Dated September 1, 1999
RIO TINTO METALS LIMITED
- and -
MK GOLD COMPANY
------------------------------------------
AGREEMENT
for the sale and purchase of
all of the issued shares and venture loans
of RioMin Exploraciones SA
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Rio Tinto plc
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇ ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
THIS AGREEMENT is made on 1999
BETWEEN:-
(1) RIO TINTO METALS LIMITED (No. 147115) whose registered office is at ▇, ▇▇
▇▇▇▇▇'▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Vendor"); and
(2) MK GOLD COMPANY of ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (the
"Purchaser).
RECITALS:
(A) By a transfer deed executed before a notary on 31 December 1998, the Vendor
acquired the Shares in the Company from Rio Tinto International Holdings
Limited. Furthermore, by a transfer deed executed before a Spanish notary
on 25 February 1999, the Vendor acquired the Venture Loans (defined below)
from Rio Tinto International Holdings Limited;
(B) The Company is a wholly owned subsidiary of Rio Tinto Metals Limited and is
the legal and beneficial owner of the Investigation Permits (defined
below);
(C) The Purchaser and the Vendor now wish to enter into this agreement to
record the terms upon which the Purchaser is to acquire the Shares, and the
Venture Loans, from the Vendor.
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 In this agreement the following words and expressions and abbreviations
have the following meanings, unless the context otherwise requires:-
"Accounts" means the audited financial statements of the Company,
comprising the balance sheet and profit and loss account of the Company
together with the directors' report and auditors certificate, as at and for
the financial period ended on the Accounts Date;
"Accounts Date" means 31 December 1998;
"Business Day" means a day (excluding Saturdays and Sundays) on which banks
generally are open in London, Seville, Salt Lake City and Sydney for the
transaction of normal banking business;
"Company" means RioMin Exploraciones S.A., a Spanish corporation whose
registered office is located at ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ (▇▇▇▇▇)
incorporated for an indefinite period by a deed executed by the Notary
Public ▇▇ ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, of Madrid, on 19 January 1983. The
articles of association currently in force were signed before the Notary
Public ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, of Barcelona, on 16 November 1998,
with protocol number 3596. The Company is listed in the Companies Register
of Seville,
Volume 2612, Folio 222, page SE 31598 and with the tax identification
number A-28-814135;
"Completion" means the completion of the sale and purchase of the Shares
and the Venture Loans in accordance with clause 4;
"Completion Date" means the date of execution of this Sale and Purchase
Agreement;
"Confidential Information" means all information relating to the affairs
and activities of the Company including all Technical Data which is not
publicly known;
"Data Room" means the files of documents relating to the Company and its
activities as the same are more particularly described in the Index to the
Data Room Documents in agreed terms;
"Disclosure Letter" means the letter of today's date together with the
attachments thereto addressed by the Vendor to the Purchaser disclosing
exceptions to the Warranties;
"Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set off or other third party right or
interest (legal or equitable) including any right of pre-emption,
assignment by way of security, reservation of title or any other security
interest of any kind however created or arising or any other agreement or
arrangement (including a sale and repurchase arrangement) having similar
effect;
"Feasibility Study" means the report prepared by the Company (together with
all supporting documentation and information hereto) on the feasibility of
developing a mine and processing facilities at Las Cruces;
"Investigation Permits" means the investigation permit (number 7532)
granted to the Company on 14 October 1992 by Servicio de Industria, Energia
y Minas as renewed for further terms of 3 years on 15 September 1995 and 25
November 1998 together with the surrounding four investigation permits
registered with numbers 7531, 7533, 7625 and 7626;
"Material Agreements" means all existing agreements to which the Company is
a party and which are material to the Company's activities as currently
carried on true and complete copies of which are in the Data Room and
referred to in the Index to the Data Room Documents in agreed terms;
"Properties" means the properties described in schedule 2 or any part or
parts thereof and "Property" shall mean any one of them;
"Purchaser's Group" means the Purchaser, its holding companies and the
subsidiaries from time to time of such holding companies, all of them and
each of them as the context admits;
"Related Person" means in relation to any party its holding companies and
the subsidiaries from time to time of such holding companies, all of them
and each of them as the context admits;
"Shares" means all of the issued shares in the capital of the Company
namely 191,500 registered shares, fully paid up with a nominal value of
3254 pesetas each numbers 1 to 191, 500, both included;
"Tax" or "tax" means any tax, and any duty, contribution, impost,
withholding, levy or charge in the nature of tax, whether domestic or
foreign, and any fine, penalty, surcharge or interest connected therewith
and includes corporation tax, advance corporation tax, income tax
(including income tax required to be deducted or withheld from or accounted
for in respect of any payment), national insurance and social security
contributions, capital gains tax, inheritance tax, value added tax, customs
exercise and import duties, stamp duty, stamp duty reserve tax, insurance
premium tax, air passenger duty, rates and water rates, land fill tax,
petroleum revenue tax, advance petroleum revenue tax, gas levy and any
other payment whatsoever which any person is or may be or become bound to
make to any person and which is or purports to be in the nature of
taxation;
"Technical Data" means all plans, results, geological data, drawings,
specifications, operating procedures and other technical data and
information of whatever kind in each case owned by the Company including,
but without limitation, the Feasibility Study, financial analysis and
interpretation of the geological and metallurgical data in respect of the
land the subject of the Investigation Permits;
"Vendor's Group" means the Vendor, its holding companies and the
subsidiaries, excluding the Company, from time to time of such holding
companies, all of them and each of them as the context admits;
"Venture Loans" means the loans granted to the Company amounting, in
aggregate to 5,390,776,662 pesetas pursuant to the assignment of a credit
and venture loan agreement entered into on 25 February 1999, before the
notary ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Tordera;
"Warranties" means the warranties set out in schedule 1.
