12
(2) groundwater and soil contamination, (3) the release
into the environment of industrial, toxic or
hazardous substances or wastes, including, without
limitation, emissions, discharges, injections, spills, escapes or
dumping of pollutants, contaminants or chemicals, (4) underground
and other storage tanks or vessels, abandoned, disposed of or
discarded barrels, containers and other closed receptacles, and
(5) the manufacture, processing, use, distribution, treatment,
storage, disposal, transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or oil or petroleum products or solid or hazardous
waste and (6) the protection and prevention of damage to the
health, safety and welfare of any human or other living organism
supported by the environment.
4.25 Disclaimer of Other Representations and Warranties. Except as expressly
set forth in Section 3 and this Section 4, the Seller and PGI make no
representation or warranty, express or implied, at law or in equity, in
respect of the Intercompany Loans, PGL, Teberebie, or any of their
respective assets, liabilities or operations, including, without
limitation, with respect to merchantability or fitness for any particular
purpose, and any such other representations or warranties are hereby
expressly disclaimed.
5 REPRESENTATIONS OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
5.1 Organization and Authority. The Buyer is a company duly organized,
validly existing and in good standing under the laws of the Cayman
Islands and has all requisite power and authority (corporate and other)
to own its properties, carry on its business as now being conducted,
execute and deliver this Agreement and the agreements contemplated
herein, and consummate the transactions contemplated hereby and thereby.
Certified copies of the constitutional documents of the Buyer, as amended
to date, have been previously delivered to the Seller, are complete and
correct, and no amendments have been made thereto or have been authorized
since the date thereof.
5.2 Authorization. The execution and delivery of this Agreement by the Buyer,
and the agreements provided for herein, and the consummation by the Buyer
of the transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action. This Agreement and all such
other agreements and written obligations entered into and undertaken in
connection with the transactions contemplated hereby constitute the valid
and legally binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms. The execution, delivery
and performance of this Agreement and the agreements provided for herein,
and the consummation by the Buyer of the transactions contemplated hereby
and thereby, will not, with or without the giving of notice or the
passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to the Buyer; (b) violate the provisions of the
Buyer's constitutional documents; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict
with or result in the breach or termination of any term or provision of,
or constitute a default under, or cause any acceleration under, or cause
the creation of any lien, charge or encumbrance upon the properties or
assets of the Buyer pursuant to, any indenture, mortgage, deed of trust
or other agreement or instrument to which the Buyer is a party or by
which the Buyer is or may be bound. Schedule 5.2 sets forth a true,
correct and complete list of all consents and approvals of third parties
that are required in connection with the consummation by the Buyer or by
AGC of the transactions contemplated by this Agreement.
5.3 Regulatory Approvals. All consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and which are necessary for the
consummation of the transactions contemplated by this Agreement have
been, or will be prior to the Closing Date, obtained and satisfied.
5.4 Brokers' Fees. The Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the
transactions
13
contemplated by this Agreement for which the Seller could
become liable or obligated.
5.5 Dealings with Officers and Directors. The Buyer has had no dealings with
any of the officers or directors of PGL or Teberebie in connection with
the transactions contemplated by this Agreement except to the extent that
such officers or directors were made available to the Buyer by PGL or
Teberebie for such purpose.
6 ACCESS TO INFORMATION; PUBLIC ANNOUNCEMENTS
6.1 Access to Management, Properties and Records. From the date of this
Agreement until the Closing Date, the Seller shall (a) afford the
officers, attorneys, accountants and other authorized representatives of
the Buyer (including employees, officers, accountants and attorneys of
Gold Fields (Ghana) Limited) free and full access upon reasonable notice
and during normal business hours and in a manner that does not interfere
with the normal business operations of PGL and Teberebie to all
management personnel, employees, advisors, offices, properties, books and
records of PGL and Teberebie, so that the Buyer may have full opportunity
to make such investigation as it shall desire to make of the management,
business, properties and affairs of PGL and Teberebie, and the Buyer
shall be permitted to make abstracts from, or copies of, all such books
and records, (b) furnish to the Buyer such financial and operating data
and other information as to the business of PGL and Teberebie as the
Buyer shall reasonably request, and (c) instruct the employees, counsel
and financial advisors of the Seller, PGL or Teberebie to cooperate with
the Buyer in its investigation of PGL or Teberebie. No investigation by
the Buyer or other information received by the Buyer shall operate as a
waiver or otherwise affect any representation, warranty or agreement
given or made by the Seller hereunder.
6.2 Confidentiality. The Buyer's rights under Section 6.1 are subject to the
Confidentiality Agreement executed by AGC with respect to PGL and
Teberebie and the transactions contemplated hereby (the "CONFIDENTIALITY
AGREEMENT").
6.3 Public Announcements. Except as may be required by any applicable law or
order or the rules of or any listing agreement with any securities
exchange or regulatory body, the parties agree that prior to the Closing
Date any and all general public announcements or other general public
communications concerning this Agreement and the purchase and sale of the
Shares by the Buyer, and the timing, manner and content of such
disclosures, shall be subject to the mutual agreement of the Seller and
the Buyer. To the extent it is able to do so, if any party is required by
any applicable law or order or the rules of or any listing agreement with
any securities exchange or regulatory body to make a general public
announcement concerning this Agreement, it shall so inform all other
parties hereto no less than 24 hours before such announcement is made.
7 PRE-CLOSING COVENANTS OF THE SELLER
From and after the date hereof and until the Closing Date, subject to the
letter agreement dated March 31, 2000 between AGC and PGI, the Seller
agrees as follows:
7.1 Conduct of Business. Except as otherwise expressly agreed in Section 9
hereof:
(a) PGL and Teberebie shall carry on their business diligently and
substantially in the same manner as conducted in the months
immediately preceding the Closing Date and otherwise in true and
ordinary course and shall not make or institute any unusual or new
methods of processing, purchase, sale, shipment or delivery,
lease, management, accounting or operation, and shall not process,
ship or deliver any quantity of gold which materially exceeds
normal processing, shipment or delivery levels, except as agreed
to in writing by the Buyer.
