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EXHIBIT 10.4
EXECUTION COPY
PURCHASE AGREEMENT
BETWEEN
XXXXXXX GOLDFIELDS TEBEREBIE LIMITED
AND
PIONEER GOLDFIELDS II LIMITED
AND
THE PIONEER GROUP, INC.
AND
XXXXXXX GOLDFIELDS COMPANY LIMITED
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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 19
12 Best Efforts of the Buyer and the Seller.
The parties shall use their best efforts to ensure that: 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 28
23 Expenses 28
24 Governing Law 28
25 Jurisdiction; Service of Process 29
26 Section Headings 29
27 Counterparts 29
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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,
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to assist the Buyer in exercising all rights with respect thereto and to
carry out the purpose and intent of this Agreement.
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.
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(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;
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(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;
(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.
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(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 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.
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(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.
(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.
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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 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)
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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 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 y 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.
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(a) Schedule 4.11 contains a true, complete and correct list of the
following written contracts and agreements (collectively, the
"CONTRACTS"):
(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
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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.
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;
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(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;
(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
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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 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,
15
statutes, rules or regulations pertaining to (1) the treatment,
storage, disposal, generation and transportation of industrial,
toxic or hazardous substances or wastes, (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.
16
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 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, including, without
17
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
(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
18
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:
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.
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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 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
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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;
(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
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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.
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.
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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
(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.
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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:
(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.
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(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
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
25
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 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
26
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 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.
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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 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.
28
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 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.
29
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
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
30
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.
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.
31
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.
32
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: X.X. XXXXXX
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
----------------------------------
Name: XXXX X. XXXXX
Title: PRESIDENT
PGI:
THE PIONEER GROUP, INC
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: XXXX X. XXXXX
Title: CEO AND PRESIDENT
33
EXHIBIT A
Form of Promissory Note from Xxxxxxx Goldfields Company Limited
to Pioneer Goldfields II Limited
34
SELLER SCHEDULES UNDER SECTION 4
OF THE STOCK PURCHASE AGREEMENT
Any information disclosed in any Schedule shall be deemed to have been
disclosed in each other Schedule where such disclosure is required, provided
that the information shall be deemed disclosed only to the extent that it is
actually disclosed in the Schedules and not merely referred to or contained in a
document referred to in the Schedules.
SCHEDULE 4.1 -- ORGANIZATION
None.
SCHEDULE 4.3 -- SUBSIDIARIES
(b) Teberebie Goldfields Limited ("Teberebie")
(i) AUTHORIZED CAPITAL: 9,000,000 Class A Ordinary Shares, no par
value per share, and 1,000,000 Class B Ordinary Shares, no par
value per share. ISSUED AND OUTSTANDING CAPITAL: 1,860,000 Class A
Ordinary Shares issued to PGL and 206,667 Class B Ordinary Shares
issued to the Government of the Republic of Ghana
(ii) DIRECTORS: Xxxx X. Xxxxx, Xx., Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx X. Xxxxxxx
OFFICERS: Xxxx X. Xxxxx, Xx. - Chairman, Xxxxx X. Xxxxxxx -
Managing Director, Fugar & Co. - Secretary
(iii) No qualifications or licenses to do business as a foreign
corporation.
(c) Covenants, conditions, restrictions, voting trust arrangements, liens,
charges, encumbrances, options or adverse claims or rights whatsoever
with respect to outstanding shares of capital stock of Teberebie are as
follows:
(i) According to the 1986 Minerals and Mining Law, "Where a mineral
right is for reconnaissance, prospecting or mining of minerals,
the Government shall acquire a ten per cent interest in the rights
and obligations of such mineral operations in respect of which no
financial contribution shall be paid by Government." The Ghanaian
government maintains a 10% interest in Teberebie. In order to give
effect to these provisions in the 1986 Minerals and Mining Law,
the Deed of Warranty, Confirmation and Conditions dated December
3, 1987 issued to Teberebie requires that: "If there should be any
further increase in the number of issued shares, the Company shall
immediately cede and add to the "B" shares of the Government, 10%
of any such increase in the issued shares. . . . The Class "B"
shares of the Government shall be maintained and assured to be
always equal to 10% of the total
35
of issued ordinary shares in the Company that is to say 10% of the
total Class A and B shares issued."
(ii) According to the 1986 Minerals and Mining Law, "A company which is
the holder of a mining lease shall not without the prior consent
in writing of the Secretary -
a) register the transfer of any equity share or shares in the company
to any particular person or a nominee of such person; or
b) enter into an agreement, arrangement, or understanding, (whether
enforceable as a legal right or not) with any particular person.
Upon an application duly made to him the Secretary shall give his
consent if he considers that the public interest would not be
prejudiced by the change of control of the company." Any change in
control of Teberebie requires the permission of the Secretary of
the Minerals Commission.
(iv) None.
(e) With respect to Teberebie, any treasury stock; any outstanding options,
warrants or other rights with respect to its capital stock; securities
convertible into or exchangeable for shares of its capital stock; or any
other commitments to issue stock, options, warrants or other securities;
or any obligations of PGL or Teberebie to repurchase, redeem or otherwise
acquire any outstanding securities of Teberebie are as follows:
(i) According to the 1986 Minerals and Mining Law, "The Government
shall have the option to acquire on such terms as shall be agreed
upon between the holder of a mining lease and the Government a
further twenty per cent interest in the rights an obligations in
any mining operations where any mineral is discovered in
commercial quantities", the Ghanaian government has the option to
purchase an additional 20% share in Teberebie for consideration.
According to a letter to Teberebie dated April 28, 1999, the
Ghanaian government asserts that it has no present intention to
exercise this option.
