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Exhibit 10.3
CONFORMED COPY
DATED AS OF JUNE 25, 1999
-------------------------
MONARCH RESOURCES INVESTMENTS LIMITED
as Borrower
MONARCH MINERA SURAMERICANA, C.A.
as an additional Obligor
THE VARIOUS BANKS AND FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HERETO
as Initial Lenders
STANDARD BANK LONDON LIMITED
as Collateral Agent
and
STANDARD BANK LONDON LIMITED
as Administrative Agent
----------------------------
CREDIT AGREEMENT
----------------------------
ASHURST XXXXXX XXXXX
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
TCW/627S00004/1178124
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INDEX
1. DEFINITIONS; INTERPRETATION
1.1 Defined Terms
1.2 Use of Defined Terms
1.3 Accounting and Financial Determinations
1.4 Change in Accounting Principles
1.5 Project Determinations, etc
1.6 General Provisions as to Certificates and Opinions, etc.
1.7 Interpretation
2. COMMITMENTS AND PROCEDURES FOR MAKING LOANS; CONTINUATION
PROCEDURES
2.1 Commitments; Making Loans
2.2 Continuation and Conversion Elections
2.3 Records
2.4 Funding
2.5 Obligations Several
3. PRINCIPAL PAYMENTS; INTEREST; COMMISSIONS
3.1 Principal Payments
3.1.1Scheduled Repayments
3.1.2Prepayments - Voluntary and Mandatory
3.1.3Principal Payments Generally
3.2 Interest Payments
3.2.1Rate
3.2.2Post-Maturity Rate
3.2.3Payment Dates; Calculation of Interest
3.2.4Rate Determinations
3.3 Fees
3.3.1Agents' Fees
4. PROJECT ACCOUNTS
4.1 The Account Bank; the Proceeds Account
4.2 Proceeds Account
4.3 Treatment of Proceeds of Project Insurance and Compensation
4.4 General Provisions Relating to the Proceeds Account and the
Local Accounts
5. INCREASED COSTS; TAXES; MARKET DISRUPTIONS; GENERAL PAYMENT
PROVISIONS
5.1 Gold or Dollars Unavailable
5.2 Increased Costs, etc.
5.3 Funding Losses
5.4 Increased Capital Costs
5.5 Illegality
5.6 Taxes
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5.7 Mitigation
5.8 Payments, Computations, etc.
5.9 Proration of Payments
5.10 Setoff
5.11 Conversion upon Acceleration, Judgment Currency, etc.
5.12 Application of Proceeds
6. CONDITIONS PRECEDENT TO MAKING LOANS
6.1 Initial Loans
6.1.1Resolutions, etc.
6.1.2Acquisition Transaction, etc.
6.1.3Subordinated Loan Agreement, etc.
6.1.4Borrower Share Charge
6.1.5MMS Pledge Agreement
6.1.6Security Agreement (U.S. Assets)
6.1.7Canadian Security Agreement
6.1.8MMS Guaranty
6.1.9Venezuelan Security Documents
6.1.10 Account Agreement
6.1.11 Intercompany Subordination Agreement
6.1.12 Miscellaneous Documents and Conditions
6.1.13 Opinions
6.1.14 Approvals, Project Documents
6.1.15 Borrowing Notice
6.1.16 Closing Fees, Expenses, etc.
6.1.17 Compliance with Warranties, No Defaults, etc.
7. REPRESENTATIONS AND WARRANTIES
7.1 Organization, Power, Authority, etc.
7.2 Due Authorization; Non-Contravention
7.3 Validity, etc.
7.4 Legal Status
7.5 Financial Statements
7.6 Absence of Default
7.7 Acquisition Agreement
7.8 Litigation, etc.
7.9 Materially Adverse Effect
7.10 Taxes and Other Payments
7.11 Mining Rights
7.12 Ownership and Use of Properties; Liens
7.13 Subsidiaries
7.14 Intellectual Property
7.15 Technology
7.16 Approvals; Project Documents
7.17 Environmental Warranties
7.18 Pari Passu
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8. COVENANTS
8.1 Informational and Financial Covenants
8.1.1Financial Information, etc.
8.1.2Defaults
8.1.3Miscellaneous Information Concerning the Project
8.1.4Books and Records; Access
8.1.5Financial Covenants of the Borrower
8.1.6Recalculation of Base Case
8.1.7Accuracy of Information
8.2 Affirmative Covenants
8.2.1Compliance with Laws, etc.
8.2.2Approvals; Operative Documents
8.2.3Maintenance of Corporate Existence
8.2.4Payment of Taxes, etc.
8.2.5Insurance
8.2.6Management and Operation
8.2.7Hedging - Metal Price
8.2.8Environmental Covenant
8.2.9Maintenance of Project Assets
8.2.10 Pari Passu
8.2.11 Collateral Agreements; After-Acquired Collateral
8.3 Negative Covenants
8.3.1Business Activities; Place of Business; Organic Documents;
Fiscal Year
8.3.2Indebtedness
8.3.3Liens
8.3.4Capital Expenditures
8.3.5Investments
8.3.6Restricted Payments, etc.
8.3.7Take or Pay Contracts
8.3.8Consolidation, Merger, etc.
8.3.9Asset Dispositions, etc.
8.3.10 Transactions with Affiliates
8.3.11 Restrictive Agreements, etc.
8.3.12 Project Documents
8.3.13 Royalty Agreements
9. EVENTS OF DEFAULT
9.1 Events of Default
9.1.1Non-Payment of Obligations
9.1.2Non-Performance of Certain Covenants
9.1.3Non-Performance of Other Obligations
9.1.4Breach of Representation or Warranty
9.1.5Default on other Indebtedness
9.1.6Bankruptcy, Insolvency, etc.
9.1.7Metal Trading Agreements
9.1.8Project Documents, etc.
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9.1.9Impairment of Loan Documents
9.1.10 Abandonment, Mining Rights
9.1.11 Judgments
9.1.12 Change in Control
9.1.13 Materially Adverse Effect
9.1.14 Cease to Carry on Business
9.1.15 Political Risk Events
9.2 Action if Bankruptcy
9.3 Action if Other Event of Default
10. THE AGENTS
10.1 Actions
10.2 Funding Reliance, etc.
10.3 Exculpation
10.4 Successors
10.5 Loans by Standard Bank
10.6 Standard Bank as Administrative Agent
10.7 Credit Decisions
10.8 Copies, etc
11. MISCELLANEOUS
11.1 Waivers, Amendments, etc
11.2 Notices
11.3 Costs and Expenses
11.4 Indemnification
11.5 Survival
11.6 Severability
11.7 Headings
11.8 Counterparts; Effectiveness
11.9 Governing Law; Entire Agreement
11.10Successors and Assigns
11.11Sale and Transfer of Loans; Participations in Loans
11.11.1 Assignments
11.11.2 Participations
11.12Other Transactions
11.13Forum Selection and Consent to Jurisdiction; Waiver of
Immunity
11.14Waiver of Jury Trial
11.15English Language
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SCHEDULES AND EXHIBITS
SCHEDULE I Disclosure Schedule
SCHEDULE II Base Case
SCHEDULE III Additional Costs Rate
EXHIBIT A Borrowing Notice
EXHIBIT B Continuation Notice
EXHIBIT C Conversion Notice
EXHIBIT D Lender Assignment Agreement
EXHIBIT E Compliance Certificate
EXHIBIT F- 1 Process Agent Acceptance
EXHIBIT F-2 Independent Consultant's Certificate
EXHIBIT G Subordinated Loan Agreement
EXHIBIT H Account Agreement
EXHIBIT I MMS Guaranty
EXHIBIT J-1 Canadian Security Agreement
EXHIBIT J-2 Security Agreement (U.S. Assets)
EXHIBIT K-1 Borrower Share Charge
EXHIBIT K-2 MMS Pledge Agreement
EXHIBIT L-1 Assignment of Contract Rights
EXHIBIT L-2 Chattel Mortgage
EXHIBIT L-3 Pledge Without Conveyance
EXHIBIT L-4 Real Property Mortgage
EXHIBIT M-1 Intercompany Subordination Agreement
EXHIBIT M-2 Nationsbank Subordination Agreement
EXHIBIT N-1 Opinion of Debevoise & Xxxxxxxx, New York
counsel to the Finance Parties
EXHIBIT N-2 Opinion of Xxxxxx, Plaz & Xxxxxx, Venezuelan
counsel to the Finance Parties
EXHIBIT N-3 Opinion of Xxxxx Von Xxxxxxxx Xxxxxxx Diquez,
Venezuelan counsel to the Obligors
EXHIBIT N-4 Opinion of Xxxxxxx Xxxx & Xxxxxxx, Bermudan
counsel
EXHIBIT N-5 Opinion of Xxxxxxxxx X. Xxxxx, corporate
counsel to Hecla Mining
EXHIBIT N-6 Opinion of Fasken Xxxxxxxxx, Canadian counsel
to the Finance Parties
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THIS CREDIT AGREEMENT is dated as of June 25, 1999 (this
"AGREEMENT") AMONG:-
(1) MONARCH RESOURCES INVESTMENTS LIMITED, a company organized
and existing under the laws of Bermuda ("MRIL" or the
"BORROWER");
(2) MONARCH MINERA SURAMERICANA, C.A., a company organized under
the laws of Venezuela ("MMS"), as an additional Obligor;
(3) THE PARTIES LISTED ON THE SIGNATURE PAGES HERETO, as the
initial lenders (collectively, the "INITIAL LENDERS");
(4) STANDARD BANK LONDON LIMITED, a bank organized under the
laws of England ("STANDARD BANK"), in its capacity as the
collateral agent (in such capacity, the "COLLATERAL AGENT");
and
(5) STANDARD BANK LONDON LIMITED, in its capacity as the
administrative agent (in such capacity, the "ADMINISTRATIVE
AGENT").
WITNESSETH:
WHEREAS, Hecla Mining Company, a Delaware corporation ("HECLA
MINING") is active in exploration and development of precious
metals and has entered into the Purchase Agreement, dated of May
17, 1999 (the "ACQUISITION AGREEMENT"), pursuant to which Hecla
Mining intends to purchase from Monarch Resources Limited, a
corporation organized under the laws of Bermuda ("MRL" or the
"VENDOR"), all of the issued and outstanding share capital of the
Borrower;
WHEREAS, MRIL owns all of the issued and outstanding share
capital of MMS and also of Monarch Resources de Mexico, S.A. de
C.V., a company organized under the laws of Mexico ("MONARCH
MEXICO");
WHEREAS, MMS owns the La Camorra underground gold mine in
Venezuela (the "PROJECT") and the Project is already engaging in
the commercial production and sale of Gold;
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WHEREAS, immediately following completion of the Acquisition
Transaction, MMS intends to initiate certain capital improvements
and installations and to fund certain working capital
requirements at the Project;
WHEREAS, the Borrower has requested that the Lenders make loans
available to the Borrower for the purposes of reimbursing moneys
spent by Hecla Mining in the Acquisition Transaction and also for
remitting funds to MMS to fund the improvements and working
capital requirements at the Project described in the previous
recital and the Lenders are willing to make such loans available
to the Borrower, on the terms and subject to the conditions of
this Agreement and the other Loan Documents;
WHEREAS, in order to finance its obligations under the
Acquisition Agreement, Hecla Mining has requested that Standard
Bank make additional funds available to it and Standard Bank is
willing to make such loans available to Hecla Mining on the terms
and subject to the conditions of the Subordinated Loan Agreement
and the other Loan Documents;
WHEREAS, as security for the Borrower's obligations under this
Agreement and for Hecla Mining's obligations under the
Subordinated Loan Agreement: (a) Hecla Mining is willing to grant
a security interest over the MRIL Shares and (b) the Borrower is
willing to grant a security interest over the MMS Shares;
WHEREAS, as security for the Borrower's obligations under this
Agreement and for Hecla Mining's obligations under the
Subordinated Loan Agreement, MMS is willing: (a) to guarantee
such obligations in favor of the Lenders and (b) grant security
interests over those of its assets constituting the Project as
more particularly set forth in the Loan Agreements to which it is
a party.
NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy whereof is hereby acknowledged by each party hereto,
the parties hereto hereby agree as follows:
1. DEFINITIONS; INTERPRETATION
1.1 DEFINED TERMS
The following terms, when used in this Agreement, including
its preamble and recitals, shall have the following
meanings:
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"ACCOUNT AGREEMENT" means that certain Account Agreement,
executed or to be executed by the Collateral Agent, the
Account Bank and the Borrower substantially in the form of
EXHIBIT H attached hereto.