(b) All of the property of PGL and Teberebie shall be used, operated,
repaired and maintained in a normal business manner consistent
with past practice,
14
including, without exception, the replacement
of crusher liners and maintenance of lubricants, hydraulics and
conveyor belts.
(c) The Seller, PGL and Teberebie shall not do anything that could
reasonably be expected to lead to damage to or a reduction in the
usefulness or efficiency of the assets of Teberebie, or cause any
breach of Environmental Laws whether by act or omission.
7.2 Absence of Material Changes. Except as otherwise expressly agreed
in Section 9 hereof, without the prior written consent of the Buyer,
neither PGL nor Teberebie shall:
(a) take any action to amend its charter documents or bylaws;
(b) issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe for any of
such securities or issue any securities convertible into such
securities;
(c) incur any obligation or liability (absolute or contingent), except
current liabilities incurred and obligations under contracts
entered into in the ordinary course of business;
(d) declare or make any payment or distribution with respect to its
stock or purchase or redeem any shares of its capital stock;
(e) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of their respective assets or properties;
(f) sell, assign, lease or transfer any of its assets, except for
inventory sold in the ordinary course of business and any Assets
listed in Schedule 4.21(b) hereto;
(g) cancel any debts or claims, except regularly scheduled debt
payments and the debt set forth on Schedule 9.1;
(h) merge or consolidate with or into any corporation or other entity;
(i) make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if
any, or increase the rate of compensation payable or to become
payable by it to any of its officers, directors or employees,
other than increases in the ordinary course of business consistent
with past practice;
(j) enter into any lease, contract, agreement or understanding;
(k) materially reduce the level of crusher spares and reagent stocks
at the Teberebie mine below the levels of September 30, 1999,
except in the ordinary course of business;
(l) incur any capital expenditures in excess of $100,000 in the
aggregate;
(m) engage any new employee;
(n) pass any resolution to wind up or to make and application for an
administrative order;
(o) admit any person as a member;
(p) to lend any money or other assets;
(q) form any subsidiary; or
15
(r) commit or agree to do any of the foregoing in the future.
7.3 Representations and Warranties. The Seller will not, and will not permit
PGL or Teberebie to, take or agree to commit to take any action that
would make any representation or warranty of the Seller hereunder
inaccurate at, or as of any time prior to, the Closing Date such that it
would amount to a Material Adverse Effect.
7.4 Compliance with Laws. PGL and Teberebie will each comply with all laws
and regulations that are applicable to it or to the conduct of its
business and will perform and comply with all contracts, commitments and
obligations by which it is bound.
7.5 Notice of Developments and Breach. The Seller shall give prompt written
notice to the Buyer of any development causing a breach of any of its
representations or warranties in Sections 3 and 4 which would or may
reasonably be expected to have a Material Adverse Effect. No disclosure
by the Seller pursuant to this Section 7.5 shall be deemed to prevent or
cure any misrepresentation or breach of warranty.
7.6 If at any time before the Closing Date the Buyer becomes aware (whether
pursuant to Section 7.5 or otherwise) of any development causing a breach
of any of the representations or warranties in Section 3 and 4 which
would or may reasonably be expected to have a Material Adverse Effect,
then the Buyer may in its absolute discretion:
(a) proceed to Closing in accordance with the terms of this Agreement,
after notification to the Seller and PGI of such breach provided
that the Buyer shall retain the right to claim all amounts to
which it would be entitled as a result of the breach by the Seller
or PGI of its representations or warranties; or
(b) terminate this Agreement pursuant to Section 15.4.
7.7 FURTHER ASSURANCES. The Seller and PGI will use their reasonable best
efforts to take all action and do all things necessary in order to
consummate and make effective the transactions contemplated by this
Agreement.
7.8 ACCESS. The Seller shall permit agents of the Buyer or of Gold Fields
(Ghana) Limited access to the facilities of PGL and Teberebie, upon
reasonable notice and during normal business hours, for the purpose of
ensuring that the business of PGL and Teberebie is carried on in
accordance with the provisions of Section 7.1 above.
8 PRE-CLOSING COVENANTS OF THE BUYER
From and after the date hereof and until the Closing Date:
8.1 NOTICE OF DEVELOPMENTS. The Buyer shall give prompt written notice to the
Seller of any development causing a breach of any of its representations
and warranties in Section 5 which would create or would reasonably be
expected to create a liability on the Buyer of $100,000 or more. No
disclosure by the Buyer pursuant to this Section 8.1 shall be deemed to
prevent or cure any misrepresentation or breach of warranty.
8.2 FURTHER ASSURANCES. The Buyer will use its reasonable best efforts to
take all action and do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement.
9 CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the
Buyer:
16
9.1 REPAYMENT OR SATISFACTION OF DEBT. The Seller shall have, or shall have
caused PGL to have, repaid or otherwise satisfied all of the outstanding
debt of Teberebie and PGL except for the debt set forth on Schedule 9.1
and the Intercompany Loans.
9.2 RELEASE OR REPAYMENT OF DEBT. All debt owed by PGL or Teberebie to Seller
and its Affiliates, shall have been repaid or cancelled except for the
debt set forth in Schedule 9.2 and the Intercompany Loans.
9.3 PAYMENT OF OTHER CREDITORS. The Seller shall have, or shall have caused
PGL and TGL to have, paid or resolved all other debts owing to creditors
of PGL or Teberebie.
9.4 EMPLOYEE MATTERS. The Seller shall have implemented and funded the plan
with respect to the current employees of Teberebie or PGL such that there
are no outstanding claims against Teberebie or PGL by any employees (past
or present) of Teberebie or PGL, as the case may be, and there are no
amounts due to any such persons from Teberebie or PGL, except as set
forth on Schedule 4.8.