1.2 In this agreement unless otherwise specified, reference to:-
(a) "subsidiary" or "holding company" in respect of the Company it shall be
construed in accordance with article 4 of the Ley del ▇▇▇▇▇▇▇ de Valores
(Stock Exchange Act) and article 42 of the Codigo de Commercio (Mercantile
Code) and in respect of the Vendor, the Vendor's Group, the Purchaser or
the Purchaser's Group, the law of the place of incorporation of the
relevant entity;
(b) a document in the "agreed terms" is a reference to that document in the
form approved and for the purposes of identification signed by or on behalf
of each party;
(c) a "party" means a party to this agreement and includes its assignees (if
any) and/or the successors in title to substantially the whole of its
undertaking;
(d) a "person" includes any person, individual, company, firm, corporation,
government, state or agency of a state or any undertaking (whether or not
having separate legal personality and irrespective of the jurisdiction in
or under the law of which it was incorporated or exists);
(e) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of and
schedules to this agreement;
(f) words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders;
(g) any reference to US$ is to the currency of the United States of America.
1.3 The schedules form part of the operative provisions of this agreement and
references to this agreement shall, unless the context otherwise requires,
include references to the schedules.
2. SALE AND PURCHASE
2.1 Upon the terms of this agreement, the Vendor as legal and beneficial owner
shall sell and the Purchaser shall purchase all the Shares and the Venture
Loans with effect from Completion free from any Encumbrance together with
all accrued benefits and rights attached thereto.
2.2 The aggregate consideration for such sale and purchase shall be the total
sum of U$42,000,000 to be satisfied in cash on Completion of which US$
shall be the consideration payable for the Shares and US$ shall be the
consideration payable for the Venture Loans.
2.3 In addition to the consideration referred to in clause 2.2 the Purchaser
shall pay to the Vendor a royalty in accordance with the provisions of
Schedule 3 ("Royalty").
3. CONDITIONS
Completion is conditional upon fulfilment in all respects by the Purchaser
of its obligation to pay the Consideration.
4. COMPLETION
4.1 Completion shall take place at the Company's offices on the Completion
Date.
4.2 On Completion the Vendor shall deliver to or, if the Purchaser shall so
agree, make available to the Purchaser:-
(a) transfers in the agreed form relating to all the Shares and the
Venture Loans duly executed in favour of the Purchaser before a Notary
Public;
(b) the original of the transfer deed executed on 31 December 1998 before
Spanish Notary Public ▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ pursuant to which
the Vendor acquired the Shares together with the original of transfer
deed executed on 25 February 1999 pursuant to which the Vendor
acquired the Venture Loans and any reports or documents lodged with
any relevant Spanish foreign investment authority concerning the
Venture Loans;
(c) resignations in the agreed terms duly executed as deeds of Mr ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ from their offices as director or secretary
of the Company containing a confirmation that they have no claims
(whether statutory, contractual or otherwise) against the Company for
compensation for loss of office or unpaid emoluments;
(d) the Company's Memorandum and articles of association, Register of
Minutes of meetings of shareholders and directors, Register of
agreements with sole shareholder, Shareholders Register, Companies
House Certificate and cheque books of the Company;
(e) the documents evidencing the Venture Loans, including any cancelled
Loans, the Investigation Permits and all Material Agreements;
(f) the Technical Data and the contents of the Data Room;
(g) the Disclosure Letter duly signed for and on behalf of the Vendor; and
4.3 At or prior to Completion (and prior to the taking effect of the
resignations of the directors referred to in clause 4.2(c) above) the
Vendor shall procure the passing of board and/or shareholder resolutions
(as the case may be) in the agreed terms of the Company approving the sale
of the Shares and the Venture Loans:-
(a) sanctioning for registration of the transfers in respect of the
Shares;
(b) appointing Messrs. G. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇
▇▇▇▇▇▇ to be the directors and ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, to be secretary of
the Company;
(c) revoking all mandates to bankers (other than any existing mandates in
favour of Mr ▇▇▇▇ ▇▇▇▇▇, Mr Gobain Ovejero Zappino or any other
employee of the Company) and giving authority in favour of the
directors appointed under clause 4.3(b) above or such other persons as
the Purchaser may nominate to operate the bank accounts thereof; and
(d) revoking all powers of attorney.
4.4 Upon compliance by the Vendor with the provisions of clauses 4.2 and 4.3
the Purchaser shall provide for the transfer by CHAPS of US$42,000,000 to
the Account of Rio Tinto Finance plc at Chase Manhattan Bank , New York,
ABA No. ▇▇▇▇▇▇▇▇▇, SWIFT ▇▇▇▇▇▇▇▇, Account No. ▇▇▇-▇-▇▇▇▇▇▇.
4.5 If in any respect the obligations of the Vendor (or Purchaser) are not
complied with on Completion the party not in default may:-
(a) defer Completion to a date not more than 28 days after Completion (and
so that the provisions of this clause 4, apart from this clause
4.5(a), shall apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable (without prejudice to its
rights hereunder); or
(c) terminate this agreement without prejudice to the rights and
liabilities which accrued prior to termination which shall continue to
subsist,
by means of a notice to that effect in writing served on the other.
5. WARRANTIES
5.1 The Vendor warrants with the Purchaser in the terms of the Warranties as at
the Completion Date.
5.2 Each of the Warranties shall be construed as a separate Warranty and (save
as expressly provided to the contrary) shall not be limited by the terms of
any of the other Warranties.