"ACCOUNT BANK" means The Chase Manhattan Bank or, subject
to this Agreement and the Account Agreement, such other
bank located in New York with which the Proceeds Account
shall be maintained.
"ACQUISITION AGREEMENT" is defined in the FIRST RECITAL.
"ACQUISITION EFFECTIVE DATE" means such date as of which
the Acquisition Transaction shall have been completed in
accordance with its terms.
"ACQUISITION TRANSACTION" means the purchase by Hecla
Mining of the share capital of MRIL, MMS and Monarch
Mexico, as contemplated by the Acquisition Agreement.
"ADDITIONAL COSTS RATE" means for any Interest Period, the
applicable rate determined by Administrative Agent and the
relevant Lenders in accordance with SCHEDULE III.
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
"AFFILIATE" of any Person means any other Person which,
directly or indirectly, controls or is controlled by or
under common control with such Person (excluding any
trustee under, or any committee with responsibility for
administering, any compensation, welfare or similar plan).
A Person shall be deemed to be "controlled by" any other
Person if such other Person possesses, directly or
indirectly, power:
(a) to vote twenty percent (20%) or more of the securities
(on a fully diluted basis) having ordinary voting power
for the election of directors or managing general
partners of such Person; or
(b) to direct or cause the direction of the management and
policies of such Person, whether by contract or
otherwise.
"AGENTS" means, collectively, the Administrative Agent and
the Collateral Agent.
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"AGGREGATE COMMITMENT AMOUNT" means U.S.$11,000,000, as may
be reduced pursuant to SECTION 2.1(d).
"AGGREGATE DISCOUNTED PROJECTED CASHFLOW" means for any
Forecast Period, the aggregate of Projected Available
Cashflow for each Measurement Period comprising such
Forecast Period, discounted back to the relevant
Calculation Date at the Discount Rate.
"AGREEMENT" is defined in the PREAMBLE.
"APPLICABLE LAW" means, with respect to any Person or
matter, any supranational, national, provincial, federal,
state, regional or local statute, law, rule, treaty,
convention, regulation, order, decree or other requirement
relating to such Person or matter and, where applicable,
any interpretation thereof by any Governmental Agency
having jurisdiction with respect thereto or charged with
the administration or interpretation thereof (in each case,
whether or not having the force of law, but if not having
the force of law, such statute, law, etc. being of the type
with which such Person would comply in the ordinary course
of business).
"APPLICABLE MARGIN" means two and one-half percent. (2.50%)
PER ANNUM.
"APPROVAL" means each and every approval, authorization,
license, permit, consent, filing and registration by or
with any Governmental Agency or other Person necessary for
the execution, delivery or performance of this Agreement or
any other Operative Document (including any such approval
relating to, or necessary for, the production and export of
Project Output and the consent of any lessor or owner of
any property or assets forming part of the Project) or for
the validity or enforceability hereof or thereof, whether
or not referred to in ITEM 1 ("APPROVALS") of the
Disclosure Schedule.
"APPROVED CREDIT QUALITY" means at least A-1 (or any
successor rating) by Standard & Poor's Rating Group, a
division of McGraw Hill, Inc. and/or P-1 (or any successor
rating) by Xxxxx'x Investors Services, Inc.
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"APPROVED SUBORDINATED INDEBTEDNESS" means any intercompany
Indebtedness advanced by (a) any Subordinated Creditor for
the benefit of the Borrower or MMS and subject to the terms
and conditions of the Intercompany Subordination Agreement
or (b) any other Affiliate of Hecla Mining for the benefit
of the Borrower or MMS and subject to subordination and
other terms and conditions the same in all material
respects as those contained in the Intercompany
Subordination Agreement.
"ASSIGNEE LENDER" is defined in SECTION 11.11.1.
"ASSIGNMENT OF CONTRACT RIGHTS" means any Assignment
executed in Spanish between MMS, the Initial Lenders and
the Collateral Agent relating to MMS' rights under any
designated Project Document, the English translation of
which shall be substantially in the form of EXHIBIT L-1
hereto.
"ASSIGNOR LENDER" is defined in SECTION 11.11.1.
"AUTHORIZED REPRESENTATIVE" means, relative to any Obligor
or Subordinated Creditor, those of its officers whose
signatures and incumbency shall have been certified
pursuant to SECTION 6.1.1.
"AVAILABLE COMMITMENT AMOUNT" means, at any time prior to
the Commitment Termination Date, the excess of the
Commitment Amount (for all Lenders) at such time minus the
Principal Amount of the Loans outstanding at such time.
"AVAILABLE FREE CASHFLOW" means, for any relevant period,
the amount equal to the following:
(a) the actual revenues (expressed in Dollars) realized by
MMS in respect of the Project during such period,
MINUS;
(b) all Operating Expenditures paid by MMS in respect of
the Project during such period, MINUS;
(c) all Taxes paid by MMS in respect of the Project during
such period, MINUS;
(d) all royalty and similar fees paid by MMS in respect of
the Project during such period, MINUS;
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(e) all direct corporate costs as identified in the Base
Case, MINUS;
(f) all Capital Expenditures paid by MMS in respect of the
Project during such period, PLUS;
(g) working capital recovery as identified in the Base
Case, MINUS;
(h) amounts paid by the Borrower in respect of principal,
interest or otherwise in respect of the Obligations
during such period.
For the purposes of the foregoing:
(i) ITEM (a) shall be adjusted for any hedging profits or
losses on settlement of each Metal Trading Agreement
then in effect during such period;
(ii) any Obligations paid in Gold shall be valued at the
Current Dollar Equivalent at the time of payment; and
(iii) in computing any portion of a relevant period
where there are insufficiently accurate data to measure
any amounts actually paid by the Borrower and/or MMS,
any means of extrapolation and/or estimation reasonably
acceptable to the Administrative Agent may be used.
"BASE CASE" means the financial model prepared by the
Borrower (approved in writing by the Administrative Agent),
containing INTER ALIA operational, economic, technical and
risk management data concerning the Project and relating to
the Facility together with calculations of: (a) the Loan
Life Cover Ratio, the Project Life Cover Ratio, the Debt
Service Cover Flow Ratio, the Reserve Debt Cover Ratio and
the Reserve Tail Cover Ratio as subject to agreed standard
assumptions and sensitivity analyses, (b) Aggregate
Discounted Projected Cashflow and Projected Available
Cashflow until the Maturity Date or, as the case may be,
the Project End Date and (c) the scheduled payment
obligations with respect to the Facility, as such model is
modified and updated pursuant to SECTION 8.1.6. A print-
out of the initial Base Case is attached as SCHEDULE II.
"BOLIVAR" means lawful money of Venezuela.
"BORROWER" is defined in the PREAMBLE.
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"BORROWER SHARE CHARGE" means the Agreement executed by
Hecla Mining and the Collateral Agent, substantially in the
form of EXHIBIT K-1 hereto.
"BORROWING DATE" means either Business Day on which Loans
are made pursuant to SECTION 2.1.
"BORROWING NOTICE" means a loan request and certificate
duly executed by an Authorized Representative of the
Borrower, substantially in the form of EXHIBIT A hereto.
"BUSINESS DAY" means:
(a) any day which is not Saturday, Sunday, a legal holiday
or any other day on which banks are closed in London,
England, Hamilton, Bermuda, or New York, New York or,
to the extent involving MMS (but not any provision
relating to the payment or making of the Loans)
Caracas, Venezuela;
(b) relative to the making, continuing converting or the
calculation of the LIBO Rate, any day on which dealings
in Dollars are carried on in the London interbank
market; and/or
(c) relative to the making, continuing, conversion or
repaying of any Gold Loans, or any related
determination, any day on which dealings in Gold are
carried on between members of the LBMA in London.
"CALCULATION DATE" means each June 30 and December 31, and,
without duplication, the initial Borrowing Date.
"CANADIAN SECURITY AGREEMENT" means that certain Security
Agreement executed by Hecla Mining and the Collateral
Agent, substantially in the form of EXHIBIT J-1 hereto.
"CAPITAL CONTRIBUTION" means a cash contribution made
(directly or indirectly) by one Person to the ordinary
share capital or equity of another Person.
"CAPITAL EXPENDITURES" means, for any period and with
respect to any Person, the sum of:
(a) the aggregate amount of all expenditures of such Person
for fixed or capital assets (including expenditure
incurred in connection with deferred development costs)
made during such period which, in accordance with GAAP,
would be classified as capital expenditures; and
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(b) the aggregate amount of all Capitalized Lease
Liabilities incurred during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary
obligations of any Person under any leasing or similar
arrangement which, in accordance with GAAP, would be
classified as capitalized leases, and, for the purposes of
this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with
GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any security, maturing not more than one year after the
purchase thereof, issued by the United States Treasury
that is maintained in book-entry form on the records of
a Federal Reserve Bank in the United States;
(b) commercial paper, maturing not more than nine months
from the date of issue, which (i) has a rating of at
least Approved Credit Quality and (ii) is issued or
guaranteed by a company (other than any Obligor or
Affiliate thereof) or a bank or commercial financial
institution; or
(c) any negotiable certificate of deposit or banker's
acceptance denominated in Dollars, maturing not more
than one year after the purchase thereof, or any money
market funds in any case issued (or, in the case of a
banker's acceptance, accepted) by a commercial banking
institution organized under the laws of an OECD member
country that has a combined capital and surplus and
undivided profits of not less than U.S.$1,000,000,000
(or the equivalent thereof in any other currency).
"CHANGE IN CONTROL" means:
(a) the failure of Hecla Mining to own (and to have sole power
to vote and dispose of), directly or indirectly and free and
clear of all Liens (other than any Lien pursuant to any
Collateral Agreement), 100% of the issued and outstanding share
capital (however designated) of the Borrower;
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(b) the failure of the Borrower to own (and to have sole power
to vote and dispose of), directly or indirectly and free and
clear of all Liens (other than the Liens pursuant to any relevant
Collateral Agreement), 100% of the issued and outstanding share
capital (however designated) of MMS.
Notwithstanding the foregoing, no Change in Control shall
occur under this Agreement, if Hecla Mining wishes to
reorganize its ownership interest in the Borrower and/or
MMS as long as the Administrative Agreement shall have
granted its consent to or such reorganization and the
structure of and the benefits conferred by the Liens
pursuant to the Collateral Agreement in effect before such
reorganization shall be maintained.
"CHATTEL MORTGAGE" means the Chattel Mortgage executed in
Spanish between MMS, the Initial Lenders and the Collateral
Agent, the English translation of which shall be
substantially in the form of EXHIBIT L-2 hereto.
"COLLATERAL AGENT" is defined in the PREAMBLE.
"COLLATERAL AGREEMENTS" means, collectively, the Pledge
Agreements and the Security Agreements.
"COLLECTED LENDERS" means, collectively, the Lenders and
the Subordinated Lenders.
"COMMITMENT" means each Lender's obligation to make,
maintain, continue and convert its Loans in an amount equal
to its Commitment Amount in each case pursuant to the terms
and subject to the conditions of this Agreement.
"COMMITMENT AMOUNT" means (a) relative to any Initial
Lender, the amount set forth opposite its name on the
signature pages hereto under the heading "COMMITMENT
AMOUNT" and (b) relative to any Assignee Lender, the amount
under the heading "COMMITMENT AMOUNT" assumed from the
Assignor Lender pursuant to the Lender Assignment Agreement
by which such Assignee Lender became a party to this
Agreement, in each case as such amount may be adjusted
pursuant to any Lender Assignment Agreement pursuant to
which such Assignor Lender or Assignee Lender, as the case
may be, is a party.
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"COMMITMENT TERMINATION DATE" means the earliest to occur
of the following:
(a) December 31, 1999;
(b) the occurrence of any Enforcement Event;
(c) the Borrowing Date on which the second (and final)
Loans shall have been made pursuant to SECTION 2.1; and
(d) the termination of the Commitments pursuant to SECTION
2.1(d).
"COMMITTED HEDGING AGREEMENTS" means all (a) Gold Loans and
(b) net forward sale, put/call options, spot deferred sale
or other similar arrangements providing for a binding
commitment to sell or deliver Gold entered into by the
Borrower pursuant to SECTION 8.2.7.