9.5 SKANDINAVISKA ENSKILDA BANKEN ("SEB") The Buyer and TGL shall have agreed
with SEB on terms acceptable to the Buyer (a) amendments to Credit
Agreement; (b) the release of security held by SEB over certain of TGL's
assets; (c) the grant by TGL of new security to SEB over certain assets
of TGL.
9.6 RESOLUTION OF CLAIMS. Except as set forth in Schedule 9.6, the Seller
shall have resolved and satisfied all claims and demands relating to or
against PGL or Teberebie on or prior to the Closing Date.
9.7 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PGI.
COMPLIANCE WITH COVENANTS AND OBLIGATIONS. The representations and
warranties of the Seller (other than the representations and warranties
regarding the physical condition of the Teberebie mine which are deemed
to have been made as of March 31, 2000) and PGI shall be true in all
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except for any changes
consented to in writing by the Buyer. The Seller, PGL and Teberebie and
PGI shall have performed and complied in all respects with all terms,
conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by each of them prior
to or at the Closing.
9.8 CORPORATE PROCEEDINGS. All corporate and other proceedings required to
be taken on the part of the Seller to authorize or carry out this
Agreement shall have been taken.
9.9 GOVERNMENTAL APPROVALS. All governmental agencies, departments, bureaus,
commissions and similar bodies, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or regulation
for the consummation by the Seller, PGL, Teberebie or PGI of the
transactions contemplated by this Agreement and the agreement between AGC
and Gold Fields Ghana Limited dated 1 October 1999 and the operation of
the business of PGL and Teberebie by the Buyer shall have consented to,
authorized, permitted or approved such transactions (including, for the
avoidance of doubt, any golden share or special rights share held by the
Government of Ghana or any subdivision thereof). Without limiting the
generality of the foregoing, the Government of Ghana and all appropriate
agencies and subdivisions thereof shall have provided any and all
necessary approvals in connection with the transactions contemplated
hereby and by the agreement between AGC and Gold Fields Ghana Limited
dated 1 October 1999, including consent to the transfer of ownership of
Teberebie as the entity holding the right to mine the Teberebie
concession and all associated permits, authorizations and approvals.
9.10 CONSENT OF LENDERS, LESSORS AND OTHER THIRD PARTIES. The Seller, PGL,
Teberebie and PGI shall have received all requisite consents and
approvals of all lenders, lessors and other third parties whose consent
or approval is required in order
17
for the Sellers, PGL and Teberebie to
consummate the transactions contemplated by this Agreement, including,
without limitation, those set forth on Schedule 4.4.
9.11 ADVERSE PROCEEDINGS. No action or proceeding by or before any court or
other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or
which might affect the right of the Buyer to own the Shares or to own or
operate the business of PGL and Teberebie after the Closing or which
might affect the rights of the Buyer to own the Intercompany Loans.
9.12 COMPLIANCE. Teberebie and PGL shall have complied in all material
respects with all regulations, rules authorizations and directives in
connection with and related to the mining activities of Teberebie, except
to the extent that any non compliance will not, in the aggregate, have a
Material Adverse Effect.
9.13 CONSENT OF THE GOVERNMENT OF GHANA AS SHAREHOLDER. The Buyer shall have
received, on or prior to the Closing Date, a written agreement from the
Government of Ghana, as owner of 10% of the issued and outstanding shares
of Teberebie, to the planned transfer of certain assets of Teberebie to
Gold Fields (Ghana) Limited subsequent to the Closing Date.
9.14 CONSENT OF AGC'S LENDERS. AGC shall have received all requisite consents
and approvals of lenders and hedge counterparties whose consent or
approval is required in order for AGC to consummate the transactions
contemplated by this Agreement.
9.15 AGREEMENT WITH LENDERS OF GHANAIAN-AUSTRALIAN GOLDFIELDS LIMITED. Written
agreement (on terms acceptable to AGC) with the shareholders of and
lenders to its subsidiary, Ghanaian-Australian Goldfields Limited ("GAG")
on the terms on which GAG's borrowings are to be rescheduled and the
terms on which GAG will agree to process ore to be mined from PGL's
Teberebie Mine
9.16 PERFORMANCE BY THE SELLER AND PGI. At the Closing, each of the Seller,
PGL and PGI shall have delivered to the Buyer a certificate, signed by an
authorized officer, as to its compliance with Sections 9.1 through 9.12
hereof, as applicable.
9.17 CLOSING DELIVERIES. At or prior to the Closing the Seller shall
(a) deliver such documents, instruments or certificates as the Buyer
may reasonably request including, without limitation:
(i) the share certificates representing the Shares accompanied
by duly executed share transfer forms in a manner directed
by the Buyer in accordance with Section 1.1 of this
Agreement;
(ii) certificates of the Secretary of PGL attesting to the
incumbency of PGL's officers, the authenticity of the
resolutions authorizing the transactions contemplated by
this Agreement, and the authenticity and continuing
validity of the constitutional documents of PGL delivered
pursuant to Section 4.1;
(iii) a certificate signed by the Chief Executive Officer of the
Seller to the forgoing effect.
(iv) the original register of members, corporate minute and
other statutory books, share certificate books, the
certificate of incorporation and constitutional documents
of PGL and Teberebie and all corporate seals and other
corporate records and books;
(v) a cross receipt executed by the Buyer and the Seller;
18
(vi) the Plant Register;
(vii) pay to the Buyer an amount equal to the accrued interest
from 1 February 2000 to 31 March 2000 due from Teberebie to
Skandinaviska Enskilda Banken pursuant to the Credit
Agreement by wire transfer of immediately available funds
to an account designated by the Buyer; and
(viii) if applicable, pay to the Buyer accounts payable and
royalties payable net of the mutually agreed upon
settlement amount on bank balances and receivables, each
converted at mutually agreed upon exchange rates, and
bullion inventory, all at March 31, 2000.