5.3 Save in the case of fraud or fraudulent concealment by the Vendor, the
Vendor shall be under no liability in respect of any claim under the
Warranties and any such claim shall be wholly barred and unenforceable
unless written notice of such claim setting out full details of the
relevant claim (including the grounds on which such claim is based and the
amount claimed to be payable in respect thereof) shall have been served
upon the Vendor by the Purchaser:-
(a) in the case of a claim under the Warranties (other than the Warranties
relating to Tax) by not later than 5.00 pm on the date which is 12
months after the date hereof; and
(b) in the case of a claim under the Warranties relating to Tax by not
later than 5.00 pm on the fourth anniversary of the date hereof
and the liability of the Vendor for any claim specified in such notice
shall absolutely determine and cease unless the amount payable in respect
of the relevant claim has been agreed by the Vendor within six months of
the date of such written notice, or
(i) if legal proceedings have not been instituted in respect of such
claim by the due service of process on the Vendor within 3 months
of the date of such written notice; or
(ii) in the event that the Vendor shall make in respect thereof a
request pursuant to clause 5.12(a)(ii), if legal proceedings have
not been instituted by the Purchaser in respect of such claim by
the due service of process on the Vendor within three months of
the date on which pursuant to clause 5.12(a)(ii) judgement is
given by a court of competent jurisdiction in respect of such
proceedings as shall have been instituted by the Purchaser
pursuant to such request or the date settlement is reached in
such third party proceedings with the consent of the Vendor or on
which the Vendor and the Purchaser agree that proceedings or
other action against the third party shall be abandoned.
For the purpose of this clause 5.3 legal proceedings shall not be deemed to
have been commenced unless they shall have been properly issued and validly
served upon the Vendor.
5.4 Save in the case of fraud or fraudulent concealment the Vendor shall be
under no liability in respect of any claim under the Warranties:-
(a) where the liability of the Vendor in respect of that claim would (but
for this paragraph) have been less than US$25,000;
(b) unless and until and only to the extent that the liability in respect
of that claim (not being a claim for which liability is excluded under
sub-clause 5.4(a) above) when aggregated with the liability of the
Vendor in respect of all other claims shall exceed US$300,000.
5.5 Save in the case of fraud or fraudulent concealment the aggregate liability
of the Vendor in respect of all claims under this Agreement shall not in
any circumstances exceed US$42,000,000.
5.6 The Vendor shall be under no liability whatsoever in respect of any claim
under the Warranties if the facts or circumstances giving rise thereto are
fully and fairly disclosed in the Disclosure Letter, any of the documents
contained in the Data Room or provided for or stated to be exceptions under
the terms of this agreement or are otherwise known to the Purchaser at the
date hereof.
5.7 No liability (whether in contract, tort or otherwise) shall attach to the
Vendor in respect of any claim under the Warranties to the extent that:-
(a) the claim or the events giving rise to the claim would not have arisen
but for an act, omission or transaction of the Purchaser or which
would not have arisen but for any claim, election or surrender or
disclaimer made or omitted to be made or notice or consent given or
omitted to be given by the Purchaser under the provisions of any
statutes relating to Tax;
(b) the claim is based upon a liability which is contingent only, unless
and until such contingent liability becomes an actual liability or
until the same is finally adjudicated;
(c) provision or reserve in respect of the matter giving rise to the claim
shall have been made in the Accounts or to the extent that the matter
giving rise to the claim shall have been noted in the Accounts;
(d) the claim occurs wholly or partly out of or the amount thereof is
increased as a result of:-
(i) any change in the accounting principles or practices of the
Purchaser introduced or having effect after the date of this
agreement unless the same is introduced to bring the accounting
principles and practices into line with generally accepted
accounting principles and practices in Spain in relation to a
business of the type carried on by the Company; or
(ii) any increase in the rates of taxation made after the date
hereof; or
(iii) any change in law or regulation or in its interpretation or
administration by the Spanish courts, by the Spanish taxation
authorities or by any other fiscal, monetary or regulatory
authority (whether or not having the force of law);
(e) the loss or damage giving rise to the claim is recoverable by the
Purchaser under any policy of insurance or would have been so
recoverable but for any change in the terms of insurance since the
date of this agreement; or
(f) the claim relates to a claim or liability for taxation and would not
have arisen but for any winding-up or cessation after Completion of
any business or trade carried on by the Company or the Purchaser.
5.8 The Purchaser shall promptly:-
(a) inform the Vendor in writing of any fact, matter, event or
circumstance which comes to its notice whereby it appears that the
Vendor is or may be liable to make any payment in respect of any claim
under the Warranties or whereby it appears the Purchaser's Group shall
become or may become entitled to recover from some other person a sum
which is referable to a payment already made by the Vendor in respect
of such a claim; and
(b) thereafter keep the Vendors fully informed of all developments in
relation thereto; and
(c) provide all such information and documentation (no matter how it is
recorded or stored) as the Vendor shall request in connection
therewith and also in connection with any proceedings instituted by or
against the Purchaser's Group under clause 5.12 and which information
or documentation is not the subject to legal professional privilege or
confidential information created or brought into existence by the
Purchaser's Group since Completion.
5.9 The only remedies available to the Purchaser in respect of this agreement
together with any other documents referred to in this agreement (the
"Transaction Documents") are damages for breach of contract (subject to the
limitations set out in this agreement) and, for the avoidance of doubt, it
does not have any right to rescind or terminate any Transaction Documents
either for breach of contract or for negligent or innocent
misrepresentation or otherwise.
5.10 The Purchaser hereby represents and warrants that it has no knowledge of
any fact which might lead to claims against the Vendor under the
Warranties.