"COMPENSATION" means:
(a) all cash or other consideration received by MMS (net of
all reasonable out-of-pocket costs paid by MMS to
Persons not affiliated with any Obligor in obtaining
such cash or other consideration) in respect of the
partial or total nationalization, expropriation,
compulsory purchase, requisition or other taking
(whether for title or otherwise) of the Project or the
Project Assets, or any interest therein,
(b) any sum received by MMS in respect of the release,
inhibition, modification, suspension or extinguishment
of any rights, easements or covenants enjoyed by or
benefiting the Project or the Project Assets, or the
imposition of any restriction affecting the Project or
the Project Assets, or the grant of any easement or
rights over or affecting the Project or the Project
Assets or any part thereof, and
(c) any cash or other payment received by MMS in respect of
the refusal, revocation, suspension or modification of
any Approval required for the construction or operation
of the Project or the Project Assets,
other than any proceeds received in respect of any Project
Insurance.
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"COMPLIANCE CERTIFICATE" means a certificate (or such other
form as may be reasonably acceptable to the Administrative
Agreement) duly executed by an Authorized Representative of
the Borrower, substantially in the form of EXHIBIT E
hereto.
"COMPLIANCE DATE" means each June 30 and December 31 of
each calendar year.
"CONTINGENT LIABILITY" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct
or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, obligation or any other
liability of any other Person (other than by endorsements
of instruments in the course of collection), or guarantees
the payment of dividends or other distributions upon the
shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to
any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount,
if larger) of the debt, obligation or other liability
guaranteed thereby.
"CONTINUATION NOTICE" means a notice of continuation and
certificate duly executed by an Authorized Representative
of the Borrower, substantially in the form of EXHIBIT B
hereto.
"CONTRACTUAL OBLIGATION" means, relative to any Person, any
provision of any security issued by such Person or of any
Instrument or undertaking to which such Person is a party
or by which it or any of its property is bound.
"CONVERSION AMOUNT" means the Dollars subject of a Dollar
Loan or the Ounces subject of a Gold Loan to be converted
pursuant to the relevant Conversion Notice.
"CONVERSION DATE" means, in relation to any Loan, the date
for converting such Loan as specified by the Borrower in the
relevant Conversion Notice.
"CONVERSION NOTICE" means a notice of conversion and
certificate duly executed by an Authorized Representative of
the Borrower, substantially in the form of EXHIBIT C hereto.
18
"CURRENT DOLLAR EQUIVALENT" means, at any date with respect
to any Gold Loan, the amount obtained by multiplying the
then Spot Gold Price by the number of Ounces subject of such
Gold Loan.
"CURRENT GOLD EQUIVALENT" means, at any date with respect
to any Dollar Loan, the amount obtained by dividing the
Principal Amount of such Dollar Loan by the then Spot Gold
Price.
"DEBT SERVICE COVER RATIO" means, at any Compliance Date,
the ratio of:
(a) Projected Available Cashflow for the Measurement Period
following such Compliance Date and for each subsequent
Measurement Period prior to (and including) the
Maturity Date, to
(b) Principal Amounts required to be paid with respect to
the Loans (together with principal amounts in a maximum
amount of U.S.$3,000,000 required to be paid with
respect to the Subordinated Loans) for each such
Measurement Period, together with all interest
projected to be paid with respect to the Loans (and
interest projected to be paid with respect to the
Subordinated Loans, on the Maturity Date under the
Subordinated Loan Agreement).
For the purposes of CLAUSE (b), Principal Amounts for Gold
Loans shall be valued using the relevant Original Dollar
Equivalent.
"DEFAULT" means any Event of Default or any condition or
event which, after notice, lapse of time, the making of any
required determination or any combination of the foregoing,
would constitute an Event of Default.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule
attached hereto as SCHEDULE I.
"DISCOUNT RATE" means, with respect to any Calculation Date,
the weighted average (by Principal Amount outstanding, with
all Gold Loans calculated at their Original Dollar
Equivalent) of:
(a) the sum (in respect of any Dollar Loan) of (i) the LIBO
Rate PLUS (ii) the Applicable Margin, and
19
(b) the sum (in respect of any Gold Loan) of (i) the Gold
Rate PLUS (ii) the Applicable Margin,
in each case for an actual Interest Period of six months
commencing on such Calculation Date.
"DOLLAR" and the sign "U.S.$" mean lawful money of the
United States.
"DOLLAR LENDING OFFICE" means (a) with respect to each
Initial Lender, the office of such Initial Lender
designated as such below its signature hereto or such other
office of such Initial Lender as may be designated from
time to time by notice from such Initial Lender to the
Administrative Agent and the Borrower, (b) with respect to
each Assignee Lender, the office of such Assignee Lender
designated as such in the Lender Assignment Agreement
pursuant to which it became a Lender or as may be
designated from time to time by notice from such Assignee
Lender to the Administrative Agent and the Borrower and (c)
with respect to the Administrative Agent, the office of the
Administrative Agent designated as such from time to time
by notice to the Borrower and each Lender.
"DOLLAR LOAN" means, relative to each Lender, those of such
Lender's Loans which are from time to time denominated in
Dollars.
"EFFECTIVE DATE" is defined in SECTION 11.8.
"ENFORCEMENT EVENT" means either:
(a) an Insolvency Event; or
(b) the occurrence of any other Event of Default and the
acceleration of the Obligations pursuant to SECTION
9.3.
"ENVIRONMENTAL LAW" means, with respect to any Person, any
Applicable Law relating to or imposing liability or
standards of conduct concerning public health and safety
and the protection of the environment that is applicable to
such Person.
"EVENT OF DEFAULT" is defined in SECTION 9.1.
20
"FACILITY" means the Loans and the financial accommodations
made to the Borrower in connection therewith.
"FINANCE PARTIES" means, collectively, the Lenders and the
Agents.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive
calendar months ending on December 31.
"FORECAST PERIOD" means, with respect to any Calculation
Date, the period consisting of all Measurement Periods
following such Calculation Date to (and including) the
Maturity Date or, as the case may be, the Project End Date.
"FORWARD GOLD RATE" means, for any relevant period, the rate
PER ANNUM quoted in the London Interbank Forward Bullion
Market two Business Days prior to the commencement of such
period on the Reuters Screen GOFO Page.
"F.R.S. BOARD" means the Board of Governors of the Federal
Reserve System.
"GAAP" means, as the context may require, Canadian GAAP,
U.S. GAAP or Venezuelan GAAP.
"GOLD" means gold bullion measured in fine ounces xxxx
weight.
"GOLD LENDING OFFICE" means (a) with respect to each Initial
Lender, the office of such Initial Lender designated as such
below its signature hereto or such other office maintained
by or on behalf of such Initial Lender as may be designated
from time to time by notice from such Initial Lender to the
Administrative Agent and the Borrower, (b) with respect to
each Assignee Lender, the office of such Assignee Lender
designated as such, the lender Assignment Agreement pursuant
to which it became a lender or as may be designated from
time to time by notice from such Assignee Lender to the
Administrative Agent and the Borrower and (c) with respect
to the Administrative Agent, the office of the
Administrative Agent designated as such from time to time by
notice to the Borrower and each Lender.
21
"GOLD LOAN" means, relative to each Lender, those of such
Lender's Loans which are from time to time denominated in
Gold.
"GOLD OBLIGATION" is defined in SECTION 5.11(a).
"GOLD RATE" means for any Interest Period in relation to a
Gold Loan, the rate of interest PER ANNUM equal to (i) the
LIBO Rate for such Interest Period MINUS (ii) the Forward
Gold Rate for such Interest Period.
"GOVERNMENTAL AGENCY" means any supranational, national,
federal, state, regional or local government or
governmental department or other entity charged with the
administration, interpretation or enforcement of any
Applicable Law.
"HAZARDOUS MATERIAL" means:
(a) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, substance or waste within the
meaning of any Environmental Law; or
(b) any petroleum product.
"HECLA MINING" is defined in the FIRST RECITAL.
"HEDGING OBLIGATIONS" means, with respect to any Person,
all liabilities of such Person under commodity swap
agreements, interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all
other agreements, options or arrangements designed to
protect such Person against fluctuations in interest rates,
currency exchange rates or precious metals prices
(including any Metal Trading Agreements).
"IMPERMISSIBLE QUALIFICATION" means, relative to the
opinion or report of any independent certified public
accountant or any independent chartered accountant as to
any financial statement of any Obligor, any qualification
or exception to such opinion or report:
(a)which is of a "going concern" or similar nature;
22
(b) which relates to any limited scope of examination of
matters relevant to such financial statement which has
resulted from any action of such Obligor the result of
which is, directly or indirectly, to prevent such
accountant from making such examination as such
accountant deems appropriate; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a
condition to its removal, would require an adjustment
to such item the effect of which would be to cause a
default of any of the obligations under SECTION 8.1.5.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or
metals (including Gold) and all obligations evidenced
by bonds, debentures, notes, or other similar
Instruments on which interest charges are customarily
paid;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or
not drawn, and banker's acceptances and similar
instruments, in each such case issued for the account
of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities;
(d) net payment liabilities of such Person under all Hedging
Obligations;
(e) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the
deferred purchase price of property or services, and
indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased
by such Person (including indebtedness arising under
conditional sales or other title retention agreements),
whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
(f) all Contingent Liabilities of such Person in respect of
any of the foregoing items which are the obligations of
any other Person.
23
"INDEMNIFIED LIABILITIES" is defined in SECTION 11.4.
"INDEMNIFIED PARTIES" is defined in SECTION 11.4.
"INDEPENDENT CONSULTANT" means Xxxxxxx, Xxxxxxxxx &
Xxxxxxx, or such other independent mining consultant as is
retained for the purposes of the Facility by the
Administrative Agent. The Independent Consultant's duties
include assistance in the review of the Base Case and also
the preparation and delivery of operating technical and
production reports concerning the Project for each six
month period during the life of the Facility based on
reports delivered to the Administrative Agent pursuant to
SECTION 8.1.3 and, where relevant its on-site inspections
of the Project.
"INDEPENDENT CONSULTANT'S CERTIFICATE" means a certificate
duly executed by the Independent Consultant, substantially
in the form of EXHIBIT F-2 hereto.
"INITIAL LENDERS" is defined in the PREAMBLE.
"INSOLVENCY EVENT" means, with respect to any Obligor, the
occurrence of any Default described in SECTION 9.1.6.
"INSTRUMENT" means any contract, agreement, indenture,
mortgage, document or writing (whether by formal agreement,
letter or otherwise) under which any obligation is
evidenced, assumed, or undertaken, or any Lien (or right or
interest therein) is granted or perfected or purported to
be granted or perfected.
"INSURANCE CONSULTANT" is defined in SECTION 8.1.4.
"INSURANCE SUMMARY" is defined in SECTION 6.1.12(c).
"INTERCOMPANY SUBORDINATION AGREEMENT" means that certain
Intercompany Subordination Agreement, executed by the
Borrower, MMS, the Subordinated Creditors and the
Collateral Agent, substantially in the form of EXHIBIT M-1
hereto.
24
"INTEREST PERIOD" means, relative to any Loan:
(a) initially, the period from the date such Loan was made
on the Borrowing Date to the day which numerically
corresponds to such date one, three or six months
thereafter (or such other date as agreed between all
the Lenders and the Borrower but, subject at all times
to the provisions of SECTION 5.1);
(b) thereafter, each period from the last day of the
immediately preceding Interest Period applicable to
such Loan to the day which numerically corresponds to
such date one, three or six months thereafter (or such
other date as agreed between all the Lenders and the
Borrower and, subject as provided in CLAUSE (a)) as the
Borrower may irrevocably select in the relevant
Continuation Notice or Conversion Notice delivered
pursuant to SECTION 2.2;
PROVIDED, HOWEVER, that:
(c) absent the timely selection of an Interest Period for a
then outstanding Loan, the Borrower shall be deemed to
have selected an Interest Period identical to that then
in effect with respect to such Loan;
(d) if such Interest Period for any Loan would otherwise
end on a day which is not a Business Day, such Interest
Period shall end on the next following Business Day,
unless, in the case of any Dollar Loans, such Business
Day occurs in the next following calendar month, in
which case such Interest Period shall end on the
immediately preceding Business Day;
(e) the Borrower shall not be permitted to select, and
there shall not be applicable, any Interest Period for
any Loan that would end later than the Maturity Date;
(f) at any one time, there shall only be permitted to be in
effect a maximum of eight Interest Periods with respect
to the Loans; and
(g) the Administrative Agent shall be able to select
Interest Periods satisfactory to it pursuant to the
terms and conditions of SECTION 3.2.2 or after any
Enforcement Event.