(b) cause the transfers mentioned in Section 9.17(a)(i) to be resolved
to be registered by procuring the passing by the directors of PGL
of resolutions including:
(i) approving the transfers mentioned in Section 9.17(a)(i) and
resolving that they be registered, new share certificates
be prepared and executed and the names of the new
shareholders be entered in PGL's register of members;
(ii) approving the appointment of new directors and the new
secretary pursuant to Section 9.17(c) and the new auditors;
and
(iii) approving the resignations pursuant to Section 9.17(d) and
9.16(f);
(c) cause such persons who consent to act as may be notified by the
Buyer to the Seller prior to the Closing Date to be validly
appointed as additional directors and Secretary of PGL and/or
Teberebie, as the case may be, with effect from the Closing;
(d) on the appointment referred to in Section 9.17(c) being made,
cause all existing directors and the secretary of PGL and
Teberebie to cease to be directors and the secretary (as the case
may be) and further cause all such persons to deliver to the Buyer
their written resignations of their respective offices and letters
(executed as deeds) acknowledging that they have no claim as to
any compensation for loss of office or otherwise howsoever
including redundancy and unfair dismissal;
(e) if the Buyer so requests, procure that each of the persons named
in Section 9.17(d) concur with PGL and/or Teberebie in taking such
action as the Buyer may consider necessary to preclude such person
from making a complaint to or putting proceedings before a court
of law or an industrial tribunal in respect of the termination of
his contract of employment ; and
(f) procure the Auditors shall resign their office as auditors of PGL
and Teberebie by depositing their written notice of resignation at
the respective registered office in accordance with the laws
applicable in the jurisdiction of incorporation of PGL and
Teberebie. At Closing PGI shall deliver an assignment of the
Intercompany Loans on terms acceptable to the Buyer.
10 RESOLUTIONS AND WAIVERS.
The Seller shall pass a resolution waiving (and shall procure the waiver
by its nominees of) all rights of pre-emption which it (or such nominees)
may have (whether under PGL's articles of association or otherwise) in
respect of the transfer to the Buyer (or its nominees) of the Shares or
any of them and shall cause the resolutions to be filed with the local
registry in Guernsey within 21 days of Closing.
19
11 CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the
Seller:
11.1 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE BUYER;
COMPLIANCE WITH COVENANTS AND Obligations. The representations and
warranties of the Buyer in this Agreement shall be true on and as of the
Closing Date as though such representations and warranties were made on
and as of such date, except for any changes consented to in writing by
the Seller. The Buyer shall have performed and complied with all terms,
conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
11.2 CORPORATE PROCEEDINGS. All corporate and other proceedings required to
be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
11.3 GOVERNMENTAL APPROVALS. All governmental agencies, departments, bureaus,
commissions and similar bodies, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or regulation
for the consummation by the Buyer of the transactions contemplated by
this Agreement shall have consented to, authorized, permitted or approved
such transactions.
11.4 CONSENTS OF LENDERS, LESSORS AND OTHER THIRD PARTIES. The Buyer and AGC
shall have received all requisite consents and approvals of all lenders,
lessors and other third parties whose consent or approval is required in
order for the Buyer or AGC to consummate the transactions contemplated by
this Agreement, including, without limitation, those set forth on
Schedule 5.2.
11.5 ADVERSE PROCEEDINGS. No action or proceeding by or before any court or
other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or
which might affect the right of the Seller to transfer the Shares.
11.6 RECOGNITION AGREEMENT. The Buyer shall have delivered to the Seller a
written agreement executed by Barclays Capital and Chase Manhattan Bank
(as lead arrangers to the AGC group) and from AGC's hedge counterparties
which acknowledges the existence of this Agreement and the obligations of
the Buyer to make certain ongoing payments to the Seller pursuant to
Section 2.3 of this Agreement and the obligations of AGC under this
Agreement.
11.7 PERFORMANCE BY THE BUYER. At the Closing, the Buyer shall have delivered
to the Seller a certificate signed by an authorized officer of the Buyer
as to its compliance with Sections 11.1 through 11.6.
11.8 CLOSING DELIVERIES. The Seller shall have received at or prior to the
Closing such documents, instruments or certificates as the Buyer may
reasonably request including, without limitation:
(a) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the
resolutions authorizing the transactions contemplated by this
Agreement, and the authenticity and continuing validity of the
charter documents and by-laws delivered pursuant to Section 5.1;
(b) a certificate signed by the Chief Executive Officer of the Buyer to
the forgoing effect;
(c) payment of the Share Purchase Price and the cash portion of the
Base Purchase Price to be paid at the Closing in accordance with
Sections 1.3 and 2.3; and
20
(d) Promissory Note. The Buyer shall have delivered a promissory
note in the form attached hereto as Exhibit A;
(e) a cross receipt executed by the Buyer and the Seller;
(f) if applicable, pay to the Seller the mutually agreed upon
settlement amounts on bank balances and receivables, each
converted at mutually agreed upon exchange rates, and bullion
inventory, net of accounts payable and royalties payable, all at
March 31, 2000; and
(g) pay to the Seller a mutually agreed upon for the gold bullion
produced at the Teberebie mine from March 31, 2000 through the
Closing Date.
12 BEST EFFORTS OF THE BUYER AND THE SELLER. THE PARTIES SHALL USE THEIR
BEST EFFORTS TO ENSURE THAT:
(a) the Buyer's Accountants shall be appointed as auditors of PGL and
Teberebie in place of the Auditors;
(b) the existing bank mandate in force relating to Teberebie and PGL
shall be altered (in such a manner as the Buyer shall require at
the Closing).
(c) the current accounting reference period of each of Teberebie
and PGL shall be altered so as to end on December 31; and
(d) the registered offices of PGL and Teberebie shall be changed to
the Legis Group, 1 Xx Xxxxxxxx Street, XX Xxx 000, Xx. Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxx Xxxxxxx and Xxxx Xxxxx, Xxxxxxx Xxxxxxx Xxxx,
Xxxxx, Xxxxx respectively.