5.11 The Purchaser's Group will take or procure the taking of all such steps and
action as are necessary or as the Vendor may reasonably require in order to
mitigate any claim under the Warranties and the Purchaser's Group shall act
in accordance with such request subject to the Company and the Purchaser
being indemnified and adequately secured to the reasonable satisfaction of
the Purchaser by the Vendor against all reasonable costs and expenses which
may properly be incurred by reason of such action, including reasonable
legal costs and expenses on a full indemnity basis. Nothing in this
agreement shall or shall be deemed to relieve the Purchaser of any common
law or other duty to mitigate any loss or damage incurred by it.
5.12 (a) This clause shall apply in circumstances where:-
(i) any claim is made against the Purchaser which may give rise to
a claim by the Purchaser against the Vendor under the
Warranties; or
(ii) the Purchaser is or may be entitled to make any recovery from
some other person any sum in respect of any facts or
circumstances by reference to which the Purchaser has or may
have a claim against the Vendor under the Warranties; or
(iii) the Vendor shall have paid to the Purchaser an amount in
respect of a claim under the Warranties and subsequent to the
making of such payment the Purchaser becomes or shall become
entitled to recover from some other person a sum which is
referable to that payment.
(b) The Purchaser shall and, where appropriate, the Company shall:-
(i) (prior to taking any action against the Vendor under the
Warranties in the case of clause 5.12(a)(i) and clause
5.12(a)(ii) and subject to the Company and the Purchaser being
indemnified and adequately secured to the reasonable
satisfaction of the Purchaser by the Vendor against all
reasonable costs and expenses which may properly be incurred
by reason of such action) promptly and diligently take all such
action (including reasonable legal costs and expenses on a full
indemnity basis) as the Vendor may reasonably request including
the institution of proceedings and the instruction of
professional advisers approved by the Vendor (such approval not
to be unreasonably withheld) to act on behalf of the Company
and the Purchaser (as the case may be) to avoid, dispute,
resist, compromise, defend or appeal against any such claim
against the Purchaser as is referred to in clause 5.12(a)(i) or
to make such recovery by the Purchaser as is referred to in
clause 5.12(a)(ii) or clause 5.12(a)(iii), as the case may be,
in accordance with the instructions of the Vendor to the intent
that such action shall be delegated entirely to the Vendor
provided that at all times the Purchaser and the Company shall
continue to be indemnified and secured to the reasonable
satisfaction of the Purchaser provided that, however, either:
(A) the Purchaser and/or the Company (as the case may be)
must consent in writing to the terms and conditions of
any settlement or compromise of any claim or dispute; or
(B) (1) the Purchaser and/or the Company (as the case may
be) must receive a full release, signed by all other
parties to the dispute or claim, releasing the
Purchaser and/or the Company (as the case may be)
from all claims and liability arising out of the
claim or dispute; and
(2) the settlement or compromise of the claim or dispute
must not hinder or impair the ability of the
Purchaser and/or the Company (as the case may be) to
carry on its or their business or businesses.
(ii) so long as the Vendor shall have given adequate security
therefor not settle or compromise any liability or claim to
which such action is referable without the prior written
consent of the Vendor which consent shall not be unreasonably
withheld or delayed; or
(iii) in the case of clause 5.12(a)(iii) only, promptly repay to the
Vendor an amount equal to the amount so recovered or, if lower,
the amount paid by the Vendor to the Purchaser.
5.13 The Vendor hereby agrees to indemnify and keep indemnified the Purchaser
against any loss, liability, cost or expense (including, without
limitation, environmental and rehabilitation liabilities) it may incur as a
direct result of any act or omission of the Vendor and/or the Company prior
to Completion in relation to any investigation permits (other than the
Investigation Permits) held from time to time by the Company.
6. CONFIDENTIAL INFORMATION
6.1 The Vendor shall:-
(a) not and shall procure that no other member of the Vendor's Group or
any director, officer or employee or adviser or agent of the Vendor's
Group shall use or disclose to any person Confidential Information;
and
(b) use all reasonable endeavours to prevent the use or disclosure of
Confidential Information by any person other than by members of the
Purchaser's Group.
6.2 Clause 6.1 does not apply to:-
(a) disclosure of Confidential Information to or at the written request of
the Purchaser;
(b) use or disclosure of Confidential Information required to be disclosed
by law or the London Stock Exchange;
(c) disclosure of Confidential Information to professional advisers for
the purpose of advising the Vendor; or
(d) Confidential Information which becomes generally known other than by
the Vendor's breach of clause 6.1.
7. ANNOUNCEMENTS
7.1 No party shall disclose the making of this agreement nor its terms (except
those matters set out in the press release in the agreed terms) and each
party shall procure that each of its Related Persons shall not make any
such disclosure without the prior consent of the other party unless
disclosure is:-
(a) to its professional advisers; or
(b) required by law or the rules of the London Stock Exchange or other
regulatory body and disclosure shall then only be made by that party:-
(i) after it has taken all such steps as may be reasonable in the
circumstances to agree the contents of such announcement with
the other party before making such announcement and provided
that any such announcement shall be made only after notice to
the other party/parties; and
(ii) to the person or persons and in the manner required by law or
the London Stock Exchange or as otherwise agreed between the
parties
provided that this clause 7.1 does not apply to announcements,
communications or circulars made or sent by the Purchaser after Completion
to customers, clients or suppliers of any Group Company to the extent that
it informs them of the Purchaser's acquisition of the Shares or to any
announcements containing only information which has become generally
available.
7.2 The restrictions contained in clause 7.1 shall apply without limit of time
and whether or not this agreement is terminated.