25
"INVESTMENT" means, relative to any Person and without
duplication:
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary
course of business);
(b) any Contingent Liability entered into by such Person;
and
(c) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original
principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by
reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property
other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value
of such property.
"LBMA" means The London Bullion Market Association.
"LENDER ASSIGNMENT AGREEMENT" means an Assignment
Agreement, duly executed by an Assignor Lender and an
Assignee Lender, substantially in the form of EXHIBIT D
hereto.
"LENDERS" means, collectively, the Initial Lenders and the
Assignee Lenders.
"LIBO RATE" means:-
(a) the rate (rounded upwards, if necessary, to the nearest
four decimal places) which is the offered rate at or
about 11.00 a.m. two Business Days prior to the
relevant Interest Period for Dollar deposits for a
period equal to the relevant Interest Period which
appears on the display designated as the British
Bankers' Association Interest Settlement Rate as quoted
on the Reuters' Screen page no. LIBOR = (or such other
page or service as may replace page no. LIBOR = of such
service (as the case may be) for the purpose of so
displaying the British Bankers' Association Interest
26
Settlement Rate for London interbank offered rates and,
in the absence of any such replacement page or service,
such other page of such other service as the
Administrative Agent, the relevant Lenders and the
Borrower may agree), or
(b) if no relevant rate appears on Reuters' Screen page no.
LIBOR = or if such Reuters' Screen page is unavailable
at the relevant time the arithmetic mean (rounded
upwards, if necessary, to the nearest four decimal
places) of the respective rates, as supplied to the
Administrative Agent at its request, quoted by the
Reference Banks to prime banks in the London Interbank
Market at or about 11.00 a.m. two Business Days prior
to the relevant Interest Period in an amount comparable
to the amount of the relevant Loans and for a period
equal to the Interest Period for delivery on the first
day of that Interest Period.
"LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, encumbrance, lien (statutory or
otherwise), charge against or interest in property to
secure payment of a debt or performance of an obligation or
other priority or preferential arrangement of any kind or
nature whatsoever.
"LOAN" means any Lender's loans under this Agreement,
whether outstanding or to be made, and whether Dollar Loans
or Gold Loans.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Collateral Agreements, the Subordinated Loan Agreement, the
Account Agreement, the MMS Guaranty, the Intercompany
Subordination Agreement, each Metal Trading Agreement to
which any Lender is a party, and each other Instrument
executed by any Obligor or any Affiliate of any thereof
evidencing any obligation (monetary or otherwise) in
connection with and pursuant to this Agreement and the
transactions contemplated hereby and representing
obligations incurred to any of the Finance Parties.
"LOAN LIFE COVER RATIO" means, at any Calculation Date, the
ratio of:
(a) Aggregate Discounted Projected Cashflow for the
Forecast Period following such Calculation Date to (and
including) the Maturity Date, to
27
(b) the Principal Outstandings (together with the
outstanding principal amount of the Subordinated Loans)
as at such Calculation Date.
For the purposes of CLAUSE (b), Principal Outstandings with
respect to Gold Loans shall be valued using their Original
Dollar Equivalent.
"LOCAL ACCOUNTS" is defined in SECTION 4.1(b).
"LONDON GOLD PRICE" means on any day the price per Ounce of
Gold as fixed by members of the LBMA during the afternoon
of such day (including an amount, if any, equal to the
premium and any other additional amounts that would be
payable in the London bullion market in connection with a
purchase of Gold). If the London Gold Price is not
available by reference to the price fixed as aforesaid,
then the London Gold Price shall be any of the following
alternatives, with each later mentioned alternative to be
used if the previous alternative is not available:
(a) if such day is a Business Day (as described in CLAUSE
(c) of the definition of such term), the price per
Ounce of Gold as fixed by members of the LBMA during
the morning of such day (including the premium and
additional amounts described above),
(b) if such day is a Business Day as aforesaid, the
publicly quoted price in Dollars per Ounce of Gold on
such other accessible international bullion market as
may be agreed between the Administrative Agent and the
Borrower, or
(c) if such day is not a Business Day as aforesaid, the
price per Ounce of Gold as fixed by members of the LBMA
during the afternoon of the previous Business Day.
"MATERIAL PROJECT DOCUMENTS" means the Union Contract, any
contract or agreement relating to the operation or
maintenance of the Project of the nature that a Materially
Adverse Effect would result if such contract or agreement
were not in effect or were terminated and not replaced
within a period of 30 days and includes those Instruments
designated as "MATERIAL PROJECT DOCUMENTS" from time to
time pursuant to SECTION 8.3.12(b).
28
"MATERIALLY ADVERSE EFFECT" means an effect, resulting from
any occurrence of whatever nature (including any adverse
determination in any labor controversy, litigation,
arbitration or governmental investigation or proceeding),
which is materially adverse to:
(a) the ability of any Obligor to make any payment or
perform any other material obligation required under
any Operative Document to which it is a party; or
(b) the ability of MMS to operate and maintain the Project
substantially in accordance with this Agreement.
"MATURITY" means, relative to the Loans, any date on which
the Loans are stated to be due and payable, in whole or in
part, whether by required repayment, prepayment,
declaration or otherwise.
"MATURITY DATE" means June 30, 2004.
"MAXIMUM DOLLAR EQUIVALENT" means, with respect to any Gold
Loan, the amount in Dollars obtained by multiplying the
Original Dollar Equivalent of such Gold Loan (as originally
made or converted) by 1.5.
"MEASUREMENT PERIOD" means the period of six calendar
months commencing on each January 1 and July 1 of each
calendar year; PROVIDED, HOWEVER, for the computation of a
financial ratio where a Measurement Period (i) commences on
the initial Borrowing Date, "MEASUREMENT PERIOD" means the
period commencing on the occurrence (or scheduled
occurrence) of the initial Borrowing Date and ending on the
June 30 or December 31 next following or (ii) ends on the
Maturity Date or the Project End Date, "MEASUREMENT PERIOD"
means the period commencing on the relevant January 1 or
July 1 and ending on the scheduled occurrence of either the
Maturity Date or the Project End Date, as the case may be.
"METAL TRADING AGREEMENTS" means, collectively, (i) the
Committed Hedging Agreements and (ii) any other agreements
entered into by the Borrower relating to the sale or
purchase of Gold.
"MINING RIGHTS" means all interests in the surface of the
lands, the minerals in (or that may be extracted from) the
29
lands, the royalty agreements, water rights, mining
concessions, fee interests, mineral leases, mining
licenses, profits-a-prendre, joint ventures and other
leases, rights-of-way, enurements, licenses and other
rights and interests in real property used by or necessary
to MMS to operate and maintain the Project.
"MMS" is defined in the PREAMBLE.
"MMS GUARANTY" means the Guaranty Agreement executed by MMS
and the Collateral Agent, substantially in the form of
EXHIBIT I hereto.
"MMS PLEDGE AGREEMENT" means the Pledge Agreement executed
by the Borrower, the Initial Lenders and the Collateral
Agent, substantially in the form of EXHIBIT K-2 hereto.
"MMS SHARES" means the 24,500 Class A Shares and the 25,500
Class B Shares, each in capital stock of MMS.
"MONARCH MEXICO" is defined in the SECOND RECITAL and
includes any successor by name change.
"MONARCH MEXICO SHARES" means the 8,464,676 shares of
capital stock of Monarch Mexico.
"MRIL " is defined in the PREAMBLE.
"MRIL SHARES" means the 7,500,000 shares of capital stock
of MRIL.
"MRL" is defined in the FIRST RECITAL.
"NATIONSBANK SUBORDINATION AGREEMENT" means that certain
Subordination Agreement, executed by Nationsbank, N.A., as
senior creditor, Standard Bank, as subordinated creditor
and Hecla Mining, substantially in the form of EXHIBIT M-2
hereto.
"NON-MATERIAL APPROVALS" is defined in SECTION 7.16(a)(ii).
"OBLIGATIONS" means all obligations of any relevant Obligor
with respect to the repayment or performance of all
obligations (monetary or otherwise) arising under or in
connection with the Facility.
30
"OBLIGORS" means, collectively, the Borrower, MMS and Hecla
Mining.
"OECD" means the Organization for Economic Cooperation and
Development.
"OPERATING EXPENDITURES" means, for any applicable period,
all production, mining, crushing, leaching, metallurgical
processing, laboratory, utility, milling, power, transport,
refining and similar operating and administrative costs
during such period.
"OPERATIVE DOCUMENTS" means, collectively, the Loan
Documents and the Project Documents.
"ORGANIC DOCUMENT" means with respect to (a) the Borrower,
its memorandum of association and its by-laws, (b) MMS, its
by-laws (ESTATUTOS) and (c) any of the foregoing, all
shareholder agreements, voting trusts and similar
arrangements applicable to any of its authorized shares of
capital stock or other equity interests.
"ORIGINAL DOLLAR EQUIVALENT" means, with respect to any Gold
Loan, the amount obtained by multiplying the Original Gold
Price applicable to such Gold Loan by the number of Ounces
subject of such Gold Loan.
"ORIGINAL GOLD PRICE" means, with respect to any Gold
subject of a Gold Loan, the London Gold Price two Business
Days prior to the date such Gold Loan was made or converted
from a Dollar Loan into a Gold Loan.
"OUNCE" means a fine ounce xxxx weight of Gold in a form
readily tradeable with members of the LBMA from time to
time.
"PARTICIPANT" is defined in SECTION 11.11.2.
"PAYMENT DATE" means each June 30 and December 31,
commencing with June 30, 2000.
"PERCENTAGE" means, relative to any Lender and at any time,
the ratio (expressed as a percentage) of (i) the Principal
Amount of such Lender's Loans at such time to (ii) the
Principal Amount of all the Lenders' Loans at such time.
For the purposes of the foregoing sentence, all Gold Loans
shall be calculated at their Original Dollar Equivalent.
31
"PERMITTED LIENS" means the Liens permitted pursuant to
SECTION 8.3.3.
"PERSON" means any natural person, corporation,
partnership, firm, association, trust, government,
governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
"PLEDGE AGREEMENTS" means, collectively, the Borrower Share
Charge and the MMS Pledge Agreement.
"PLEDGE WITHOUT CONVEYANCE" means the Pledge executed in
Spanish between MMS, the Initial Lenders and the Collateral
Agent over Project Output (including that being processed
by the Project), the English translation of which shall be
substantially in the form of EXHIBIT L-3 hereto.
"POLITICAL RISK INSURANCE" is defined in SECTION 6.1.12(f).
"PRINCIPAL AMOUNT" means:-
(a) with respect to any Gold Loan, the Current Dollar
Equivalent (or as the context may require Original
Dollar Equivalent) of such Gold Loan; and
(b) with respect to any Dollar Loan, the principal amount
thereof.
"PRINCIPAL OUTSTANDINGS" means at any time the Principal
Amount of all outstanding Loans at such time.
"PROCEEDS ACCOUNT" means the account maintained by the
Borrower with the Account Bank pursuant to SECTION 4.1(a).
"PROCESS AGENT" is defined in SECTION 11.13.
"PROJECT" is defined in the THIRD RECITAL.
"PROJECT ASSETS" means all properties, assets or other
rights, whether real or personal, tangible or intangible,
now owned or hereafter acquired by or for the benefit of
MMS, which are used or intended for use in or forming part
of the Project.
32
"PROJECT DOCUMENTS" means, collectively and without
duplication (a) the Material Project Documents, (b) all
other Instruments referred to in ITEM 2 ("CURRENT/PENDING
PROJECT DOCUMENTS") of the Disclosure Schedule and (c) all
other Instruments designated as "PROJECT DOCUMENTS" from
time to time pursuant to SECTION 8.3.12.
"PROJECT END DATE" means December 31, 2006.
"PROJECT INSURANCE" means any policy of insurance held in
connection with the Project pursuant to SECTION 8.2.5.
"PROJECT LIFE COVER RATIO" means, at any Calculation Date,
the ratio of:
(a) Aggregate Discounted Projected Cashflow for the
Forecast Period following such Calculation Date to (and
including) the Project End Date, to
(b) the Principal Outstandings (together with the
outstanding principal amount of the Subordinated Loans)
as at such Calculation Date.