(ii) According to the 1986 Minerals and Mining Law, "Where a mineral
right is for reconnaissance, prospecting or mining of minerals,
the Government shall acquire a ten per cent interest in the rights
and obligations of such mineral operations in respect of which no
financial contribution shall be paid by Government." The Ghanaian
government maintains a 10% interest in Teberebie. In order to give
effect to these provisions in the 1986 Minerals and Mining Law,
the Deed of Warranty, Confirmation and Conditions dated December
3, 1987 issued to Teberebie requires that: "If there should be any
further increase in the number of issued shares, the Company shall
immediately cede and add to the "B" shares of the Government, 10%
of any such increase in the issued shares. . . . The Class "B"
shares of the Government shall be maintained and assured to be
always equal to 10% of the total of issued ordinary shares in the
Company that is to say 10% of the total Class A and B shares
issued."
(iii) According to the Minerals and Mining (Amendment) Act of 1994, "The
Government shall have the option by notice in writing to a mining
company to acquire at any time a
2
36
special share by whatever name called in the company for no
consideration or for such consideration as the Government and the
company shall agree. . . . A special share shall constitute a
separate class of shares and shall have such rights as shall be
agreed between the Government and the company, but in the absence
of such agreement shall have the following rights -- . . . (a) the
special share shall be a preference share and shall carry no right
to vote but the holder shall be entitled to receive notice of and
to attend and speak at any general meeting of the members or any
separate meeting of the holders of any class of shares; (b) the
special share may only be issued to, held by or transferred to the
Minister or any other Minister of the Government or any person
acting on behalf of the Government and authorised in writing by
the Minister; (c) on a return of assets in a winding up or
liquidation of the company, the holder of the special share shall
be entitled to the sum of one thousand cedis in priority to any
payment to other members, but the special share shall confer no
further right to participate in the profits or assets of the
company; (d) the holder of the special share may require the
company to redeem the special share at any time in consideration
of the payment to the holder of one thousand cedis; (e) each of
the following matters shall be deemed to be a variation of the
rights attaching to a special share and shall accordingly be
effective only with the written consent of the holder of the
special share - (i) any amendment to or removal of any provision
in the regulations, bye-laws, articles of association, or other
equivalent document regulating the company which reflect or
further the intention of all or any of the provisions of this
section or of sections 60 to 60H of this Law; (ii) the voluntary
winding-up or voluntary liquidation of the company; (iii) the
disposal of any mining lease granted under this Law or of the
whole or a material part of the assets of the company."
SCHEDULE 4.4 - AUTHORIZATION
The execution, delivery and performance by the Seller of the Agreement and the
consummation of the transactions contemplated 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, except that according to the Minerals
and Mining (Amendment) Act of 1994, "A person shall not cease to be a
shareholder controller or a majority shareholder controller or an
indirect controller of a mining company unless he has first given to the
Minister a written notice of his intention to cease to be such a
controller of the mining company." The Seller and PGL must notify the
Minister of any intended sale.
(b) None.
(c) None.
(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
3
37
by which PGL or Teberebie or any of their properties is or may be bound
(except if no Material Adverse Effect would occur) or on the ability of
the parties to consummate the transactions contemplated by the Agreement,
except that:
(i) The two credit facilities of PGI contain restrictions on the
disposition of significant assets; therefore, PGI obtained the
consent of the respective lenders in order to consummate the
transactions contemplated by the Agreement.
SCHEDULE 4.6 - ABSENCE OF UNDISCLOSED LIABILITIES
Teberebie has entered into a number of contracts to maximize cash flow and
minimize its investment in supplies inventory. On June 1, 0000, Xxxxxxxxx
entered into a ten-year contract with Mobil Oil (Ghana) Limited ("Mobil") to
supply fuel on site. This contract enabled Teberebie to purchase fuel on an "as
needed" basis, eliminating the need for fuel inventory. In the event of
cancellation, the contract required Teberebie to pay Mobil $806,500, less
$45,670 per year. Teberebie negotiated an arrangement with Mobil under which
Teberebie paid Mobil the cedi equivalent of $395,000, and Mobil retains full
title to the oil tanks and associated equipment, without risk of any ownership
claim by Teberebie or its successors and assigns.
On December 1, 0000, Xxxxxxxxx entered into a five-year contract with Svedala
Ghana Limited ("Svedala") to maintain a warehouse of consigned parts on-site for
the crushing equipment. Teberebie is charged only for the parts used to repair
crushing equipment. As a condition to the cancellation of the contract, the
contract required Teberebie to pay Svedala the cost of the warehouse building
(less 20% per year depreciation) and the cost of any inventory on hand or
in-transit. Teberebie agreed with Svedala to pay four outstanding invoices
related to contested warranty claims totalling SEK 93,222. Teberebie and Svedala
agreed that the Buyer shall have exclusive access and right of way to Svedala's
warehouse facilities, subject to Svedala's and its customers' rights to have
reasonable access, subject to the Buyer's consent and compliance with minesite
safety and security protocols. Svedala retains full title to the warehouse
building and the associated improvements and stock parts, without risk of any
ownership claim by Teberebie or its successors and assigns.
On December 1, 0000, Xxxxxxxxx entered into a ten-year contract with Dupont de
Nemours International ("Dupont") to maintain a facility on-site of cyanide and
other reagent supplies for processing. As a condition to the cancellation of the
contract, Teberebie must pay Dupont the depreciated cost of the facility. In
lieu of paying the depreciated cost of the warehouse facility, Teberebie
confirmed to Dupont the access and right of way to the warehouse facility, and
Dupont retains full title to the warehouse building and improvements, without
risk of any ownership claim by Teberebie or its successors and assigns for the
full ten-year term of the license.
On April 15, 0000, Xxxxxxxxx also entered into a five-year contract for
satellite equipment and a communications link between the mine-site and
corporate headquarters to improve the response time between Ghana and Boston.