8. COSTS
Unless expressly otherwise provided in this agreement each of the parties
shall bear its own legal, accountancy and other costs, charges and expenses
connected with the sale and purchase of the Shares. All Notaries' costs and
any taxes payable as a result of the implementation of anything
contemplated hereunder shall be paid in accordance with the appropriate
Spanish laws.
9. EFFECT OF COMPLETION
9.1 The terms of this agreement (insofar as not performed at Completion and
subject as specifically otherwise provided in this agreement) shall
continue in force after and notwithstanding Completion.
9.2 The remedies of the Purchaser in respect of any breach of any of the
Warranties shall continue to subsist notwithstanding Completion.
10. FURTHER ASSURANCES
10.1 Following Completion the Vendor shall from time to time forthwith upon
request from the Purchaser at the Vendor's expense do or procure the doing
of all acts and/or execute or procure the execution of all such documents
in a form reasonably satisfactory to the Purchaser for the purpose of
vesting in the Purchaser the full legal and beneficial title to the Shares
and the Venture Loans and otherwise giving the Purchaser the full benefit
of this agreement.
10.2 Without prejudice to the generality of clause 10.1, the Vendor shall for a
reasonable period of time after Completion provide the Purchaser with
reasonable access during normal business hours to those employees of the
Vendor's Group who have worked on the Las Cruces Project. The Purchaser
undertakes to reimburse the Vendor, or the relevant member of the Vendor's
Group, immediately upon production of a invoice, in respect of any costs
and expenses incurred as a result of the Vendor complying with its
obligations hereunder. For the avoidance of any doubt nothing herein shall
oblige the Vendor to comply with its obligations contained in this clause
to the extent that such compliance would have a material adverse effect on
or would otherwise substantially interfere in the ongoing business and
affairs of the Vendor or any other member of the Vendor's Group.
11. ENTIRE AGREEMENT
Each party on behalf of itself and as agent for each of its Related Persons
acknowledges and agrees with the other party (each such party acting on
behalf of itself and as agent for each of its Related Persons) that:-
(a) this agreement together with any other documents referred to in this
agreement (together the "Transaction Documents") constitute the entire
and only agreement between the parties and their respective Related
Persons relating to the subject matter of the Transaction Documents;
(b) neither it nor any of its Related Persons have been induced to enter
into any Transaction Document in reliance upon, nor have they been
given, any warranty, representation, statement, assurance, covenant,
agreement, undertaking, indemnity or commitment of any nature
whatsoever other than as are expressly set out in the Transaction
Documents and, to the extent that any of them have been, it (acting on
behalf of itself and as agent on behalf of each of its Related
Persons) unconditionally and irrevocably waives any claims, rights or
remedies which any of them might otherwise have had in relation
thereto;
PROVIDED THAT the provisions of this clause 11 shall not exclude any
liability which any of the parties or, where appropriate, their Related
Persons would otherwise have to any other party or, where appropriate, to
any other party's Related Persons or any right which any of them may have
to rescind this agreement in respect of any statements made fraudulently by
any of them prior to the execution of this agreement or any rights which
any of them may have in respect of fraudulent concealment by any of them.
12. VARIATIONS
This agreement may be varied only by a document signed by each of the
Vendor and the Purchaser.
13. WAIVER
13.1 A waiver of any term, provision or condition of, or consent granted under,
this agreement shall be effective only if given in writing and signed by
the waiving or consenting party and then only in the instance and for the
purpose for which it is given.
13.2 No failure or delay on the part of any party in exercising any right, power
or privilege under this agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
13.3 No breach of any provision of this agreement shall be waived or discharged
except with the express written consent of the Vendor and the Purchaser.
13.4 The rights and remedies herein provided are cumulative with and not
exclusive of any rights or remedies provided by law.
14. NOTICES
14.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or sent by fax or prepaid first
class post (air mail if posted to or from a place outside the United
Kingdom):-
In the case of the Purchaser to:-
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: G. ▇▇▇▇▇ ▇▇▇▇▇▇
In the case of the Vendor to:-
Fax: 0171 930 3249
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
and shall be deemed to have been duly given or made as follows:-
(a) if personally delivered, upon delivery at the address of the relevant
party;
(b) if sent by first class post, two Business Days after the date of
posting;
(c) if sent by air mail, five Business Days after the date of posting; and
(d) if sent by fax, when despatched;
provided that if, in accordance with the above provisions, any such notice,
demand or other communication would otherwise be deemed to be given or made
outside 9.00 a.m. - 5.00 p.m. on a Business Day such notice, demand or
other communication shall be deemed to be given or made at 9.00 a.m. on the
next Business Day.
14.2 A party may notify the other party to this agreement of a change to its
name, relevant addressee, address or fax number for the purposes of clause
14.1 provided that such notification shall only be effective on:-
(a) the date specified in the notification as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five Business Days after notice of any such change has been
given.
15. COUNTERPARTS
This agreement may be executed in any number of counterparts which together
shall constitute one agreement. Any party may enter into this
agreement by executing a counterpart and this agreement shall not take
effect until it has been executed by all parties.
16. GOVERNING LAW AND JURISDICTION
16.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this agreement or
its formation) shall be governed by and construed in accordance with
English law.
16.2 Each of the parties to this agreement irrevocably agrees that the courts of
England shall have exclusive jurisdiction to hear and decide any suit,
action or proceedings, and/or to settle any disputes, which may arise out
of or in connection with this agreement (respectively, "Proceedings" and
"Disputes") and, for these purposes, each party irrevocably submits to the
jurisdiction of the English Courts.