For the purposes of CLAUSE (b), Principal Outstandings with
respect to Gold Loans shall be valued using their Original
Dollar Equivalent.
"PROJECT OUTPUT" means all products from the Project
including ore, dore and Gold.
"PROJECT PARTY" means (i) any Obligor and (ii) any
contractor, operator or processor involved in the
technical, physical and operational aspects of the
operation and maintenance of the Project.
"PROJECTED AVAILABLE CASHFLOW" means, for any Measurement
Period, the amount reached by computing:
(a) the actual revenues (expressed in Dollars and
calculated by reference to Ounces of Gold) projected to
be realized by MMS in respect of the Project during
such period, MINUS;
(b) all Operating Expenditures projected to be paid by MMS
in respect of the Project during such period, MINUS;
33
(c) all Taxes projected to be paid by MMS in respect of the
Project during such period, MINUS;
(d) all royalty and similar fees projected to be paid by
MMS in respect of the Project during such period,
MINUS;
(e) all direct corporate costs as identified in the Base
Case, MINUS;
(f) all Capital Expenditures projected to be paid by MMS in
respect of the Project during such period, PLUS;
(g) working capital recovery as identified in the Base
Case.
For the purposes of ITEM (a) above, as at any relevant
Compliance Date:
(i) any Ounces subject of Committed Hedging Agreements
(other than Gold Loans) then in effect shall be valued
using the actual delivery price specified in such
Committed Hedging Agreements;
(ii)any Ounces subject of Gold Loans due to be repaid
within the relevant Measurement Period shall be valued
at their Original Dollar Equivalent; and
(iii) any other Ounces then projected to be produced
shall be valued using the lower of (i) the average Spot
Gold Price (for a period of three months) ending on
(and including) the relevant Compliance Date and
(ii) the Spot Gold Price as at the relevant Compliance
Date.
"PURCHASE PRICE" is defined in the Acquisition Agreement.
"REAL PROPERTY MORTGAGE" means the Mortgage executed in
Spanish between MMS, the Initial Lenders and the Collateral
Agent over certain real property assets and interests in
and relating to the Project (including certain real
property assets and interests owned or to be acquired by
MMS), the English translations of which shall be
substantially in the form of EXHIBIT L-4 hereto.
"REFERENCE BANKS" means Citibank N.A., The Chase Manhattan
Bank and Deutsche Bank AG acting through their principal
offices in London, or such other banks and financial
institutions which the Borrower and the Administrative
Agent may agree.
34
"REFINING/TRANSPORTATION AGREEMENT" means the contract
providing for the refining of Project Output and its
shipment (as permitted by Applicable Law) to refiners
outside of Venezuela to be on terms and conditions, and to
be in effect with a counterparty, reasonably satisfactory
to the Administrative Agent.
"REGULATORY CHANGE" means the occurrence after the
Effective Date of any change in or
abrogation of, or introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in of any:
(a) statute, law, rule, or regulation applicable to any
Finance Party, or
(b) guideline, interpretation, directive, consent decree,
administrative order, request or determination (whether
or not having the force of law but, if not having the
force of law, such guideline, etc. being of the type
with which such Finance Party would comply in the
ordinary course of business) applicable to such Finance
Party of any court, central bank or governmental or
regulatory authority charged with the interpretation or
administration of any statute, law, rule or regulation
referred to in CLAUSE (a) or of any fiscal, monetary,
or other authority having jurisdiction over such
Finance Party.
"REQUIRED COLLECTED LENDERS" means, at any time, Collected
Lenders having, in the aggregate, a percentage of more than
sixty-six and two thirds (662/3%), computed by reference to
the ratio of: (a) the sum of (i) the Principal Amount of
such Collected Lenders' Loans at such time PLUS (ii) the
principal amount of such Collected Lenders' Subordinated
Loans at such time to (b) the sum of (i) the Principal
Amount of all the Collected Lenders' Loans at such time
PLUS (ii) the principal amount of all the Collected
Lenders' Subordinated Loans at such time. For the purposes
of this definition, all Gold Loans shall be calculated at
their Original Dollar Equivalent.
"REQUIRED LENDERS" means, at any time, Lenders having, in
the aggregate, a Percentage of more than sixty-six and two-
thirds (662/3%).
"REQUIREMENT OF LAW" means, as to any Person, its Organic
Documents and any Applicable Law or Contractual Obligation
binding on or applying to such Person.
35
"RESERVE DEBT COVER RATIO" means, at any date, the ratio
of:
(a) Reserves as at such date, to
(b) the Principal Outstandings together with the
outstanding principal amount of the Subordinated Loans,
as at such date.
For the purposes of items (a) and (b) above,
(i) any Ounces the subject of Committed Hedging
Agreements (other than Gold Loans) in effect at any
relevant time of measurement shall be valued using the
actual delivery price specified in such Committed Hedging
Agreement;
(ii) any Ounces the subject of Gold Loans due to be repaid
at any relevant time of measurement shall be valued at
their Original Dollar Equivalent; and
(iii)any other Ounces projected to be produced at any
relevant time of measurement shall be valued using the
lower of (i) the average Spot Gold Price (for a period of
three months) ending on such date and (ii) the Spot Gold
Price as at such date.
"RESERVE TAIL COVER RATIO" means, at any date, the ratio
of:-
(a) Reserves as at such date, to
(b) Reserves as at the Effective Date.
"RESERVES" means those ounces of gold underlying the
Project which, in accordance with guidelines promulgated by
the U.S. Securities and Exchange Commission, could be
economically and legally extracted or produced at any
relevant time of determination, or, without duplication,
which are presented in the Base Case as mineable gold ore.
"RESTATED CREDIT AGREEMENT" means the Restated Credit
Agreement, dated May 7, 1999, between Hecla Mining,
Nationsbank, N.A. as Agent and the lenders party thereto.
36
"SECURITY AGREEMENT (U.S. ASSETS)" means that certain
Security Agreement executed by the Borrower and the
Collateral Agent, substantially in the form of EXHIBIT J-2
attached hereto.
"SECURITY AGREEMENTS" means, collectively, the Venezuelan
Security Documents, the Canadian Security Agreement, and
the Security Agreement (U.S. Assets).
"SPOT GOLD PRICE" means, at any date, the London Gold Price
in effect two Business Days prior to such date.
"STANDARD BANK" is defined in the PREAMBLE.
"SUBORDINATED CREDITORS" means, collectively, in their
capacities as lenders under any Instrument evidencing
Approved Subordinated Indebtedness, Hecla Mining and its
Affiliates.
"SUBORDINATED LENDERS" means Standard Bank and the other
banks from time to time party to the Subordinated Loan
Agreement.
"SUBORDINATED LOAN AGREEMENT" means that certain Loan
Agreement executed or to be executed by Hecla Mining, as
borrower, the Subordinated Lenders, Standard Bank as
Administrative Agent and Standard Bank as Collateral Agent,
substantially in the form of EXHIBIT G hereto.
"SUBORDINATED LOANS" means the loans outstanding under the
Subordinated Loan Agreement.
"TAX CREDIT" is defined in SECTION 5.7(b).
"TAX PAYMENT" is defined in SECTION 5.7(b).
"TAXES" means any present or future income, franchise,
excise, stamp or other taxes, fees, duties, withholdings or
other charges of any nature imposed by any taxing authority
of any jurisdiction.
"TYPE" means, as the context may require, Gold Loans or
Dollar Loans.
"UNION CONTRACT" means the contract between MMS and the
Union of Workers from the Gold, Diamonds, Bauxite,
Dolomite, Kaolin, etc. mines of Bolivar State, dated
November 5, 1998.
37
"U.S. GAAP" is defined in SECTION 1.3.
"VENDOR" is defined in the FIRST RECITAL.
"VENEZUELAN GAAP" is defined in SECTION 1.3.
"VENEZUELAN SECURITY DOCUMENTS" means the Real Property
Mortgage, the Chattel Mortgage, the Pledge Without
Conveyance, any Assignment of Contract Rights and all other
documents expressed to be governed by the laws of Venezuela
creating, evidencing or granting or the subject of security
for the obligations of any Obligor under the Loan
Documents.
1.2 USE OF DEFINED TERMS
Unless otherwise defined or the context otherwise requires,
terms for which meanings are provided in this Agreement
shall have such meanings when used in this Agreement and
each other Loan Document and each notice and other
communication delivered from time to time in connection
therewith.
1.3 ACCOUNTING AND FINANCIAL DETERMINATIONS
Unless otherwise specified, all accounting terms used
herein or in any other Loan Document shall be interpreted,
all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements
required to be delivered hereunder or thereunder shall be
prepared in accordance with, generally accepted accounting
principles in the U.S. ("U.S. GAAP"). Notwithstanding the
foregoing, the parties hereto recognize that the financial
statements of MMS referred to in SECTION 7.5 were prepared
in accordance with generally accepted accounting principles
in Venezuela ("VENEZUELAN GAAP"), and all accounting terms,
determinations and computations relating to MMS at any time
prior to the Effective Date shall be interpreted in
accordance therewith.
1.4 CHANGE IN ACCOUNTING PRINCIPLES
If, after the Effective Date, there shall (without
prejudice to SECTION 8.3.1) be any change to either the
Borrower's or MMS' Fiscal Year, or in the application of
the accounting principles used in the preparation of the
38
financial statements of Hecla Mining for the Fiscal Year
ending December 31, 1998 (as delivered pursuant to the
Subordinated Loan Agreement) as a result of the
promulgation of rules, regulations, pronouncements or
opinions by agencies having jurisdiction over financial
reporting and accounting standards which changes result in
a change in the method of calculation of, or have an
adverse impact on, financial covenants, standards, or terms
applicable to either the Borrower or MMS found in this
Agreement or any other Loan Document, such Obligor and the
Administrative Agent agree promptly to enter into
negotiations in order to amend such financial covenants,
standards or terms so as to reflect equitably such changes
with the desired result that the evaluations of such
Obligor's financial condition shall be the same after such
changes as if such changes had not been made; PROVIDED,
HOWEVER, that until the Required Lenders have given their
consent (such consent not to be unreasonably withheld,
conditioned or delayed) to the Administrative Agent to such
amendments, each such Obligor's financial condition shall
continue to be evaluated on the same principles as those
used in the preparation of Hecla Mining's financial
statements for the Fiscal Year ending December 31, 1998 as
described above.
1.5 PROJECT DETERMINATIONS, ETC
Subject to SECTION 8.1.7, all determinations and
calculations relating to the Project (including, to the
extent involving projections, the determination or
calculation, as the case may be, of Aggregate Discounted
Projected Cashflow, Debt Service Cover Ratio, Loan Life
Cover Ratio, Project Life Cover Ratio, Projected Available
Cashflow, Reserve Debt Cover Ratio and/or Reserve Tail
Cover Ratio) shall be made in accordance with the Base
Case.
1.6 GENERAL PROVISIONS AS TO CERTIFICATES AND OPINIONS, ETC.
Whenever the delivery of a certificate is a condition
precedent to the taking of any action by either Agent or
any Lender hereunder, the truth and accuracy of the facts
and the diligent and good faith determination of the
opinions stated in such certificate shall in each case be
conditions precedent to the right of any Obligor to have
such action taken, and any certificate executed by such
Obligor shall be deemed to represent and warrant that the
facts stated in such certificate are true and accurate as
of the date stated.