Teberebie has terminated this contract and paid the related cancellation
charges.
4
38
SCHEDULE 4.7 -- PROPERTIES
In connection with the Loan Agreement with Skandinaviska Enskilda Banken ("X.X.
Xxxxxx") (listed on Schedule 4.11(a)(i)) and pursuant to the (Further Charge)
Debenture issued in connection therewith, X.X. Xxxxxx retains a first priority
security interest in the equipment purchased pursuant to certain contracts
listed on the schedule to the X.X. Xxxxxx Loan Agreement.
Pursuant to the License granted by Teberebie to Svedala Ghana Limited
("Svedala") dated June 10, 1998 in connection with the Agreement for Holding of
Stock Spare and Wear Parts, Teberebie granted Svedala a license on certain
specified property on which Svedala built the warehouse to store crushing
equipment and spare parts.
SCHEDULE 4.8 - LITIGATION
(a) Pending actions, suits or proceedings to which PGL or Teberebie is party:
(i) XXXXXX XXXXXX XXXXXX V. TEBEREBIE GOLDFIELDS LIMITED. The
complaint was filed in 1998 alleging that the plaintiff had a
medical condition in his eyes resulting from his employment at
Teberebie, which condition was confirmed by the medical examiners,
and that Teberebie wrongfully terminated him when he refused to
work. The plaintiff alleges that he was almost totally disabled
and that he should have been retired as such. The plaintiff is
seeking compensation for loss of employment and for resettlement,
as well as payment of all medical bills and other relief as may be
just. A trial of the matter commenced on February 29, 2000.
Teberebie is currently trying to settle the matter, and the
estimated settlement cost is approximately 5,000,000 -
10,000,000 [cedis].
(ii) XXXX XXXXXX V. TEBEREBIE GOLDFIELDS LIMITED. The complaint was
filed in 1998 alleging that plaintiff was wrongfully dismissed and
that he is entitled to compensation for the impairment of his eyes
suffered in the course of his employment with Teberebie. He is
also seeking damages for wrongful dismissal. A trial of the matter
is currently scheduled to begin on April 7, 2000. Teberebie is
currently trying to settle the matter, and the estimated
settlement cost is approximately 5,000,000 - 10,000,000 [cedis].
(iii) XXXXXXX XXXXX V. TEBEREBIE GOLDFIELDS LIMITED. The complaint was
filed in 1998 alleging that the plaintiff contracted the disease
"Ankylosing spondylities" during the course of his employment with
Teberebie and that his condition should be treated as an
occupational illness. The plaintiff claims damages to compensate
him for being terminated as a result of an occupational illness
and also seeks reimbursement of his costs. A trial of the matter
has not yet begun. Teberebie is currently trying to settle the
matter, and the estimated settlement cost is approximately
5,000,000 - 10,000,000 [cedis].
(iv) REPUBLIC X. XXXXXX. The plaintiffs alleged that they were
assaulted by one of Teberebie's security officers during a village
riot. The claim is against the security officer and not
5
39
Teberebie, but Teberebie has been providing a defense for him. Teberebie
believes that the case will be dismissed on April 5, 2000 and will not
cost Teberebie any money.
(b) None.
(c) None.
SCHEDULE 4.9 - TAX MATTERS
(a) All payroll tax, income tax and royalty payment schedules have been filed
in a timely manner by Teberebie. Property rate (property taxes) assessed
by the Wassa West District Assembly (Tarkwa) for 1999 have been paid. PGL
has filed all Annual Tax Returns in a timely manner with the government
of Guernsey, Channel Islands.
(b) PGL and Teberebie have paid all Taxes, interest, penalties, assessments
and deficiencies due and payable or claimed to be due, except for the
draft assessment described in clause (c) below, which assessment
Teberebie is contesting in good faith.
(c) On December 23, 1999, the Office of the Commissioner of Internal Revenue,
issued the attached letter entitled "TAX AUDIT - 1996 AND 1997 FINANCIAL
STATEMENTS, FINALISATION OF 1991 - 1997 ASSESSMENTS" which was signed by
the Assistant Commissioner, Tax Audit. In the report, the Internal
Revenue Service concluded that Teberebie overpaid 139,792,000 [cedis] in
corporate taxes between 1991 and 1997. In addition, Teberebie underpaid
royalties of 14,427,015 [cedis] and 25,142,180 [cedis] in 1996 and 1997,
respectively. Teberebie paid the underpayment of royalties for the
periods of 1996, 1997 and 1998 in February 2000. Royalties for 1999 were
paid during 1999 under the IRS interpretation of the regulations. In a
separate schedule, the Internal Revenue Service estimated the RESIDUE, or
capital allowances available for future deduction, of 135 billion [cedis]
at December 31, 1997.
In February 0000, Xxxxxxxxx concluded its discussion with IRS regarding
the IRS letter of December 23, 1999 and refiled the applicable income tax
returns for the period of 1991 through 1997. The basic areas of
discussion with the IRS and Teberebie's conclusions are as follows:
1. The IRS disputed the deduction of realized foreign exchange losses
on debt service payment. Teberebie believed that the matter was
resolved by adding to taxable income the realized foreign exchange
gains on reduction of spare parts inventory. The basic matter of
adjusting the taxable income by realized foreign exchange gains or
losses is not disputed by the IRS.
2. The IRS disputed the indexation of capital allowances prior to the
formal IRS regulations issued in 1991 related to indexation.
Teberebie has refiled the income tax returns on the basis of the
1991 regulations with no indexation prior to 1991.
The refiled income tax returns from 1991 through 1997 reflect an
overpayment of taxes of 46,935,096 [cedis] and a residue (capital
allowances to be deducted after 1997) of 182,731,102,492 [cedis].