16.3 Without prejudice to any other permitted mode of service the parties agree
that service of any writ, notice or other document ("Documents") for the
purpose of any Proceedings begun in England shall be duly served upon it if
delivered personally or sent by registered post, in the case of:-
(a) the Vendor to Rio Tinto Metals Limited (marked for the attention of
▇▇▇▇ ▇▇▇▇▇▇▇); and
(b) the Purchaser to MK Gold Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ 84111(marked for the attention of G. ▇▇▇▇▇ ▇▇▇▇▇▇)
or such other person and address in England and/or Wales as the Vendor
shall notify the Purchaser in writing or vice versa from time to time.
IN WITNESS whereof this agreement has been executed on the date first above
written.
SCHEDULE 1
----------
The Warranties
For the purposes of this Schedule 1, where a warranty is qualified by the words
"so far as the Vendor is aware" and/or "so far as the Company is aware" then the
Vendor and/or the Company (as appropriate) shall only be deemed to be aware of
those facts within the actual knowledge of either ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ or Gobain Ovejero Zappino and no other employee, adviser, consultant or
officer of the Company or any other member of the Rio Tinto Group. Furthermore
it is hereby agreed that the Vendor, the Company and such named individuals
shall be under no obligation whatsoever to make any enquiries, outside of
information actually obtained in the course of performance of their duties, as
to the accuracy of the warranties so qualified.
1. VENDOR'S CAPACITY
1.1 Authorisations
The Vendor has obtained all corporate authorisations and all other applicable
governmental, statutory, regulatory or other consents, licences, waivers or
exemptions required to empower it to enter into and to perform its
obligations under this agreement.
1.2 Proper Execution
The Vendor's obligations under this agreement are enforceable in accordance
with their terms.
1.3 Third Party Rights
The Vendor is able to sell and transfer the Shares and the Venture Loans to
the Purchaser without the consent of any person and free of any pre-emptive
rights or rights of first refusal.
1.4 Vendor's Disclosure Letter accurate
The information in the Disclosure Letter is accurate in all material
respects.
2. THE SHARES AND SUBSIDIARIES
2.1 The Shares
(a) The Vendor is the only legal and beneficial owner of the Shares.
(b) The Company has not allotted any shares other than the Shares and the
Shares are fully paid or credited as fully paid.
(c) There is no Encumbrance in relation to any of the Shares.
(d) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, sale, transfer,
redemption or repayment of, a share in the capital of the Company
(including an option or right of pre-emption or conversion).
2.2 Venture Loans
(a) The Vendor is the only legal and beneficial owner of the Venture
Loans.
(b) The Company has no debts which individually are in excess of US$20,000
(other than trade debts, amounts owed to employees incurred by the
Company in the ordinary course of the Company's activities or the
Venture Loans).
(c) There is no Encumbrance in relation to any of the Venture Loans.
2.3 Subsidiaries
(a) The Company does not have any subsidiaries.
3. ACCOUNTS
3.1 General
The Accounts have been prepared and audited in accordance with the
standards, principles and practices specified on the face of the Accounts
applied on a consistent basis and subject thereto in accordance with the
law and applicable standards, principles and practices generally accepted
in Spain consistently applied.
3.2 Changes since Accounts Date
Since the Accounts Date:-
(a) the Company has not contractually committed to make capital
expenditure which is outstanding for fixed assets exceeding in total
US$10,000, or contractually committed to incur, a commitment or
connected commitments involving capital expenditure which is
outstanding for fixed assets exceeding in total US$5,000;
(b) the Company has not disposed of any of its assets with a book value of
more than US$5,000;
(c) the Company has not incurred any material liabilities (other than
liabilities incurred in the ordinary course of the Company's
activities) in excess of US$10,000.
(d) no dividends, bonus issues or other distributions or repayments of
loans (including Venture Loans) have been declared, made or paid by
the Company.
4. ASSETS
4.1 The principal assets of the Company are its right, title and interest in
the Properties, the Investigation Permits, the Technical Data and
associated exploration expenditure ("Sale Assets").
4.2 Title
(a) There are no Encumbrances, nor has the Company agreed to create any
Encumbrances, over the Sale Assets or any part of its undertaking or
assets and each asset used by the Company (tangible or intangible)
is:-
(i) legally and beneficially owned by the Company;
(ii) where capable of possession, in the possession of the Company;
(iii) used solely by the Company; and
(iv) fully paid for or otherwise provided for in the Accounts.
4.3 Intellectual Property Rights
Details of all intellectual property or know-how owned by third parties
(including members of the Vendor's Group) which were used by the Company in
preparing the Feasibility Study are contained in the Data Room.
5. CONTRACTUAL MATTERS
5.1 Material Agreements
(a) Copies of all agreements and contracts to which the Company is a party
or otherwise bound which are material to the activities undertaken by
the Company are contained in the Data Room ("Material Agreements") and
referred to in the Index of Data Room Documents in the agreed terms.
(b) Each Material Agreement constitutes a valid and binding obligation of
the Company and:
(i) is within the ordinary course of ordinary activities of the
Company;
(ii) is at arm's length; and
(iii) is not with the Vendor or any member of the Vendor's Group.
5.2 No Restrictive Covenants
The Company is not a party to any Material Agreement which prevents it from
engaging in mining or exploration operations.
5.3 Change of Control
The Company is not a party to any Material Agreement under which any party
is entitled or likely, as a result of a change in ownership of the Shares:
(a) to terminate the agreement; or
(b) to require the adoption of terms which are less favourable to the
Company than the current terms.
5.4 No Default
The Company, so far as it is aware is not, and has received no written
notice that it is in default or would be in default, but for the
requirements of notice or lapse of time, or both under any Material
Agreement. So far as the Company is aware, no other party to a Material
Agreement is in default, or would be in default but for the requirement of
notice or lapse of time, or both, under any Material Agreement.