39
1.7 INTERPRETATION
Unless a clear contrary intention appears, this Agreement
and each other Loan Document shall be construed and
interpreted in accordance with the provisions set forth
below:
(a) the singular number includes the plural number and vice
versa;
(b) reference to any Person includes such Person's successors,
executors, administrators, substitutes and assigns but, if
applicable, only if such successors, executors, administrators,
substitutes and assigns are permitted by this Agreement or such
other Loan Document, and reference to a Person in a particular
capacity excludes such Person in any other capacity or
individually;
(c) reference to any gender includes any other gender;
(d) reference to any agreement, document or Instrument means
such agreement, document or Instrument as amended, supplemented,
novated, refinanced, replaced, waived, restated or modified, and
in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof;
(e) reference to any promissory note includes any promissory
note which is an extension or renewal thereof or a substitute or
replacement therefor;
(f) reference to any Applicable Law means such Applicable Law
as amended, modified, codified or re-enacted, in whole or in
part, and in effect from time to time, including rules and
regulations promulgated thereunder;
(g) "HEREUNDER", "HEREOF", "HERETO", "HEREIN" and words of
similar import shall be deemed references to this Agreement or
such other Loan Document, as the case may be, as a whole and not
to any particular Article, Section, clause or other provision
hereof or thereof;
(h) any reference to any particular Article, Section or clause
shall be to such Article, Section or clause of this Agreement or
such other Loan Document;
(i) "INCLUDING" means including without limiting the generality
of any description preceding such term;
40
(j) relative to the determination of any period of time, "FROM"
means "FROM (AND INCLUDING)" and "TO" means "TO (BUT EXCLUDING)";
(k) any reference to a time of day is a reference to London
time;
(l) reference to a "COMPANY" or "CORPORATION" shall be
construed as a reference to the analogous form of business entity
used in any relevant jurisdiction;
(m) when an expression is defined, another part of speech or
grammatical form of that expression has a corresponding meaning;
and
(n) any reference to the "knowledge" of an Obligor or its
Authorized Representative with respect to a certain matter means
either such Person's actual knowledge with respect to such matter
or that of which a Person, in the position of such Obligor or
Authorized Representative and acting reasonably, would be
expected to have knowledge.
2. COMMITMENTS AND PROCEDURES FOR MAKING LOANS; CONTINUATION
PROCEDURES
2.1 COMMITMENTS; MAKING LOANS
(a) Subject to the terms and on the conditions of this
Agreement, the Lenders agree that their Commitments
consist of obligations to make, maintain, continue
and/or convert Loans, in an amount not to exceed the
Aggregate Commitment Amount (for all the Lenders) or
each Lender's Commitment Amount. In no event may Loans
made by all Lenders on either Borrowing Date exceed the
Available Commitment Amount as in effect as at such
Borrowing Date. The Loans may be made on two Borrowing
Dates during the period from the Effective Date to the
Commitment Termination Date, as Dollar Loans or Gold
Loans (but not both).
(b) By delivering a Borrowing Notice to the Administrative
Agent on or before 10:00 a.m., the Borrower may request
on any Business Day during the period described in
CLAUSE (a), on not less than three nor more than five
Business Days' notice (counting the date on which such
notice is given), that Loans be made by all Lenders on
41
the Borrowing Date set forth in such Borrowing Notice
in a principal amount equal to the then Available
Commitment Amount (or the Current Gold Equivalent
thereof). Upon receipt of a Borrowing Notice
requesting Loans to be made, the Administrative Agent
shall promptly notify each Lender of the contents
thereof, and such Borrowing Notice shall not thereafter
be revocable by the Borrower. The Loans made on the
initial Borrowing Date shall be made solely for use of
the purposes described in the fifth recital. The Loans
made on the second (and final) Borrowing Date shall be
made solely to pay accrued interest on the Loans made
on the initial Borrowing Date and payable on December
31, 1999.
(c) Subject to the terms and conditions of this Agreement,
the Loans requested to be made in the relevant
Borrowing Notice shall be made on the specified
Borrowing Date. The Loans made on the initial
Borrowing Date must be in a Principal Amount of
U.S.$10,500,000. The Loans made on the last Borrowing
Date must be in a Principal Amount of U.S.$500,000. On
such Borrowing Date and subject to such terms and
conditions, each Lender shall, (i) in the case of
Dollar Loans on or before 10:00 a.m., credit a
specifically designated account of the Administrative
Agent at its Dollar Lending Office, with an amount of
Dollars equal to such Lender's Percentage of the
aggregate Principal Amount of the Dollar Loans
requested to be made or (ii) in the case of Gold Loans
on or before 11:00 a.m., credit a specifically
designated account of the Administrative Agent at its
Gold Lending Office with such amounts equal to such
Lender's Percentage of the aggregate Principal Amount
of the Gold Loans requested to be made. To the extent
funds are received by the Administrative Agent from the
Lenders in respect of the Loans as requested pursuant
to the relevant Borrowing Notice, the Administrative
Agent shall make such funds available to the Borrower
by crediting the Principal Amount of such Loans to the
Proceeds Account or such other account as the Borrower
may direct (solely in the case of the initial Loans);
PROVIDED, HOWEVER, that in the case of the second (and
final) Loans advanced hereunder, the Borrower and the
Lenders may offset the Principal Amount of the Loans
made on the Borrowing Date relating thereto against the
payment of interest to be made on December 31, 1999.
42
(d) The Borrower may, from time to time on any Business Day
prior to the Commitment Termination Date upon which
there then remains any portion of the Available
Commitment Amount, voluntarily reduce the Available
Commitment Amount, as then in effect, in whole or, if
in part, in multiples of U.S.$1,000,000; PROVIDED,
HOWEVER, that the Borrower shall give the
Administrative Agent not less than three nor more than
five Business Days prior written notice (counting the
date on which such notice is given) of any such
reduction which notice shall be irrevocable once given.
On the Commitment Termination Date, the Available
Commitment Amount (if still remaining) shall,
automatically, and without any action by any Person be
reduced to zero.
2.2 CONTINUATION AND CONVERSION ELECTIONS
(a) To convert all or part of a Dollar Loan into a Gold Loan
(or VICE VERSA), the Borrower must deliver a Conversion Notice to
the Administrative Agent no later than 10.00 a.m. five Business
Days prior to the expiration of the relevant Interest Period then
in effect. Conversions of Loans (whether in whole or in part)
shall be permitted only if, after giving effect to such
Conversion Notice: (i) no more than eight Interest Periods with
respect to all the Loans would be outstanding from all Lenders at
such time and (ii) the aggregate Principal Amounts of all Gold
Loans and/or Dollar Loans would be in a multiple of 2,000 Ounces
and/or U.S.$500,000, as the case may be.
(b) The obligations of the Lenders to give effect to any
Conversion Notice are subject to the conditions precedent that on
both the day of delivery of the Conversion Notice and the
proposed Conversion Date:
(i) no Default shall have occurred and be continuing or would
result from such conversion;
(ii) the representations and warranties set forth in ARTICLE 7
and in any other Loan Document shall be true and correct with the
same effect as if then made (unless stated to relate solely to an
earlier date, in which case such representations and warranties
shall be true as of such earlier date); and
43
(iii)none of the circumstances specified in SECTION 5.1 has
occurred and is continuing.
(c) The Borrower may request a maximum of two conversions of
Loans in any calendar year.
(d) (i)If pursuant to any Conversion Notice, the
Borrower seeks to convert all or part of a Dollar
Loan into a Gold Loan, the Borrower shall repay
the Conversion Amount on the Conversion Date
designated in such Conversion Notice and the
Lenders shall make a Gold Loan to the Borrower in
the number of Ounces equal to the Current Gold
Equivalent of the Conversion Amount.
(ii) If pursuant to any Conversion Notice, the Borrower seeks to
convert all or part of a Gold Loan into a Dollar Loan and the
Spot Gold Price exceeds the Original Gold Price with respect to
such Gold Loan, then the Borrower shall repay the Conversion
Amount on the Conversion Date designated in such Conversion
Notice and the Lenders shall make a Dollar Loan to the Borrower
in the number of Dollars equal to the Original Dollar Equivalent
of the Conversion Amount.
(iii)If pursuant to any Conversion Notice, the Borrower seeks to
convert all or part of a Gold Loan into a Dollar Loan and the
Spot Gold Price is less than (or is equal to) the Original Gold
Price with respect to such Gold Loan, then the Borrower shall
repay the Conversion Amount on the Conversion Date designated in
such Conversion Notice and the Lenders shall make a Dollar Loan
to the Borrower in the number of Dollars equal to the then
Current Dollar Equivalent of the Conversion Amount.
(iv) (X) provisions of this Agreement relating to
the making and repayment of Loans shall apply
to the mechanics for converting Loans set
forth in this Section. Solely for the purpose
of this Section, subject to the terms and of
the conditions of this Agreement, the Loans
requested in each relevant Conversion Notice
shall be made on the Conversion Date specified
therein.
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(Y) On the Conversion Date specified in each
relevant Conversion Notice (no later than
10.00 a.m.) and subject to the terms and
conditions specified in each relevant
Conversion Notice, each Lender will make
available to the Administrative Agent its
participation (which shall be equal to its
Percentage) in the requested Loans to be made
pursuant to such Conversion Notice. In the
case of Dollar Loans, the Dollars required for
each Lender to participate therein shall be
remitted to a specified account in London of
the Administrative Agent's Dollar Lending
Office. In the case of Gold Loans, the Gold
required for each Lender to participate
therein shall be credited to a specified
account at the Administrative Agent's Gold
Lending Office. To the extent funds are
received by the Administrative Agent from the
Lenders in respect of the Loans to be
converted as a result of any Conversion
Notice, such funds shall be made available to
the Borrower by crediting the Principal Amount
of the Conversion Amount to the Proceeds
Account.
(e) To continue all or part of either a Gold Loan or a Dollar
Loan for the same (or for a different) Interest Period, the
Borrower must deliver a Continuation Notice to the Administrative
Agent no later than 10.00 a.m. five Business Days prior to the
expiration of the relevant Interest Period then in effect. To
the extent the Borrower wishes to issue a Continuation Notice
with respect to part (but not all) of the Loans, such
Continuation Notice must relate to Loans in an aggregate
Principal Amount of multiples of 2,000 Ounces and/or
U.S.$500,000, as the case may be, and a maximum of four Interest
Periods with respect to the Loans may be outstanding at any one
time after giving effect thereto.
(f) (i)Each new Interest Period will commence on the
expiration of the preceding Interest Period
relating to all or that portion of those Loans
made pursuant to a Borrowing Notice continued
pursuant to a Continuation Notice or converted
pursuant to a Conversion Notice.
45
(ii) The Borrower will select the duration of Interest Periods
such that each Payment Date will fall on the last day of an
Interest Period.
(iii)If the Borrower fails to deliver a Continuation Notice or a
Conversion Notice as and when required, it, subject as provided
in CLAUSES (d) and (e) of the definition of "INTEREST PERIOD",
will be deemed to have requested that any then current Loan be
continued as a loan of that type for an Interest Period that is
the same as the duration of the Interest Period then currently in
effect with respect to that Loan.
(iv) If all or part of any Loan is required to be repaid on a
Payment Date to ensure that the Borrower complies with its
obligations under SECTION 3.1.1 and if an Interest Period
relative to such Loan would, but for the operation of this sub-
clause, extend beyond such Payment Date, then such Interest
Period shall commence upon the expiry of the immediately
preceding Interest Period and expire on the relevant Payment
Date.
(g) A Continuation Notice or a Conversion Notice once given
shall be irrevocable.
2.3 RECORDS
Each Lender's Loans shall be evidenced by loan accounts
maintained by such Lender. The Borrower hereby irrevocably
authorizes each Lender to make (or cause to be made)
appropriate account entries, which account entries, if
made, shall evidence INTER ALIA the date of, the type of,
the principal amount of, any repayments of, the interest
rate on, and the Interest Period applicable to, the Loans
then outstanding to such Lender. Any such account entries
indicating the outstanding Principal Amount of Loans
outstanding to such Lender shall be PRIMA FACIE evidence of
the Principal Amount thereof owing and unpaid, but the
failure to make any such entry shall not limit or otherwise
affect the obligations of the Borrower hereunder to make
payments of the amount of, or interest on, such Loans when
due. The Administrative Agent shall also maintain records
with respect to each of the matters set forth in the first
sentence of this Section and each other party hereto agrees
46
to deliver such information to the Administrative Agent as
it may reasonably request for the purpose of maintaining
such records. In case of any discrepancy between the
records of the Administrative Agent and the records of any
Lender with respect to any matter referred to in this
Section, the records of such Lender shall be deemed to
control.
2.4 FUNDING
Each Lender may, if it so elects, but subject to Applicable
Law, fulfil its obligation to make, maintain, continue or
convert any portion of its Loans by causing an offshore
branch, Affiliate or banking facility of such Lender to
make, maintain, continue or convert such Loans; PROVIDED,
HOWEVER, that in such event any Loans shall be deemed to
have been made by such Lender, and the obligation of the
Borrower to repay such Loan, and pay interest thereon,
shall nevertheless be to such Lender and shall be deemed to
be held by it, to the extent of such Loan, for the account
of such foreign branch, Affiliate or international banking
facility; and PROVIDED, FURTHER, HOWEVER, that the Borrower
shall be under no obligation to pay any amount to such
Lender pursuant to SECTION 5.1, 5.2, 5.3, 5.4, 5.5 or 5.6
which arises solely as a consequence of an election made by
such Lender pursuant to this Section.