6
40
The revised income tax returns were submitted to the IRS on February 29,
2000, and Teberebie is of the opinion that these matters have been
resolved.
The IRS has included another matter in its December 23, 1999 letter
entitled "Floor Programme." The position of the IRS is that the income
obtained from hedging transactions (i.e., from Teberebie's floor program)
is a separately taxed item, which cannot be reduced by capital
allowances, and that the amount of tax arising from the floor program is
3,121,065,695 [cedis]. The IRS did not specifically request these funds
in the conclusion of its assessment nor was the IRS' position reflected
in its adjusted tax calculations for the years 1991 through 1997. In
Teberebie's opinion and in the opinion of Teberebie's tax advisor, the
position of the IRS is not supported by the Ghanaian tax regulations.
During the discussions with the IRS in February 2000, the Commissioner
and the Chief Inspector for Petroleum and Mining Unit agreed informally
that the matter had been resolved with no further liability to Teberebie.
(e) Based upon capital allowances for 1998 and 1999 and the refiling of the
income tax returns for the period 1991 through 1997, the estimated
capital allowances available for future deduction at December 31, 1999
was 293,191,842,885 [cedis]. Due to the disposal of the mining equipment
in March 2000 to satisfy the outstanding indebtedness to Caterpillar
Financial Corporation, the capital allowances have been decreased by
103,782,572,141 [cedis], resulting in a revised amount of 189,409,270,744
[cedis] available at December 31, 1999.
SCHEDULE 4.11 - CONTRACTS AND COMMITMENTS
(a) (i) LOAN AGREEMENTS, INDENTURES, MORTGAGES, GUARANTIES:
(A) Agreement dated November 28, 1988 between Boliden-Allis
Svedala-Xxxxx and Teberebie
(B) Credit Agreement dated as of March 11, 1996 (the "X.X. Xxxxxx
Agreement") between X.X. Xxxxxx and Teberebie
(C) Supplemental Agreement dated as of September 20, 1996 to the X.X.
Xxxxxx Agreement
(D) Supplemental Agreement dated as of October 11, 1996 to the X.X.
Xxxxxx Agreement
(E) Supplemental Agreement dated as of March 24, 1999 between
Teberebie and X.X. Xxxxxx
(F) Series E Unsecured Notes issued by Teberebie to The Pioneer Group,
Inc.:
1. PGI-11 dated May 10, 2000 in the principal amount of
$20,793,926
(ii) PLEDGES, CONDITIONAL SALE OR TITLE RETENTION AGREEMENTS, SECURITY
AGREEMENTS, MATERIAL EQUIPMENT OBLIGATIONS, MATERIAL PERSONAL PROPERTY
LEASE, LEASE PURCHASE AGREEMENTS:
(A) Further Charge (Debenture) dated September 30, 1996 issued by
Teberebie in favor of X.X. Xxxxxx
7
41
(B) License granted by Teberebie in connection with the Agreement for
Holding of Stock Spare and Wear Parts dated as of June 10, 1998
between Teberebie and Svedala Ghana Limited (with respect to piece
of property on which Svedala built the warehouse to store crushing
equipment and spare parts)
(iii) CONTRACTS, COMMITMENTS, PURCHASE ORDERS OR OTHER UNDERSTANDINGS OR
ARRANGEMENTS INVOLVING PAYMENTS OR RECEIPTS OF $100,000 OR MORE IF NOT
FULLY PERFORMED OR THAT MIGHT HAVE A MATERIAL ADVERSE EFFECT :
8
42
NAME DESCRIPTION PERIOD CONTRACT P.O. LIABILITY STATUS/
P.O. COMMENTS
---------------------------------------------------------------------------------------------------------------------
1 Mobil Oil (Ghana) Fuel Supply; 1-6-98 to Contract, $0 Contract terminated;
Ltd Lubricants 30-5-08; Contract Mobil retains title
Supply 24-6-94 to to tanks under
31-12-03 settlement agreement
2 ACG Telesystems Service Agreement 15-4-98 to P.O. 97-1512C $0 Gave termination
for airwave space 14-04-03 notice and paid
for satellite cancellation fee
phone system
3 SSI - Compass Camp site services 1-5-97 to Contract $0 Gave termination
30-4-01 notice
4 Svedala Inventory and 1-12-98 to Contract/ P.O. $0 Contract terminated;
supply crusher 30-11-03 Buyer has access and
repair and wear right of way to
parts Svedala's warehouse
5 GS Telecom Satellite phone 15-4-98 to 97-1512A; $0 Same as #2
equipment and 14-4-03 L9-0015
services
6 Dupont Supply of cyanide 1-12-97 to L9-0001; $0 Contract terminated;
and other reagents 30-11-07 Contract Dupont retains title
to warehouse
7 Barbex supply of filters 1-1-99 to L9-0737 $0 P.O. terminated; no
31-12-99 further commitments
8 Safetech Site security Month-to- L9-1573 and $0 Gave termination
services month contract notice
9 University of Support Ten-years Contract $0 Notice to conclude
Xxxxx Xxx-environment from 8-3-96 early given on
Studies Chair 16-12-99; final
payment to be made by
TGL prior to 31-03-00
10 ECG Electricity Current None Outstanding No change anticipated
bills
11. Deed of Warranty, Confirmation and Conditions dated December 3, 1987 among
the Government of the Republic of Ghana, Teberebie, The Pioneer Group, Inc. and
Glencar Explorations (UK) Limited
(IV) COLLECTIVE BARGAINING AGREEMENTS, EMPLOYMENT AND CONSULTING AGREEMENTS,
EXECUTIVE COMPENSATION PLANS, BONUS PLANS, DEFERRED COMPENSATION
ARRANGEMENTS, PENSION PLANS, RETIREMENT PLANS, EMPLOYEE STOCK OPTION OR
STOCK PURCHASE PLANS, GROUP HEALTH, LIFE AND ACCIDENT INSURANCE, AND
OTHER EMPLOYEE BENEFIT PLANS, AGREEMENTS, ARRANGEMENTS OR COMMITMENTS:
(A) WORKERS' COMPENSATION INSURANCE: Great Northern Insurance Company
(Chubb) Policy No. 3524-71-31 effective through July 10, 2000
(policy covers expatriates) and Enterprise Insurance Co. Ltd.