13 POST-CLOSING COVENANT OF THE BUYER AND SELLER.
13.1 HOLDING OF SHARES IN TRUST. To the extent that the transfer of the Shares
is not completed at the Closing, the Seller hereby declares that for so
long as it or its nominees remain the registered holder of any of the
Shares after Closing, it will or will procure that its nominees (as the
case may be) will:
(a) hold the Shares and the dividends and other distributions of
profit or surplus or other assets declared, paid or made in
respect of them after Closing and all rights arising out of or in
connection with them in trust for the Buyer and its successors in
title; and
(b) deal with and dispose of the Shares and all dividends,
distributions and rights as are described in (a)
above as the Buyer or any successor may direct.
13.2 VOTING OF SHARES. If so requested by the Buyer or any successor, the
Seller shall:
(a) vote at all meetings which it or its nominees shall be entitled
to attend as the registered holder of the Shares in such manner
as the Buyer or any successor may direct;
(b) execute all instruments of proxy or other documents which the
Buyer may reasonably require and which may be necessary or
desirable or convenient to enable the Buyer or any successor or
their respective representatives to attend and vote at any such
meeting.
13.3 POWER OF ATTORNEY. The Seller hereby appoints the Buyer as its lawful
attorney for the purpose of receiving notices of and attending and voting
at all meetings of the members of PGL from Closing to the day on which
the Buyer or its nominees is entered in the register of members of PGL as
the holder of the Shares. For such purposes, the Seller hereby
authorizes:
21
(a) PGL to send any notices in respect of its holding of Shares to
the Buyer;
(b) the Buyer to complete in such manner as it thinks fit and return
proxy cards, consents to short notice and any other documents
required to be signed by it in its capacity as a member.
13.4 Operation of the Teberebie Mine. During the period from the Closing Date
until March 31, 2006, Buyer agrees to make reasonable efforts to mine and
process ore at the Teberebie minesite in a manner designed to produce and
ship at least 37,500 ounces of gold per calendar quarter.
13.5 FINANCIAL STATEMENTS OF BUYER; NOTICE OF MATERIAL ADVERSE CHANGE IN
CONDITION
(a) In the event that the Buyer is no longer obligated by law or the
rules of any securities exchange to make public its financial
results, the Buyer will provide copies of its financial statements
to the Seller on a semi-annual basis through March 31, 2006.
(b) In the event that the Buyer experiences a material adverse change
in its financial condition or operations after Closing, it will as
soon as practicable thereafter inform the Seller in writing of
such change.
13.6 COVENANT RELATING TO TAX
The Seller hereby agrees to pay to the Buyer an amount equal to any Tax
(which has not been paid in full prior to Closing) which is payable by
PGL or Teberebie as a result of, or by reference to, any event,
occurrence, transactions, act or omission on or before Closing
notwithstanding any disclosure contained in Schedule 4.9.
13.7 RECLAMATION OBLIGATIONS
The Buyer hereby undertakes to the Seller to procure that Teberebie shall
undertake the reclamation obligations.
13.8 ACCESS TO EQUIPMENT
The Buyer hereby agrees that for a period of ninety (90) days from the
Closing Date, Caterpillar Financial Services Corporation ("CATERPILLAR")
shall be entitled to keep certain of the equipment and spare parts listed
on Schedule 4.21(a) (the "CATERPILLAR EQUIPMENT") at the workshop and
workshop yard areas, temporary marshalling yard at the East Crusher
Stockpile and the warehouse facility on the Teberebie mine site. The
Seller has informed the Buyer that it has an agreement with Caterpillar
pursuant to which Caterpillar or its authorized agents will remove the
Caterpillar Equipment from the mine site during this period. During this
ninety (90) day period, the Seller, or unless otherwise agreed,
Caterpillar hereby agrees to provide the necessary security services to
protect the Caterpillar Equipment from damage or unauthorized usage or
removal. Further, the Buyer agrees to permit Caterpillar or its
authorized agents, following reasonable prior notice, access to the 100
ton Grove crane (which should only be available for thirty (30) days from
the Closing Date), 18 ton Gall tone crane, forklift MO2, Isuzu mine
service truck T25 and mine service pickup truck P70 to disassemble
certain of the Caterpillar Equipment and remove all of the Caterpillar
Equipment from the mine site at times to be agreed upon among the Buyer,
the Seller and Caterpillar. The Buyer, PGL or Teberebie shall not be
responsible for any damage to the Caterpillar Equipment however caused.
14 INDEMNIFICATION
14.1 (a) By the Seller. After the Closing, subject to Section 14.5, the
Seller shall indemnify and hold harmless the Buyer from and
against all claims, damages, losses, liabilities, costs and
expenses of any nature whatsoever after application of available
insurance and tax benefits (including, without limitation,
settlement costs, reasonable expenses of investigating any
22
potential Losses (as defined below) and any legal expenses in
connection with defending any actions) in connection with any suit
or proceeding (collectively, the "LOSSES") in connection with each
and all of the following:
(i) any misrepresentation or breach of any representation or
warranty made by the Seller or PGI in this Agreement;
(ii) any breach of any covenant, agreement or obligation of the
Seller or PGI contained in this Agreement, which breach has
not been cured within 30 days after notice from the Buyer;
and
(iii) any misrepresentation contained in any certificate or
schedule furnished by the Seller pursuant to this Agreement.
(iv) any of the actions, suits or proceedings set forth in
Schedule 4.8 and any other action, suit or proceeding arising
out of or relating to the subject of any such actions, suits
or proceedings.
(b) BY THE BUYER. After the Closing, subject to Section 14.5, the
Buyer shall indemnify and hold harmless the Seller from and
against all Losses in connection with each and all of the
following:
(i) any misrepresentation or breach of any representation or
warranty made by the Buyer in this Agreement;
(ii) any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement, which breach has not
been cured within 30 days after notice from the Buyer;
(iii) any misrepresentation contained in any certificate or
schedule furnished by the Buyer pursuant to this Agreement.