2.5 OBLIGATIONS SEVERAL
The obligations of the Lenders to make, maintain, continue
and convert Loans under this Article are several. No
Lender's obligation under this Article shall be affected by
any other Lender' s failure to meet its obligations
hereunder.
3. PRINCIPAL PAYMENTS; INTEREST; COMMISSIONS
3.1 PRINCIPAL PAYMENTS
3.1.1 SCHEDULED REPAYMENTS
The Borrower shall, on each Payment Date set forth below,
make a mandatory repayment of the Loans in the Principal
Amount such that, after giving effect to such repayment, the
Principal Amount of Loans remaining outstanding would not be
in excess of the figure set below opposite such Payment
Date:
47
PAYMENT DATE PRINCIPAL AMOUNT REMAINING OUTSTANDING
June 30, 2000 U.S.$ 10,625,000
December 31, 2000 U.S.$ 10,250,000
June 30, 2001 U.S.$ 8,625,000
December 31, 2001 U.S.$ 7,000,000
June 30, 2002 U.S.$ 5,500,000
December 31, 2002 U.S.$ 4,000,000
June 30, 2003 U.S.$ 2,500,000
December 31, 2003 U.S.$ 1,000,000
June 30, 2004 U.S.$ 0
3.1.2 PREPAYMENTS - VOLUNTARY AND MANDATORY
In addition to its obligations under SECTION 3.1.1, the
Borrower:
(a) may, from time to time on any Business Day which is the
last day of any Interest Period or (subject to SECTION
5.3) on any other Business Day, make a voluntary
prepayment, in whole or in part, of the then
outstanding principal amount of all Loans; PROVIDED,
HOWEVER, that:
(i) the Borrower shall give the Administrative Agent not
less than five Business Days' prior written notice
(counting the date on which such notice is given) of
any such voluntary prepayment, which notice, once
given, shall be irrevocable; and
(ii) all such partial voluntary prepayments shall (x) in
the case of Dollar Loans, be in an aggregate Principal
Amount of multiples of U.S.$500,000 and (y) in the
case of Gold Loans, be in an aggregate Principal Amount
of multiples of 2,000 Ounces.
(b) shall, within five Business Days after:
(i) any Business Day on which Gold Loans are
outstanding and on which the Current Dollar
Equivalent of the Principal Amount of all such
Gold Loans outstanding on such Business Day
exceeds the Maximum Dollar Equivalent of the
aggregate Principal Amount of such outstanding
Gold Loans,
or
48
(ii) any period of 20 consecutive days during which
Gold Loans are outstanding and on each day of
which the Current Dollar Equivalent of the
Principal Amount of all such Gold Loans
outstanding on each such day exceeds one hundred
thirty-three and one-third percent (133 1/3%) of
the Original Dollar Equivalent of the aggregate
Principal Amount of such outstanding Gold Loans on
each such day,
at the Borrower's discretion do any of the following: (x)
make a mandatory prepayment of Gold Loans then outstanding
in an aggregate Principal Amount for all such Gold Loans
having a Dollar equivalent at least equal to the Dollar
equivalent of the excess described in CLAUSE (b)(i) or
(ii), as the case may be (in the case of CLAUSE (b)(ii),
calculated as of the last day of the relevant 20 day
period); (y) arrange for the provision to the
Administrative Agent of collateral (other than collateral
already subject to (or required to be subject to) any
Collateral Agreement) in a form and on terms acceptable to
the Administrative Agent with a value at least equal to the
Dollar equivalent of such excess; or (z) convert, subject
to SECTIONS 2.2 and 5.3, all Gold Loans into Dollar Loans
with an initial Interest Period of three months, or such
other Interest Period as may be requested by the Borrower.
In the absence of any election by the Borrower as aforesaid
the Borrower shall be deemed to have elected to make the
mandatory prepayment referred to in CLAUSE (b)(x) on the
fifth Business Day after the occurrence of the event
described in CLAUSE (b)(i) or (b)(ii), as the case may be.
(c) shall, upon deposit of Compensation or Project
Insurance proceeds which the Collateral Agent requires
to be applied against the Loans pursuant to SECTION
4.3(c)(ii), make a mandatory prepayment of the Loans
outstanding in an amount equal to any such proceeds.
(d) in the event that any Compliance Certificate or the
Base Case as revised by the agreement (or deemed
agreement) of all relevant parties pursuant to SECTION
8.1.6 demonstrates that, as at the current Calculation
Date or any other date described in any of the
foregoing ratios where compliance is required pursuant
to SECTION 8.1.5, the Loan Life Cover Ratio is or would
be lower than 1.5:1.0, the Project Life Cover Ratio is
or would be lower than 2.0:1.0 or the Debt Service
Cover Ratio is or would be lower than 1.25:1.0, the
49
Borrower shall make a mandatory prepayment of the Loans
outstanding in an amount up to Available Free Cashflow
as at such Calculation Date or at the date of the
revision of the Base Case (or as at a date as close as
practicable thereto) until such time as the ratios
described above would be in compliance with the levels
set forth in SECTION 8.1.5.
3.1.3 PRINCIPAL PAYMENTS GENERALLY
(a) Each repayment or prepayment of any Loans made pursuant
to this Section shall be without premium or payment of
any other additional amount, except as may be required
pursuant to SECTION 5.3. Amounts repaid or prepaid may
not be re-borrowed. Any repayment or prepayment of the
Principal Amount of any Loans shall include accrued
interest on the date of repayment or prepayment on the
principal amount being repaid or prepaid.
(b) Unless any of the clauses of SECTION 3.1.1 or SECTION
3.1.2 requires otherwise, Gold Loans and Dollar Loans
required to be repaid or prepaid pursuant to this
Section shall be paid in Gold and Dollars,
respectively. All such repayments and prepayments
(except for the prepayments described in SECTION
3.1.2(b)) shall be applied PRO RATA against the
Principal Outstandings of Loans according to the Ounces
and Dollars then outstanding. Any amount paid pursuant
to SECTION 3.1.2(a), (c) or (d) shall be applied in
reducing the repayment installments under SECTION 3.1.1
in the inverse order of their maturities.
3.2 INTEREST PAYMENTS
The Borrower shall make payments of interest in accordance
with this Section.
3.2.1 RATE
The Borrower shall pay interest on the Principal Amount of
the Loans outstanding from time to time prior to and at
Maturity at a rate PER ANNUM equal to (a) in the case of
each Gold Loan, the sum of (i) the Gold Rate as in effect
from time to time, (ii) the Applicable Margin plus (iii) the
Additional Costs Rate, if relevant, and (b) in the case of
each Dollar Loan, the sum of (i) the LIBO Rate as in effect
from time to time, (ii) the Applicable Margin plus (iii) the
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Additional Costs Rate, if relevant. The Administrative
Agent shall, promptly after the first day of each Interest
Period, notify each Lender of the interest rate applicable
to such Loan during such Interest Period.
3.2.2 POST-MATURITY RATE
After the Maturity of all or any portion of the Principal
Amount of the Loans or after any other Obligations shall
have become due and not been paid, the Borrower shall pay
interest (after as well as before judgment) on:
(a) the Principal Amount of each Gold Loan so matured or on
any such other Obligations due and payable in Gold, at
a rate PER ANNUM equal to the sum of (i) the Gold Rate
for such Interest Periods (of a minimum of three
months) as the Administrative Agent may from time to
time select, (ii) the Applicable Margin, (iii) the
Additional Costs Rate (if relevant) PLUS (iv) two
percent (2%); and
(b) the Principal Amount of each Dollar Loan so matured or
on any such other Obligations due and payable in
Dollars, at a rate PER ANNUM equal to the sum of (i)
the LIBO Rate for such Interest Periods (of a minimum
of three months) as the Administrative Agent may from
time to time select, (ii) the Applicable Margin,
(iii) the Additional Costs Rate (if relevant) PLUS (iv)
two percent (2%).
3.2.3 PAYMENT DATES; CALCULATION OF INTEREST
Interest accrued on each Loan shall be payable, without
duplication, on:
(a) the last day of each Interest Period with respect to such
Loan (and, in addition to such day, if such Interest Period shall
exceed three months, on each date which is the last day of each
successive three-monthly period occurring during such Interest
Period);
(b) the Maturity of such Loan; and
(c) with respect to any portion of any Loan repaid or prepaid
pursuant to SECTION 3.1, 5.1 or 5.5 the date of such repayment or
prepayment, as the case may be.
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Interest accrued on each Loan after the Maturity thereof
and interest on other overdue amounts, shall be payable
upon demand. The amount of accruing interest on any Loans
shall be calculated during each Interest Period applicable
thereto by the Administrative Agent on the daily
outstanding principal amount of such Loans. All interest
shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) during
the period for which such interest is payable over a year
comprised of 360 days. Subject to CLAUSES (d) and (e) of
the definition of "INTEREST PERIOD", whenever any payment
to be made shall otherwise be due on a day which is not a
Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be
included in computing interest, if any, in connection with
such payment.
3.2.4 RATE DETERMINATIONS
All determinations by the Administrative Agent of the rate
of interest applicable to any Loan shall be conclusive
absent demonstrated error.
3.3 FEES
The Borrower shall make payments in respect of fees in
accordance with this Section.
3.3.1 AGENTS' FEES
The Borrower confirms and agrees that (without prejudice to
any similar obligation of any other Obligor) it will pay to
the Administrative Agent such underwriting, arrangement and
agency fees (in such amounts, on such dates and pursuant to
such terms) for the account of the Administrative Agent as
are described in a letter of even date herewith from the
Borrower to the Administrative Agent.
4. PROJECT ACCOUNTS
4.1 THE ACCOUNT BANK; THE PROCEEDS ACCOUNT
(a) The Borrower shall maintain the Proceeds Account in its
name with the Account Bank.
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(b) MMS may operate local accounts with Banco del Orinoco,
Banco del Orinoco N.V., Fivenez and Banco Lara (collectively, the
"LOCAL ACCOUNTS") for the purpose of making payments, whether in
Dollars or Bolivars, to employees and vendors located in
Venezuela and for making payment of other Operating Expenditures,
Capital Expenditures, and taxes and royalties, in each case as
permitted by the Base Case. The permitted aggregate balance of
the Local Accounts at any time during any calendar month is
limited to the amounts permitted by the Base Case to be spent on
the foregoing uses during such calendar month.
(c) Neither MMS nor the Borrower may open or maintain any bank
account other than the Proceeds Account and the Local Accounts
without the prior written consent of the Administrative Agent.
(d) Except with respect to the proceeds of sales of Gold which
the Government of Venezuela requires MMS to convert into Bolivars
(and MMS agrees to remit those proceeds to the relevant Local
Accounts), each of MMS and the Borrower shall promptly (or
promptly instruct the Account Bank to) convert into Dollars any
moneys received by it in a currency other than Dollars for credit
to the Proceeds Account on the day of conversion.
(e) None of the restrictions contained in this Section on the
withdrawal of funds from the Proceeds Account shall affect the
obligations of the Borrower (or, as the case may be, MMS) to make
all payments required to be made to the Finance Parties on the
relevant due dates in accordance with the relevant Loan
Documents.
(f) Notwithstanding any other provision of any Loan Document,
no withdrawal may be made from the Proceeds Account if the
Proceeds Account would then have a negative balance.
(g) No sum may be transferred or withdrawn from the Proceeds
Account except as expressly permitted or required by this Article
and in accordance with the Account Agreement.
(h) All deposits to and transfers from the Proceeds Account
must be made in accordance with Applicable Law.
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4.2 PROCEEDS ACCOUNT
(a) The Borrower (or, as the case may be, MMS) shall cause the
following amounts to be deposited to the relevant Proceeds
Account:
(i) proceeds of all Loans and Subordinated Loans (as may remain
following reimbursement to Hecla Mining for payment of the
Purchase Price) advanced in favor of the Borrower but remitted in
the form of a Capital Contribution or Approved Subordinated
Indebtedness to MMS;
(ii) proceeds of any Conversion Amount advanced in favor of the
Borrower pursuant to SECTION 2.2;
(iii) proceeds of other Capital Contributions and all Approved
Subordinated Indebtedness made to or for the account of the
Borrower;
(iv) proceeds of the export and sale of Project Output;
(v) amounts received by MMS representing business interruption
insurances;
(vi) proceeds of Metal Trading Agreements; and
(vii) all other amounts permitted to be deposited to the Proceeds
Account by Applicable Law.