Policy No. DG 41353 effective through September 17, 2000 (policy
covers Ghanaian employees)
9
43
(B) LIFE INSURANCE: Life Insurance Company of North America (CIGNA)
Policy No. GO 17278 effective through April 17, 2000 (policy
covers active, full-time expatriates working in Ghana)
(C) ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE: Life Insurance
Company of North America (CIGNA) Policy No. ABL 657431 effective
through November 20, 2000 (policy covers officers and expatriates)
(D) LONG TERM DISABILITY INSURANCE: Life Insurance Company of North
America (CIGNA) Policy No. DE 604957 effective through February
12, 2000 (policy covers full-time, active expatriates working in
Ghana)
(v) MATERIAL CONTRACTS BETWEEN PGL AND TEBEREBIE OR BETWEEN PGL, TEBEREBIE
AND SELLER:
None.
(vi) MATERIAL LEASES, OPERATING OR CAPITAL:
(A) Mining Lease dated February 2, 1988 between the Government of the
Republic of Ghana and Teberebie
(B) Mining Lease dated June 18, 1992 between the Government of the
Republic of Ghana and Teberebie
(C) Lease dated December 1996 between Xxxxxxx Xxxxxx Xxxxx and
Teberebie from the house at Xxxx Xxxxxx 00X Xxxxxxx Xxxxxxxxxxx
Xxxx, Xxxxx
(vii) MATERIAL LICENSES OR SIMILAR ARRANGEMENTS RELATING TO MINING CONCESSIONS:
(A) Mining Lease dated February 2, 1988 between the Government of the
Republic of Ghana and TGL
(B) Mining Lease dated June 18, 1992 between the Government of the
Republic of Ghana and TGL
(C) Prospecting License dated June 12, 1998 between the Government of
the Republic of Ghana and TGL (Sefwi Project 90A)
(D) Prospecting License dated May 12, 1998 between the Government of
the Republic of Ghana and TGL (Sefwi Project 90C)
(E) Reconnaissance License dated November 21, 1994 between the
Government of the Republic of Ghana and TGL (Sefwi)
(F) Letter dated October 13, 1998 from the Minerals Commission to TGL
re: renewal of Prospecting License of Sefwi Project 90D
10
44
(G) Prospecting License dated November 18, 1998 between the Government
of the Republic of Ghana and TGL (Sefwi Project 90D)
(H) Prospecting License dated October 28, 1998 between the Government
of the Republic of Ghana and TGL (Nangodi Project)
(I) Reconnaissance License dated September 10, 1997 between the
Government of the Republic of Ghana and TGL (Nangodi Project)
(J) Non-Exclusive Prospecting Permit dated January 1996 granted by the
Ministry of Mining and Energy of the Republic of Niger to PGL,
with renewal dated June 7, 1999.
(VIII) OTHER MATERIAL AGREEMENTS, COMMITMENTS, ARRANGEMENTS OR PLANS NOT MADE IN
THE ORDINARY COURSE:
None other than those included elsewhere in this Schedule 4.11.
(b) By letter dated January 10, 2000, Teberebie notified X.X. Xxxxxx of its
inability to make the debt payment due January 31, 2000 under the Loan
Agreement with X.X. Xxxxxx (listed in Schedule 4.11(a)(i) above). X.X.
Xxxxxx has agreed to defer the due date of such payment.. Teberebie
understands that on the Closing Date, the Buyer will assume the
obligation to make such payment. X.X. Xxxxxx has not declared a default
or breach under its Loan Agreement with Teberebie.
(c) None.
SCHEDULE 4.12 - COMPLIANCE WITH AGREEMENTS,
LAWS AND COURT ORDERS
(c) See Schedule 4.11(b) above.
SCHEDULE 4.13. - INSURANCE
Teberebie has one pending claim for insurance covering certain excess spare
parts that were damaged in transit from Teberebie to Caterpillar, as described
in Schedule 4.15(f) below. The maximum total amount of the claim is about
$400,000, which claim has been assigned to PGI.