14.2 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 14, the party asserting the claim (the
"INDEMNIFIED PARTY") shall promptly notify the other party (the
"INDEMNIFYING PARTY") of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim
or legal proceedings by a third party, the notice shall specify, if
known, the amount or an estimate of the amount of the liability arising
therefrom. The Indemnified Party shall not settle or compromise any claim
by a third party for which it is entitled to indemnification hereunder
without the prior written consent, which shall not be unreasonably
withheld or delayed, of the Indemnifying Party; provided, however, that
if suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after
notification thereof as provided in Section 14.3 of this Agreement, the
Indemnified Party shall have the right to settle or compromise such claim
upon giving notice to the Indemnifying Party as provided in Section 14.3.
14.3 DEFENSE BY THE INDEMNIFYING PARTY. In connection with any claim which may
give rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the Indemnified Party,
the Indemnifying Party, at the sole cost and expense of the Indemnifying
Party, may, upon written notice to the Indemnified Party, assume the
defense of any such claim or legal proceeding if the Indemnifying Party
acknowledges to the Indemnified Party in writing the obligation of the
Indemnifying Party to indemnify the Indemnified Party with respect to all
elements of such claim. If the Indemnifying Party assumes the defense of
any such claim or legal proceeding, the Indemnifying Party shall select
counsel reasonably acceptable to the Indemnified Party to conduct the
defense of such claims or legal proceedings and at the sole cost and
expense of the Indemnifying Party shall take all steps necessary in the
defense or settlement thereof. The Indemnifying Party shall not consent
to a settlement of, or the entry of any judgment arising from, any such
claim or legal proceeding, without the prior written consent of the
Indemnified Party (which consent
23
shall not be unreasonably withheld or delayed). The Indemnified
Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at
the expense of the Indemnifying Party. If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom
within 30 days after the date such claim is made: (a) the Indemnified
Party may defend against such claim or litigation in such manner as it
may deem appropriate, including, but not limited to, settling such claim
or litigation, after giving notice of the same to the Indemnifying Party,
on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control)
the defense of such action, with its counsel and at its own expense. If
the Indemnifying Party thereafter seeks to question the manner in which
the Indemnified Party defended such third party claim or the amount or
nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a reasonably
prudent manner.
14.4 SURVIVAL OF REPRESENTATIONS; CLAIMS FOR INDEMNIFICATION. All
representations and warranties made by the Seller or the Buyer in this
Agreement shall expire on the second anniversary of the Closing Date,
except in respect of claims, if any, (a) asserted in writing prior to
such second anniversary identified as a claim for indemnification
pursuant to this Section 14, or (b) which are based upon fraud by the
Seller or the Buyer, as the case may be, which shall survive until
finally resolved and satisfied in full, provided that the agreements,
representation and warranties contained in Section 4.9 and 4.24 shall
survive until the expiry of 5 years from the Closing Date.
14.5 THRESHOLD AMOUNT; LIMITATIONS. Neither party which is an Indemnifying
Party hereunder shall be required to indemnify, defend or hold harmless
the other party which is an Indemnified Party from and against any Losses
under Section 14.1 with respect to any breach of any representation,
warranty, covenant or agreement hereunder unless and until the amount of
such Losses exceeds $100,000 in the aggregate (the "THRESHOLD AMOUNT")
and shall only be obligated to indemnify the Indemnified Party with
respect to amounts in excess of the Threshold Amount up to a maximum
aggregate indemnity limit of $23.8 million. The Indemnifying Party shall
pay the Indemnified Party up to $5,000,000 at the Closing Date and that
shall increase (a) to $7,500,000 on Xxxxx 00, 0000, (x) to $10,000,000 on
March 31, 2002, (c) to $13,000,000 on Xxxxx 00, 0000, (x) to $16,750,000
on March 31, 2004, and (e) to $18,800,000 on March 31, 2005 and any
additional amounts equal to the Supplemental Payments made to the Seller
by the Buyer up to each of those dates. Amounts due to the Indemnified
Party shall be paid up to the maximum aggregate indemnity limit in
accordance with the schedule above and without regard to the date such
claim for indemnification is made. In determining whether and to what
extent the Threshold Amount has been exceeded, only individual Losses, or
related series of Losses, of $10,000 or greater in magnitude shall be
counted.
14.6 EXCLUSIVE REMEDY. If the Closing occurs, (a) Buyer's exclusive remedy for
Losses with respect to any breach by Seller of any representation,
warranty, covenant or agreement hereunder shall be the indemnification
provided by this Section 14, and Buyer expressly waives any other rights
or remedies it may have, and (b) Seller's exclusive remedy for Losses
with respect to any breach by Buyer of any representation, warranty,
covenant or agreement hereunder shall be the indemnification provided by
this Section 14, and Seller expressly waives any other rights or remedies
it may have; provided, however, that equitable relief, including the
remedies of specific performance and injunction, shall be available to
both parties hereto with respect to any actual or attempted breach of
this Agreement occurring before the Closing or with respect to the breach
of any covenant to be performed after the Closing.
15 TERMINATION OF AGREEMENT
15.1 TERMINATION BY LAPSE OF TIME. This Agreement shall terminate at 5:00
p.m., Boston Time, on May 26, 2000 if the transactions contemplated
hereby have not
24
been consummated, unless such date is extended by the
written consent of the Seller and the Buyer to a date which is no later
than June 30, 2000.
15.2 TERMINATION BY AGREEMENT OF THE PARTIES. This Agreement may be
terminated by the mutual written agreement of the parties hereto at any
time prior to the Closing.