6. INVESTIGATION PERMITS
6.1 Copies of all the Company's current permits, authorisations and consents
including, without limitation, the Investigation Permits which in each case
are material and relevant to its current activities are contained in the
Data Room (collectively referred to as the "Permits").
6.2 The Company has received no written notice that any of the Permits are not
in full force and effect. So far as the Company is aware, each Permit is in
full force and effect.
6.3 No Breach
The Company has received no written notice that it is in breach of, or
default under, any of the Permits. So far as the Company is aware, the
Company is not in breach of, or default under, any of the Permits.
6.4 No Notices
The Company has not received written notice from any third party (including
any government agency) in respect of any Permit and, so far as the Vendor
is aware no proposal has been made:
(a) in respect of the compulsory acquisition or resumption of any part of
the lands the subject of the Investigation Permits ("▇▇▇ ▇▇▇▇"); and
(b) requiring expenditure to be made or in respect of the Land in excess
of US$10,000.
6.5 Royalties
So far as the Vendor is aware, none of the land nor any mineral or metal
production from the Land is or will be subject to any royalty, production
payment or similar right save as or arising under the laws of Spain or this
agreement.
7. LIABILITIES
7.1 Guarantees and Indemnities
The Company is not a party to any guarantee, indemnity or other agreement
(including letters of comfort) to secure or incur a financial or other
obligation with respect to another person's obligation.
8. LITIGATION AND COMPLIANCE WITH LAW
8.1 Litigation
(a) The Company has not during the six years ending on the date of this
agreement been involved, in a civil, criminal or arbitration
proceeding in any jurisdiction and, so far as the Vendor is aware no
such proceedings are pending or threatened by or against the Company.
(b) There is no outstanding judgement, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency in
any jurisdiction against the Company.
(c) So far as the Vendor is aware, the Company is not the subject of any
investigation by any governmental agency.
8.2 Corporation Existence
The Company:
(a) is a company organised and existing in accordance with the laws of
Spain; and
(b) has the power to own its assets and carry on its business as it is now
being conducted.
8.3 Compliance with Constituent Documents
So far as the Vendor is aware, the business affairs of the Company have
been conducted in accordance with its constitution.
9. EMPLOYEES
9.1 Particulars of Offers
The Data Room contains the names and date of commencement of employment of
every employee of the Company.
9.2 Remuneration and Benefits
The particulars of all employees contained in the Data Room show all
remuneration and other benefits:-
(a) actually provided; and
(b) which the Company is bound to provide (whether now or in the future)
to each employee of the Company and are true and complete in all material
respects and include particulars of and details of participation in all
profit sharing, incentive, bonus, commission, share option, medical,
permanent health insurance, directors' and officers' insurance, travel,
car, redundancy and other benefit schemes, arrangements and understandings
(the "Schemes") operated for all or any employees or former employees of
the Company or their dependants whether legally binding on the Company or
not.
10. PROPERTIES
All Property
The Properties comprise all the freehold and leasehold land owned, used or
occupied by the Company.
11. TAXATION
11.1 Payment of Tax
The Company has paid all Tax required to be paid by it as at the date of
this Agreement.
11.2 Provision in Accounts
Adequate provision has been made in the Accounts for any Tax which Vendor
or the Company is aware is payable or may become payable but which is
unpaid.
11.3 Withholding Tax
Any obligation on the Company under any Tax Law to withhold amounts at
source including but not limited to withholding Tax, PAYE, Tax, value added
tax and royalties has been complied with.
11.4 Documents stamped
Any Duty payable in any Tax Law in relation to any transaction or agreement
to which either the Company is or has been a party to or by which the
Company derives, or has derived a substantial benefit, has been paid.
11.5 Records
So far as the Vendor is aware the Company has maintained proper and
adequate records to enable it to comply with its obligations to:
(a) prepare and submit any information, notices, computations, returns and
payments required in respect of any Tax Law;
(b) prepare any accounts necessary for the compliance of any Tax Law; and
(c) retain necessary records as required by any Tax Law.
11.6 Returns submitted
The Company has submitted any necessary information, notices, computations
and returns to the relevant government agency in respect of any Tax or any
duty relating to its businesses and activities.
11.7 No disputes
There are no disputes with any government agency in respect of any Tax or
duty.
12. SOLVENCY
12.1 No liquidation or winding-up
The Company has not gone into liquidation or passed a winding-up resolution
nor received a notice under any applicable law which will result in the
Company being wound up or otherwise being put into liquidation.
12.2 No petition
No petition or other process for winding-up has been presented or
threatened against the Company .
12.3 No writ of execution
No writ of execution has been issued and served on the Company.
12.4 No receiver
No receiver or receiver and manager of any part of the undertaking or
assets of the Company has been appointed.
13. POWERS OF ATTORNEY
All current powers of attorney given by the Company and which are currently
in force are contained in the Data Room.
14. SHAREHOLDINGS AND MEMBERSHIPS
14.1 Shareholdings
The Company is not the holder or the beneficial owner of any shares or
other capital or securities convertible into shares or other capital in any
other company.
14.2 Memberships
The Company is not a member of any joint venture, partnership or
unincorporated association (other than a recognised trade association).
14.3 Restrictive trade practices
The Company is not a party to any agreement, contract, arrangement or
understanding whether legally enforceable or not which is in breach of any
restrictive trade practices legislation and has not engaged in any conduct
or practice in breach of that legislation.