SCHEDULE 4.14 - EMPLOYEE RELATIONS
(c) CONTRACT HOURLY STAFF INFORMATION AT DECEMBER 31, 1999:
Cedis US Dollars
Number Monthly at 3430
Department Category Description Employed Basic Cedi/Dollar
-------------- -------- --------------------- -------- ---------- -----------
Mining Equipment Operators 4 4,000,000 1,166.18
Mine Workshop Mechanics 13 13,000,000 3,790.09
11
45
Process Operators/Technicians 28 28,000,000 8,163.27
Process Laborers 13 8,450,000 2,463.56
Admin/Security:
Tarkwa Guards & Drivers 6 6,000,000 1,749.27
Accra Drivers 2 2,000,000 583.09
Warehouse Laborer 1 650,000 189.50
Medical Clerk & Nurse 2 2,000,000 583.09
TOTALS 69 64,100,000 18,688.05
EXPATRIATE INFORMATION AT DECEMBER 31, 1999:
Date of Annual Add'l 14% Annual Monthly
Last Name First Contract Title Contract Salary Ins & Retire Cost Cost
--------- ------ ----------------------- --------- --------- ------------ --------- --------
Xxxxxxx Xxxxx Managing Director 23-Jul-96 $ 175,000 $ 24,500 $ 199,500 $ 16,625
XxXxxxxx Xxxxxxx General Manager 14-May-98 120,000 16,800 136,800 11,400
Xxxxx Xxxxxxx Chief Financial Officer 21-Jan-91 111,000 15,540 126,540 10,545
Xxxxxx Xxx Manager of Processing 01-Jun-93 93,000 13,020 106,020 8,835
Xxxxxxx Xxxxxxx Chief Engineer 15-Mar-95 80,000 11,200 91,200 7,600
Xxxxxxxx Xxxxxx Purchasing Officer 22-Oct-92 75,000 10,500 85,500 7,125
Xxxxx Xxxxx Project Geologist Niger 24-Feb-97 70,200 9,828 80,028 6,669
Xxxxxxxx Xxxx Chief Accountant 15-May-97 68,500 9,590 78,090 6,508
Xxxxx Xxxxx Mine Superintendent 18-Jan-95 65,000 9,100 74,100 6,175
Xxxxxx Xxxx Process Metallurgist 22-Mar-96 62,700 8,778 71,478 5,957
Xxxxxxx Xxxxx Proc. Ops 12-Jan-98 60,000 8,400 68,400 5,700
Superintendent
Xxxxxx Xxxxxx Mechanical 01-Feb-90 58,500 8,190 66,690 5,558
Trainer/Superv.
Hollywood Xxxxxxx Warehouse Supv. 15-Jan-96 58,500 8,190 66,690 5,558
Xxxxx Xxxx Environmental Engineer 21-Dec-94 55,500 7,770 63,270 5,273
Xxxx Xxxxx Electrical Supervisor 01-Jan-99 54,000 7,560 61,560 5,130
Xxxxx Xxxx Crusher Supervisor 01-Feb-98 53,500 7,490 60,990 5,083
Xxxxxxxxx Xxxx Crusher Maint. 02-Jan-98 52,000 7,280 59,280 4,940
Supervisor
XxXxxxxx Xxxxxx T. Mine Supervisor 06-Feb-97 52,000 7,280 59,280 4,940
Xxxx Xxxxxx Mine Supervisor 26-Nov-96 52,000 7,280 59,280 4,940
Xxxxxxxx Xxxx Maintenance Supervisor 01-Jan-98 50,000 7,000 57,000 4,750
Xxxxx Xxx Mine Planning Engineer 08-Jan-96 50,000 7,000 57,000 4,750
Xxxxxxxxx Xxxxxx Trainer/Supervisor 01-May-97 49,000 6,860 55,860 4,655
---------- -------- ---------- --------
TOTALS $1,565,400 $219,156 $1,784,556 $148,713
---------- -------- ---------- --------
All employees left Teberebie on or prior to March 31, 2000.
(d) See claims of former employees set forth in Schedule 4.08, all of which
Teberebie expects to resolve prior to the closing under the Agreement.
12
46
SCHEDULE 4.15 - ABSENCE OF CERTAIN CHANGES OR EVENTS
(a) None.
(b) None.
(c) None.
(d) Teberebie has repaid the entire amount due to the Overseas Private
Investment Corporation.
(e) Not mortgaged, pledged or subject to lien, charge or encumbrance any
properties or assets except for a review by the Minerals Commission of
the offshore hard currency retention level of 80% of gold proceeds; 35%
in excess of the Deed of Warranty. In June 1999, the Minerals Commission
notified all mining companies of the requirement in the Foreign Exchange
Retention Account Agreement for the review of the retention level. The
Minerals Commission has not conducted a formal review of Teberebie's
retention level since the Foreign Exchange Retention Account Agreement
was executed in 1990. Teberebie and the Minerals Commission agreed that
the review of the retention level would be deferred until the sale of PGL
is concluded. During a meeting of the Bank of Ghana ("BOG"), the Minerals
Commission and the represented mining companies held on June 14, 1999,
the need to review the retention level was mentioned. During the meeting,
the BOG requested that additional gold proceed dollars be returned to a
commercial bank within Ghana, thereby improving the commercial banking
system within the country. The additional funds would be transferred to
the respective company's unrestricted dollar account at a commercial bank
in Accra as follows:
45% to the Chase account offshore
35% to Ghana International Bank - London ("GIB")
71.4% (25% of gross proceeds) to Standard Charter-Accra dollar
account
28.6% (10% of gross proceeds) to remain at GIB - London
20% to Bank of Ghana for conversion to cedis
The mining companies requested an indemnification letter from the BOG
protecting their dollar accounts held in commercial banks in Accra. This
request has delayed the anticipated change in retention levels. Teberebie
is currently in a cedi deficit cash position requiring the conversion of
U.S. dollars to cedis on a routine basis.
(f) Not suffered material losses of personal or real property in excess of
$100,000, or waived any material rights except: the return of excess
spare parts to Caterpillar. With the assistance of Caterpillar, Teberebie
returned approximately $2.2 million in value of excess spare parts to
Caterpillar and recorded it as a deposit/advance. Teberebie has received
approximately $983,000 for certain of the returned parts. Teberebie is
still negotiating with Caterpillar about one additional container of
parts, which Teberebie believes should be valued at approximately
$81,000. Additionally, Teberebie made a claim for insurance coverage of
approximately $400,000 for the remaining parts that were damaged in
transport to Caterpillar. Any proceeds from this claim have
13
47
been assigned to PGI. In relation to this matter, Teberebie recorded a
loss in the fourth quarter of 1999.