15.3 TERMINATION BY REASON OF BREACH. This Agreement may be terminated by the
Seller, if at any time prior to the Closing there shall occur a breach of
any of the representations, warranties or covenants of the Buyer or the
failure by the Buyer to perform in any respect any condition or
obligation hereunder provided that such breach or failure would
reasonably be expected to create a liability of $100,000 or more, the
Seller has notified the Buyer of the breach, and the breach has continued
without cure for the lesser of 15 days after receipt of notice and the
number of days prior to the Closing. This Agreement may be terminated by
the Buyer, if at any time prior to the Closing there shall occur a breach
of any of the representations, warranties or covenants of the Seller, PGL
or Teberebie or the failure of the Seller, PGL or Teberebie to perform in
any respect any condition or obligation hereunder provided that such
breach or failure would amount to a Material Adverse Effect, the Buyer
has notified the Seller of the breach, and the breach has continued
without cure for the lesser of 15 days after receipt of notice and the
number of days prior to the Closing (such a breach by the Seller, PGL or
Teberebie shall be referred to herein as a "PRE-CLOSING BREACH").
15.4 TERMINATION BY THE BUYER. The Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing in
the event the Seller has given the Buyer any notice pursuant to Section
7.5.
15.5 EFFECT OF TERMINATION. If either party terminates this Agreement pursuant
to this Section 15, all rights and obligations of the parties hereunder
shall terminate without any liability of any party to any other party
(except for any liability of any party then in breach); provided,
however, that the obligations of the Buyer under the Confidentiality
Agreement shall continue in accordance with the terms thereof.
16 DISPUTE RESOLUTION
16.1 GENERAL. In the event that any dispute should arise between the parties
hereto with respect to any matter covered by this Agreement, the parties
hereto shall resolve such dispute in accordance with the procedures set
forth in this Section 16.
16.2 CONSENT OF THE PARTIES. In the event of any dispute between the parties
with respect to any matter covered by this Agreement, the parties shall
first use their best efforts to resolve such dispute among themselves. If
the parties are unable to resolve the dispute within 30 calendar days
after the commencement of efforts to resolve the dispute, the dispute
will be submitted to arbitration in accordance with Section 16.3.
16.3 ARBITRATION
(a) Either the Buyer or the Seller may submit any matter referred to
in Section 16.2 hereof to arbitration by notifying the other party
hereto, in writing, of such dispute. Within 10 days after receipt
of such notice, the Buyer and the Seller shall designate in
writing one arbitrator to resolve the dispute; provided, that if
the parties hereto cannot agree on an arbitrator within such
10-day period, the arbitrator shall be selected by the American
Arbitration Association. The arbitrator so designated shall not be
an employee, consultant, officer, director or stockholder of any
party hereto or any Affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Seller shall meet, at which time the
Buyer and the Seller
25
shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals
pursuant to paragraph (b) above, to discuss each of the issues
identified by the Buyer and the Seller. Each such party shall have
the right to be represented by counsel. The arbitration shall be
governed by the rules of the American Arbitration Association;
provided, that the arbitrator shall have sole discretion with
regard to the admissibility of evidence.
(d) The arbitrator shall use his or her best efforts to rule on each
disputed issue within 30 days after the completion of the hearings
described in paragraph (c) above. The determination of the
arbitrator as to the resolution of any dispute shall be binding
and conclusive upon all parties hereto. All rulings of the
arbitrator shall be in writing and shall be delivered to the
parties hereto.
(e) The prevailing party in any arbitration shall be entitled to an
award of reasonable attorneys' fees incurred in connection with
the arbitration. The non-prevailing party shall pay such fees,
together with the fees of the arbitrator and the costs and
expenses of the arbitration.
(f) Any arbitration pursuant to this section 16.3 shall be conducted
in New York, New York, U.S.A. Any arbitration award may be entered
in and enforced by any court having jurisdiction thereover and the
parties hereby consent and commit themselves to the jurisdiction
of the courts of the State of New York and the United States
District Court for the Southern District of New York for purposes
of the enforcement of any arbitration award.
17 BROKERS
17.1 FOR THE SELLER. The Seller represents and warrants that, other than
Xxxxxxx Xxxxx Xxxxxx, Inc., no person, firm or corporation has acted in
the capacity of broker or finder on its behalf to bring about the
negotiation of this Agreement. The Seller agrees to pay all fees,
expenses and other compensation owed by it or PGI to Xxxxxxx Xxxxx
Barney, Inc. The Seller agrees to indemnify and hold harmless the Buyer
against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Seller.
17.2 FOR THE BUYER. The Buyer agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on its behalf to bring about the negotiation
of this Agreement. The Buyer agrees to indemnify and hold harmless the
Seller against any claims or liabilities asserted against it by any
person acting or claiming to act as a broker or finder on behalf of the
Buyer.
18 GUARANTEES
18.1 CONSIDERATION. In consideration of the Buyer entering into this
Agreement, PGI hereby irrevocably and unconditionally guarantees to the
Buyer the due and punctual observance and performance by the Seller of
its obligations under this Agreement.
18.2 DURATION. The Guarantee referred to in Section 18.1 is a continuing
guarantee and shall remain in full force and effect until the Seller has
performed and discharged all of its obligations under this Agreement, and
the liability of PGI as guarantor shall not be affected by any
concession, time, indulgence or release granted by the Buyer nor shall
any other dealing, operate to discharge or limit that liability.
18.3 ENFORCEABILITY. PGI's obligation under Section 18.1 is a principal
obligation and is not ancillary or collateral to any other obligation,
and may be enforced by the Buyer (irrespective of any legal limitation,
disability, liquidation or
26
other incapacity on the part of the Seller or
any disclaimer by a liquidator or a trustee in bankruptcy of the Seller)
against PGI without the Buyer being required to maintain an action
against the Seller.
18.4 WARRANTY. PGI hereby warrants and represents that it is a corporation
duly organized and validly existing under the laws of Delaware and has
all requisite power and authority to enter into, execute and deliver this
Agreement and to comply with the terms of this Agreement.