SCHEDULE 2
----------
Properties
===================================================================================
Amount of
Annual notice
Rent (ptas) required to
Identification Address No V.A.T. terminate Term
-------------- ------- ----------- ----------- ----------
Cartuja Office ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 10.800.696 3 months 31/12/99
39 Isla Cartuja
41092 Sevilla
Core shed Industrial state 4.183.776 3 months 31/03/00
▇▇▇▇▇▇▇, ▇▇▇ ▇ ▇▇
▇▇▇▇.▇▇▇▇▇▇▇▇▇▇-
▇▇▇▇▇ ▇▇ 4.100
Valenciana de la
Concep. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ office Avda. 1(degree)de 900.00 1 month Each month
Mayo, 6
▇▇▇▇▇▇ - ▇▇▇▇▇▇▇
▇▇▇▇▇▇ House Urb. Zarzalejos 1.560.000 1 month 24/10/99
C/Paloma Torcaz 59
▇▇▇▇▇▇ - ▇▇▇▇▇▇▇
SCHEDULE 3
----------
Royalty
1. A Royalty of 1.5% (one and a half per cent) of "Sales Revenue" shall be
paid by Purchaser to Vendor in respect of all sales realised in any
calendar month in which the "Trigger Price" is exceeded. For the purposes
of this Schedule, the "Trigger Price" is exceeded when the official monthly
average LME Cash Settlement price for Grade A copper is equivalent to or
greater than $0.80 per pound of copper.
2. "Sales Revenue" shall mean:-
(A) in the case of sales of copper metal, whichever is the higher of:
either (1) the invoiced volume of metal sold in any month multiplied
by the actual official monthly average LME Cash
Settlement price for Grade A copper for that relevant
month; or
(2) the invoiced volume of metal sold in any month
multiplied by the actual price realised by the Purchaser
(including any premium),
for all metal produced by the Purchaser from ore mined from the land
which is the subject of the Investigation ▇▇▇▇▇▇▇ ("▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇")
(B) in the case of sales of copper produced from the Permit Land which is
sold in any form which is partly or not wholly processed, "Sales
Revenue" shall mean whichever is the higher of:
either (1) the actual final invoice value for the volume of partly
processed copper sold in the relevant month. (For these
purposes, final invoice value shall mean the full value
of the cargo as adjusted for final weight, assays and
prices); or
(2) the value for the volume of partly processed copper sold
which would have been invoiced if the copper price used
in calculating the relevant amount was the actual
official monthly LME Cash Settlement price for Grade A
copper for the month in which the final invoice is
settled,
for all partly processed copper produced by the Purchaser and mined
from the land which is the subject of the Permit Land.
In calculating the Sales Revenue for the purposes of paragraphs 2(A) and
(B) above the Purchaser may deduct the following costs and expenditures:
(a) freight, transportation and insurance costs of copper metal from the
treatment plant and/or refinery to the point of sale;
(b) the amount of any royalties payable to the Spanish government and any
other royalty payable in respect of ore mined, or copper metal
produced from the Permit Land;
(c) sales commissions and other sales representation costs in connection
with the sales of copper metal incurred on an arms-length basis in the
ordinary course of business by the Purchaser,
but such costs and expenditures shall not include operating costs
(including without limitation mining, operating, refining, financing and
related costs, and administration costs).
In addition, in calculating the Sales Revenue for the purposes of paragraph
2(B) above the Purchaser may deduct smelting and refining charges or such
other deductions which are directly related to the further processing of
the product into cathode copper.
3. The Purchaser must maintain proper records of:
(a) tonnes of ore mined;
(b) information or returns regarding the payment of royalties, taxes or
other payments to the Spanish government in respect of mining on the
Permit Land;
(c) all other information necessary to determine "Sales Revenue" and to
allow Royalty to be calculated; and
(d) all amounts paid by the Purchaser to the Vendor under paragraph 4
below,
together called the "Purchaser's Records".
4. On each occasion the Purchaser is obliged to provide a statement under
paragraph 5, and within 12 months thereafter, the Vendor may at its own
expense:
(a) upon reasonable notice to the Purchaser request and have access during
the Company's normal business hours at premises maintained by the
Company in Spain to inspect the Purchaser's Records;
(b) require an audit of the Purchaser's Records to be performed by an
auditor nominated by the Vendor. Any such audit of the Purchaser's
records shall be conducted in accordance with accounting principles
generally applied in Spain;
(c) if such an audit discloses a discrepancy between the amount paid by
the Purchaser pursuant to paragraph 5 and the amount which should have
been paid pursuant to that paragraph, then if there has been an
underpayment by the Purchaser, the Purchaser must pay the underpayment
immediately, and if there has been an overpayment, then the
overpayment may be set off by the Purchaser against any further
amounts payable to the Vendor pursuant to paragraph 5.
5. Within 21 (twenty one) days of the end of any applicable calendar month in
which the "Trigger Price" has been exceeded, the Purchaser will send to the
Vendor a statement summarising:
(a) the quantity of copper metal (expressed in lbs) produced during the
calendar month in which the "Trigger Price" is effective from ore
mined from the Permit Land;
(b) the Purchaser's calculation of "Sales Revenue" for the respective
calendar month; and
(c) the quantity of copper (metal and concentrate) sold during the
relevant month.
The Purchaser shall at the same time pay the Vendor the relevant Royalty in
US dollars by telegraphic transfer to a bank to be nominated by Vendor.
Executed by Mr ▇ ▇ ▇▇▇▇▇▇, duly appointed )
attorney, for and on behalf of )
RIO TINTO METALS LIMITED )
/s/
Attorney
Executed by )
for and on behalf of )
MK GOLD COMPANY )
/s/
Director