(g) Not made, or committed to make, material changes in compensation payable
to any officer, director, employee or agent of PGL or Teberebie or any
bonus payment or similar arrangements with any of the foregoing or to
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. All Ghanaian staff were made redundant in November
and December 1999, and all amounts owing by way of agreements reached
with the Ghana Mineworkers Union, the Ministry of Labor and the Teberebie
Exempt Employees Association were paid out at that time. Employees needed
for the on-going operations of the recovery plants, refineries, equipment
operators and maintenance personnel and necessary administrative and
professional functions were put under short-term (3 month) contracts
until March 31, 2000. These contracts specifically precluded vacations
and major fringe benefits. These contracts were also fixed cedi contracts
that do not escalate with the depreciation of the cedi.
Certain expatriate staff members, deemed essential to the continued
operation, were given contract revisions providing for a completion bonus
to stay until the closing of the mine. In February 0000, Xxxxxxxxx
recorded a liability of $508,000 for these incentive payments.
(h) None.
(i) None.
(j) Caterpillar Financial Services Corporation ("Caterpillar") and Teberebie
executed a settlement agreement pursuant to which Caterpillar accepted
the return of Caterpillar equipment and spare parts, along with a payment
of no more than $1.7 million from PGI (to the extent the amount received
upon the sale of such equipment does not exceed the agreed upon appraisal
value) as consideration for extinguishing all indebtedness due to
Caterpillar from Teberebie. This transaction resulted in Teberebie
recording in March 2000 a book loss of $5,024,134 related to spare parts
inventory and $4,659,217 related to Caterpillar equipment.
(k) None.
SCHEDULE 4.16 - SUPPLIERS
(a) Vendor information:
Purchases Amounts
To Dec 99 over 30 days
Name Address Description Dollars Dollars
---- ------- ----------- ------- -------
AB Benziers Xxx 000
X-000 00 Xxxxxxxxxxx Xxxxxxx spares $202,708 $ 0
Sweden
African Explosives X.X. Xxx 00 Explosives 4,771,357 0
Xxxxxx, Xxxxxxx Xxxxxx
Xxxxx
14
48
Aggreko UK Limited Birch Road Generator rental 754,316 0
Xxxxxxxxx X00 0XX
Xxxxxx Xxxxxxx
Xxxxxxx XX 00000 Malmoe Electrical spares for 183,010 0
Sweden crushing
Accra
Ghana
CIBA Specialty Chemicals X.X. Xxx 00 Process Chemicals 228,289 0
Low Moor, Bradford
West Yorkshire, UK
RD12 OJE
Citiland International 0000 Xxxxxx Xxxxx Xx Xxxxx pad piping 000,000 0
Xxxxx 000
Xxxxxxx, XX 00000 XXX
Xxxxxxx Gatco 00 Xxxxxxxx Xxxxx Ground engagement 497,419 0
Westfield, New Jersey tools
07090-1099 USA
Driltech Mission X.X. Xxx 000 Drill equipment 192,741 0
Alachua, FL USA Repair spares
32615
DuPont de Nemoures X.X. Xxx 00 Sodium cyanide 2,566,460 0
Geneva
Switzerland
Electricity Corporation Electricity 3,925,374 0
of Ghana
Expertravel & Tours X.X. Xxx 0000 Air fares 383,135 0
Osu, Accra
Ghana
Ghacem Ltd X.X. Xxx 000 Cement 5,385,135 0
Takoradi
Ghana
Heavens Star P.O. Box 1359 Electrical material & 235,542 0
Accra supplies
Halco Drilling Int'l P. O. Box25 Drilling supplies 1,256,824 0
Xxxx Xxxx, Xxxxxxxxx
Xxxxxxx XX0 0XX UK
Hull Blyth & Co 2, Coldbath Square Air & Sea freight 146,011 0
London, UK From Europe
ECIR 5AX
Liner Agencies & Trading X.X. Xxx 00 Clearing agent and 452,390 0
Accra transportation from
Ghana ports to mine site
Xxxxxxxx Xxxxx Xxxxxx X.X. Xxx 000 Misc. Supplies from 106,291 0
Takoradi Takoradi
Mobil Oil 00 Xxxxxxx Xxxx Mobil Diesel fuel and 7,163,299 0
House lubricants
X.X. Xxx 000
Xxxxx, Xxxxx
MSAS Cargo International 16580 Air Center Blvd Sea / air freight and 1,102,896 0
Suite 200 freight forwarding
Xxxxxxx, Xxxxx 00000
XXX
Nowata Limited Carlton House Carlton Road Process chemicals 1,557,538 0
Xxxxx Xxxxxxxx
Xxxxxx XX00XX XX
OTR Tyres Bluebell Close Equipment and light 1,248,606 0
15
49
Clover Nook Industrial Park duty Tires
Xxxxxxxx, Xxxxxxxxxx XX00
0XX U K
Planproc P.O. Box 3555 Steel plate & misc 117,422 0
Accra Supply items
R-Co X.X. Xxx 000 Safety supply items 125,583 0
Accra
Xxxxxxx International 000 Xxxxx Xxx Xxxxxx Xxx Maintenance & inventory 691,796 0
Salt Lake City software & contract
Xxxx 00000 XXX operating services
Senet Projects X.X. Xxx 0000 Xxxxx pad conveyor 438,992 0
Edenglen 1613 (field & permanent)
South Africa
Serrot Corporation 125 Cassia May Plastic Lining 158,289 0
Xxxxxxxxx, XX XXX
00000
SSI Compass X.X. Xxx 00000 Catering 1,089,919 0
Airport, Accra
Ghana
Svedala Xxxxx X-000 00 Xxxxxxx Crusher spares 1,132,788 0
Sweden
Svedala Ghana X.X. Xxx XX 0000 Crusher spares 1,331,271 0
Cantonments, Accra
Ghana
Svedala Trellex AB X.X. Xxx 00 Wear rubber 469,208 0
X-000 00 Xxxxxxxxxx
Xxxxxx
Svedala Trellex A/S N-2200 Conveyor belt 350,228 0
Kongsvinger
Norway
Tamrock Ghana P.M.B. KIA Drill equipment 173,046 0
Accra Repair spares
Unatrac Limited Maidenhead Rd Caterpillar spares 192,282 0
Xxxxxxx, Xxxxxxxxx
XX XX0 0XX
West African Drilling X.X. Xxx X0000 Contract Drilling 184,300 0
Services Cantonments
Accra
West Coast Allies X.X. Xxx 00000 Contract security 212,029 0
Services Airport
Accra
Western Star Trucks 0000 Xxxxxxxxxx Xxx Spares for Western 145,836 0
Kelowna, BC Star fuel trucks
Xxxxxx XX X0X 0X0
Xxxxxxx Ltd X.X. Xxx 0000 Bus transport 340,726 0
Teshi-Nungua Est Casual labor and
Accra Construction services
Xxxxxxxx Xxxxxx AlpenblickstraBe 3 Various process supplies 414,541 0
D-88267 Xxxx and repair spares
Germany
Tractor & Equipment P.O. Box 5207 Local Caterpillar dealer 5,836,908 0
Accra-North
Ghana
Intercompany:
Pioneer Various 0
PIOGlobal Insurance - two years'
premium
16
50
(b) Ghacem Limited may qualify as having been a sole supplier of cement to
Teberebie. With the cessation of operations, however, the need for
contract was terminated.