18.5 SUBROGATION. PGI irrevocably waives any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any payment under
Section 18.1 to be subrogated to the rights of the payee against the
Seller with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Seller in respect thereof.
18.6 CONSIDERATION. In consideration of the Seller entering into this
Agreement, AGC hereby irrevocably and unconditionally guarantees to the
Seller the due and punctual observance and performance by the Buyer of
its obligations under this Agreement provided that the aggregate
liability of AGC pursuant to this guarantee shall not exceed $7,000,000.
18.7 DURATION. The Guarantee referred to in Section 18.6 is a continuing
guarantee and shall remain in full force and effect until the Buyer has
performed and discharged all of its obligations under this Agreement, and
the liability of AGC as guarantor shall not be affected by any
concession, time, indulgence or release granted by the Seller nor shall
any other dealing, operate to discharge or limit that liability.
18.8 ENFORCEABILITY. AGC's obligation under Section 18.6 is a principal
obligation and is not ancillary or collateral to any other obligation,
and may be enforced by the Seller (irrespective of any legal limitation,
disability, liquidation or other incapacity on the part of the Seller or
any disclaimer by a liquidator or a trustee in bankruptcy of the Seller)
against AGC without the Seller being required to maintain an action
against the Seller.
18.9 WARRANTY. AGC hereby warrants and represents that it is a corporation
duly organized and validly existing under the laws of Ghana and has all
requisite power and authority to enter into, execute and deliver this
Agreement and to comply with the terms of this Agreement.
18.10 SUBROGATION. AGC irrevocably waives any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any payment under
Section 18.6 to be subrogated to the rights of the payee against the
Buyer with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Buyer in respect thereof.
18.11 AGC agrees that if its proposed sale of a 50% interest in its Geita mine
is completed, it will approach its lending and hedge banks with a request
that the guarantee given by AGC pursuant to this Agreement shall be
increased from $7,000,000 to an amount equal to that which is due from
the Buyer to the Seller from time to time under this Agreement.
19 NOTICES
Any notices or other communications required or permitted hereunder shall
be sufficiently given if delivered personally or sent by telecopier,
telex, federal express, registered or certified mail, postage prepaid,
addressed as follows or to such other address of which the parties may
have given notice:
To the Buyer or AGC: Xxxxx Xxxxxx
C/o Xxxxxxx Goldfields Company Limited
Gold House
Xxxxxxx Xxxxxxx Road, Xxxxx Xxxxx
X.X. Xxx 0000,
Xxxxx, Xxxxx
Telecopier: 00 233 21 776 501
27
With a copy to: The Company Secretary
Xxxxxxx Goldfields Company Limited
Gold House
Xxxxxxx Xxxxxxx Road, Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxx, Xxxxx
Telecopier: 00 233 21 778 155
To the Seller: Xxxxxxx X. Xxxxxx
The Pioneer Group, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 XXX
Telecopier: 001 617 422 4289
With a copy to: Xxxxxx X. Xxxxx, Esq.
General Counsel
The Pioneer Group, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 XXX
Telecopier: x0-000-000-0000
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxx and Xxxx
Hasilwood House
00 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Telecopier: x00-00-0000-0000
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) on the date delivered, if delivered
personally, (b) three business days after being sent, if sent by
registered or certified mail, or (c) upon receipt of confirmation of
transmission, if sent by telecopier.
20 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
the Buyer, on the one hand, and the Seller and PGI , on the other hand,
may not assign their respective obligations hereunder without the prior
written consent of the other party. Any assignment in contravention of
this provision shall be void. No assignment shall release the Buyer, the
Seller and PGI from any obligation or liability under this Agreement.
21 ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant
hereto represent the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and
supersede all prior oral and written and all contemporaneous oral
negotiations, commitments and understandings between such parties.
The Buyer and the Seller may amend or modify this Agreement, in
such manner as may be agreed upon, by a written instrument
executed by the Buyer and the Seller.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions
of the Agreement shall prevail. The Exhibits and Schedules
attached hereto or to be attached hereafter are hereby
incorporated as integral parts of this Agreement.
28
22 SEVERABILITY
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal or unenforceable in any other
jurisdiction.
23 EXPENSES
Except as otherwise expressly provided herein, the Buyer, on the one
hand, and the Seller, on the other hand, will pay all fees and expenses
(including, without limitation, legal and accounting fees and expenses)
incurred by them in connection with the transactions contemplated hereby.
In no event will any of the fees or expenses incurred in connection with
this transaction by the Seller, including, without limitation, the fees
and expenses of counsel to the Seller, be billed to or paid by PGL or
Teberebie. The Seller shall be responsible for payment of all sales or
transfer taxes arising out of the conveyance of the Shares owned by the
Seller.
24 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
25 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of
the parties in the courts of the State of New York or in the United
States District Court for the Southern District of New York, and each of
the parties consents to the jurisdiction of such courts (and the
appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere
in the world.
26 SECTION HEADINGS
The section headings are for the convenience of the parties and in no way
alter, modify, amend, limit, or restrict the contractual obligations of
the parties.
27 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall be one and the
same document.
29
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of and on the date first above written.
AGC:
XXXXXXX GOLDFIELDS
COMPANY LIMITED
By: /s/ X. X. Xxxxxxx
Name: /s/ X. X. Xxxxxxx
Title: Chief Operating Officer
BUYER:
XXXXXXX GOLDFIELDS TEBEREBIE LIMITED
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Managing Director, New Business
SELLER:
PIONEER GOLDFIELDS II LIMITED
By: /s/ Xxxx X. Xxxxx, Xx.
Name: Xxxx X. Xxxxx, Xx.
Title: President
PGI:
THE PIONEER GROUP, INC.
By: /s/ Xxxx X. Xxxxx, Xx.
Name: Xxxx X. Xxxxx, Xx.
Title: CEO and President
[Schedules and Exhibits Intentionally Omitted]
30