(c) Relations with vendors were good.
SCHEDULE 4.18 - PREPAYMENTS AND DEPOSITS
None.
SCHEDULE 4.19 - INDEBTEDNESS TO AND FROM
OFFICERS AND DIRECTORS
None.
SCHEDULE 4.20 - REGULATORY APPROVALS
The following consents, approvals, authorizations and other requirements
prescribed by law, rule or regulation are required of PGL or Teberebie in order
to execute and deliver the Agreement or any related documents to be executed and
delivered by the Seller, PGL or Teberebie and have been satisfied by the Closing
Date:
According to the Minerals and Mining (Amendment) Act of 1994, "A person
shall not cease to be a shareholder controller or a majority shareholder
controller or an indirect controller of a mining company unless he has
first given to the Minister a written notice of his intention to cease to
be such a controller of the mining company." The Seller and PGL will have
to notify the Minister of any sale.
SCHEDULE 4.21(a) - EXCLUDED ASSETS
1. See attached list of Caterpillar equipment and drilling equipment and
related spares.
2. All cash on hand.
3. All accounts receivable.
4. All prepayments.
5. All advances and deposits.
SCHEDULE 4.21(b) - RETAINED ASSETS
17
51
See attached list prepared by the Buyer.
SCHEDULE 4.24 - ENVIRONMENTAL MATTERS
(a) None.
(b) Environmental reports, investigations and audits conducted in the last
two years:
1. Annual Environmental Report for 1999 dated February 2000 prepared by
Teberebie and presented to the Ghana EPA
2. Environmental Audit dated January 2000 1999 prepared by SGS Environment
("SGS")
3. Environmental Assessment New Tailings Dams Location dated June 1999
prepared by SGS
4. Annual Environmental Report for 1998 dated March 1999 prepared by
Teberebie and presented to the Ghana EPA
5. Interim Reclamation and Closure Plan dated January 1999 prepared by SGS
6. Xxxxx Pad Audit for the Teberebie Mine dated January 1999 prepared by
Vector Engineering, Inc. ("Vector")
7. Environmental Audit dated December 1998 by prepared by SGS
8. Teberebie Goldfields Hydrology of the Open Pits dated October 1998
prepared by Vector
9. Teberebie Goldfields Heap Xxxxx Pads Closure dated August 1998 prepared
by Vector
10. EPA Form M02 Monthly Monitoring Reports for June 1998 through December
1999 prepared by Teberebie
11. Application for River Diversion License dated November 1997 prepared by
SGS (including Vector's South Reservoir Embankment Design Appendix)
12. Annual Environmental Report 1997 dated March 1998 prepared by Teberebie
and presented to the Ghana EPA
13. Environmental Action Plan dated March 1998 prepared by Teberebie
14. Environmental Audit dated March 1998 by prepared by SGS
(c) None.
18
52
SCHEDULE 9.1 - REPAYMENT OR SATISFACTION OF DEBT
All debt due by Teberebie to X.X. Xxxxxx pursuant to the X.X. Xxxxxx Agreement,
as amended
SCHEDULE 9.2 - RELEASE OR REPAYMENT OF DEBT
All debt due by Teberebie to The Pioneer Group, Inc. pursuant to certain Series
E Unsecured Notes
SCHEDULE 9.6 - RESOLUTION OF CLAIMS
See outstanding litigation claims under Schedule 4.8 above.
19
53
SCHEDULE 5.2 THIRD PARTY CONSENTS
AND APPROVALS REQUIRED BY THE BUYER
Set out below is 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 of the transactions contemplated by this Agreement:
(a) Under the Minerals and Mining law, 1986 (as amended by the Minerals &
Mining (Amendment) Act of 1994) a person cannot become a shareholder
controller or a majority shareholder controller or an indirect controller
of a mining company unless he has first served on the Minister of Mines,
Minerals and Energy (the "Minister") written notice of his Intention to
do so and the Minister (in accordance with the advice of the Minerals
Commission) has confirmed that he has no objections to such person
becoming a shareholder controller or a majority shareholder controller or
an Indirect controller of a mine or the relevant time for such objection
has elapsed.
(b) Consent of each of its lenders under Xxxxxxx Xxxxxxxxx Company Revolving
Credit Facility (as amended), the Senior Bridge Credit Facility and AGC's
hedge counterparties.
(c) Consent of 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 and the creation of
any new security or lien over the assets of Teberebie.
(d) 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.
1