(b) The Borrower may withdraw sums from the Proceeds Account,
in the following order of priority:
(i) to make payments of Taxes and royalty fees, in each case in
respect of the Project, as and when due;
(ii) to make payments of Capital Expenditures and Operating
Expenditures, in each case in respect of the Project, as and when
due;
(iii) to make transfers to the Local Accounts in order to make
payments of Taxes, royalty fees, Capital Expenditures and
Operating Expenses in each case in respect of the Project, as and
when due, to the extent not made pursuant to SUB-CLAUSE (i) or
(ii) and to the extent permitted by SECTION 4.1(b);
54
(iv) without duplicating SUB-CLAUSE (v), as are necessary to
make payment of the Obligations as and when due;
(v) to make payments with respect to the Metal Trading
Agreements as and when due; and
(vi) subject to SECTION 8.3.6, for distribution to Hecla Mining
or any other Person permitted by such Section.
(c) The Borrower may, on behalf of MMS, withdraw sums from the
Proceeds Account to make payment of any amount payable by MMS and
permitted by this Section.
4.3 TREATMENT OF PROCEEDS OF PROJECT INSURANCE AND COMPENSATION
(a) MMS shall ensure that all amounts (including amounts
representing business interruption insurances) received by it or
paid to its order with respect to Compensation and Project
Insurance (including amounts representing business interruption
insurances) are paid into the Proceeds Account immediately on
receipt by it or on its behalf.
(b) MMS may direct any amount relating to Compensation or
Project Insurance payable to its order to be paid directly to the
third party on account of whose claim such amounts are payable.
(c) MMS may (or request the Borrower to) withdraw amounts
representing Compensation or Project Insurance proceeds from the
Proceeds Account:
(i) in the case of amounts representing the proceeds of any
claim in respect of physical loss, damage or destruction to any
Project Asset:
(x) where such proceeds do not exceed
U.S.$5,000,000 (or its equivalent in any
other currency), as MMS (or the Borrower) may
direct or
(y) where such proceeds exceed U.S.$5,000,000 (or
its equivalent in any other currency), only
with the consent of the Collateral Agent, not
to be unreasonably withheld,
55
toward the repair or replacement of the lost, damaged or
destroyed Project Asset;
(ii) in the case of any amounts described in SUB-CLAUSE (i)(y)
where the Collateral Agent shall not have consented to the use of
such proceeds for the repair or replacement of the lost, damaged
or destroyed Project Asset, for the purpose of making the payment
described in SECTION 3.1.2(c); and
(iii)in the case of amounts representing third party liability
claims, toward meeting the relevant liability.
4.4 GENERAL PROVISIONS RELATING TO THE PROCEEDS ACCOUNT AND THE
LOCAL ACCOUNTS
(a) MMS and the Borrower shall deposit moneys to, and moneys
shall be disbursed from, the Proceeds Account and the Local
Accounts solely for the purposes described in this Article,
subject at all times to Applicable Law. The mechanics relating
to the Proceeds Account are more specifically described in the
Account Agreement and the remedies in respect of the Proceeds
Account are more specifically described in the Security Agreement
(U.S. Assets) and the Account Agreement.
(b) At any time when no Default shall then have occurred and be
continuing and subject to Applicable Law, the Borrower may, to
the extent practicable in order to perform its obligations under
each Operative Document to which it is a party, direct the
Account Bank to invest amounts held in the Proceeds Account in
Cash Equivalent Investments, subject at all times to the
provisions of the Account Agreement and the Security Agreement
(U.S. Assets).
(c) At any time following the occurrence and during the
continuation of a Default (other than a Default which does not
itself constitute an Enforcement Event), but prior to the
occurrence of an Enforcement Event, the Borrower and may only
cause moneys to be transferred from the Proceeds Account and/or
invested in Cash Equivalent Investments by requesting the
Collateral Agent to direct the Account Bank to procure such
56
transfers or make such investments. The parties hereto
agree and acknowledge that in such circumstances the
Collateral Agent may exercise its reasonable discretion
in deciding to accept or reject any such requests from
the Borrower and any refusal by the Collateral Agent of
any such request by the Borrower shall not result in
any liability to the Collateral Agent. Upon the
occurrence of an Enforcement Event, the Borrower shall
not have any rights to direct the transfer of moneys
from the Proceeds Account or investments thereof into
Cash Equivalent Investments, and the Collateral Agent
shall be entitled to direct the Account Bank to
liquidate such Cash Equivalent Investments, it being
expressly understood and agreed that any breakage or
other costs arising from such liquidation shall be for
the account of the Borrower.
5. INCREASED COSTS; TAXES; MARKET DISRUPTIONS; GENERAL PAYMENT
PROVISIONS
5.1 GOLD OR DOLLARS UNAVAILABLE
(a) If, at any time that the Administrative Agent shall be
required to make any determination of the Gold Rate or, as the
case may be, the LIBO Rate for any Interest Period and it shall
have determined or shall have been notified (for any reason
whatsoever) that:
(i) in the case of any Gold Loans outstanding or to be
outstanding during such Interest Period, any Lender is, due to
circumstances outside its control (including the unavailability
of Gold, or the inability of the Lenders to determine the Gold
Rate) unable to conduct transactions in any accessible
international gold market and, as a direct result thereof, to
make or maintain, in whole or in part, its Gold Loans hereunder;
or
(ii) in the case of any Dollar Loans outstanding or to be
outstanding during such Interest Period, either (x) Dollar
certificates of deposit or Dollar deposits, as the case may be,
in the relevant amount and for the relevant Interest Period are
not available to the Lenders in the London interbank market, or
(y) by reason of circumstances affecting the Lenders in the
London interbank market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to such
Dollar Loan,
57
then the Administrative Agent shall promptly give
telephonic notice of such determination confirmed in
writing to the Borrower (which determination shall, in the
absence of demonstrated error, be conclusive and binding on
the Borrower).
(b) As soon as practicable following the giving of the notice
described in CLAUSE (a), the Administrative Agent, the affected
Lenders acting reasonably and the Borrower shall negotiate for a
period not exceeding 30 days with a view to agreeing to an
alternative basis for making or maintaining the Loans affected by
the circumstances described in CLAUSE (a). During such period
interest shall accrue on the principal amount of each affected
Lender's affected Loans at the rate applicable to such Loans
immediately prior to the giving of such notice. If no such
alternative basis is agreed within such time period, each
affected Lender's affected Loans shall bear interest at a rate
PER ANNUM equal to the sum of (i) the cost to such Lender of
funding such Loans (as determined by such Lender which
determination shall, in the absence of demonstrated error, be
conclusive and binding on the Borrower), (ii) the Applicable
Margin PLUS (iii) the Additional Costs Rate as in effect from
time to time with respect to such Lender.
(c) As an alternative to CLAUSE (b), the Borrower may at any
time elect that the Principal Amount of and interest on all of
the affected Lenders' then outstanding Loans which are affected
by the circumstances described in CLAUSE (a) be immediately
converted using the principles set forth in SECTION 2.2 into a
Gold Loan or a Dollar Loan, or if such type of Loan is
unavailable hereunder, be immediately repaid in full (subject,
however, to SECTION 5.3).
5.2 INCREASED COSTS, ETC.
(a) The Borrower agrees to reimburse each Lender for any
increase (other than as specifically covered in any other Section
of this Article) in the cost to such Lender of making,
converting, continuing or maintaining (or of its obligation to
make, convert, continue or maintain) any Loans, and for any
reduction (other than as specifically covered in any other
Section of this Article) in the amount of any sum
58
receivable by such Lender hereunder in respect of
making, converting, continuing or maintaining any
portion of any such Loans in either case, from time to
time by reason of any Regulatory Change (including,
solely with respect to any Lender that is a bank or
commercial financial institution, with respect to
Regulation D of the F.R.S. Board but excluding the
Additional Costs Rate (if relevant)), then, in any such
event, such Lender shall promptly notify the
Administrative Agent and the Borrower thereof stating
in reasonable detail the reasons therefor and the
additional amount required fully to compensate such
Lender for such increased cost or reduced amount. Such
notice shall, in the absence of demonstrated error, be
conclusive and binding on the Borrower.
(b) As soon as practicable following the giving of any notice
described in CLAUSE (a), the affected Lender, the Administrative
Agent and the Borrower shall negotiate for a period not exceeding
30 days with a view to avoiding or minimizing the circumstances
described in CLAUSE (a). If no steps mutually agreeable to the
affected Lender, the Administrative Agent and the Borrower are
decided within such 30 day period, the Borrower may elect either
to prepay the principal amount of and interest on such affected
Lender's then outstanding Loans (subject, however, to SECTION
5.3) or pay, within five days after the expiry of such 30 day
period, any additional amount required fully to compensate such
affected Lender for the increased cost or reduced amount
described in CLAUSE (a).
5.3 FUNDING LOSSES
In the event that any Lender shall incur any loss or
expense (including any loss or expense incurred by reason
of the liquidation or reemployment of Gold or Dollar
deposits or other funds or precious metals acquired by such
Lender to make, convert, continue or maintain any portion
of the Principal Amount of any Loan) as a result of:
(a) any payment, prepayment or conversion of the Principal
Amount of either type of Loan on a date other than the scheduled
last day of the Interest Period applicable thereto, whether
pursuant to SECTION 3.1 or otherwise; or
59
(b) any action of the Borrower resulting in any Loans not being
made, continued or converted in accordance with the Borrowing
Notice, Continuation Notice or Conversion Notice, as the case may
be, given therefor,
then, upon the request of such Lender to the Borrower (with
a copy to the Administrative Agent) the Borrower shall pay
to the Administrative Agent for the account of such Lender
such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or
expense. A statement as to any such loss or expense
(including calculations thereof in reasonable detail) shall
be submitted by such Lender to the Administrative Agent and
the Borrower and shall, in the absence of demonstrated
error, be conclusive and binding on the Borrower.
5.4 INCREASED CAPITAL COSTS
(a) If any Regulatory Change affects or would affect the amount
of capital required to be maintained by any Lender which is a
bank or commercial financial institution or any Person
controlling such Lender, and such Lender determines (in its
reasonable discretion) that the rate of return on its or such
controlling Person's capital is reduced to a level below that
which such Lender or such controlling Person could have achieved
but for the occurrence of any such Regulatory Change, then, in
any such case upon notice from time to time by such Lender to the
Borrower, the Borrower may, at its option (i) within five days of
receipt of such notice, pay directly to such Lender additional
amounts sufficient to compensate such Lender or such controlling
Person for the portion of such reduction in rate of return which
is reasonably allocable to the Facility or (ii) prepay the
principal amount of and interest on such affected Lender's then
outstanding Loans (subject, however, to SECTION 5.3). A
statement of such Lender as to any such additional amount or
amounts (including calculations thereof in reasonable detail)
shall, in the absence of demonstrated error, be conclusive and
binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its
reasonable discretion) shall deem applicable.
(b) Notwithstanding CLAUSE (a), the Borrower shall not be
obligated to pay any amount to any Lender in respect of any such
reduction in the rate of return or
60
increased cost which arises as a consequence of (i) any
law or directive implementing the proposals for
international convergence of capital measurement and
capital standards published by the Basle Committee on
Banking Regulations and Supervisory Practices in July
1988 and/or (ii) the Council of the European
Communities Directive of April 17, 1989, on the own
funds of credit institutions (89/299/EC) and the
Council of the European Communities Directive of
December 18, 1989, on a solvency ratio for credit
institutions (89/647/EC) to the extent that the impact
of any such law or directive can reasonably be
calculated at the Effective Date. In addition, no
Lender may make any claim for compensation in respect
of any such reduction in return or increased cost to
the extent that a notification of the event leading to
such reduction in the rate or return or increased cost
is not given to the Borrower within six months of such
Lender's obtaining knowledge thereof.
5.5 ILLEGALITY
(a) If, as the result of any Regulatory Change, any Lender
shall determine (which determination, in the absence of
demonstrated error, shall be conclusive and binding on the
Borrower) that it is unlawful for such Lender to make any Loan or
the obligations of such Lender to make such Loan shall, upon such
determination (and telephonic notice thereof confirmed in writing
to the Administrative Agent and the Borrower), forthwith be
suspended until such Lender shall become aware that the
circumstances causing such suspension no longer exist and shall
forthwith notify the Administrative Agent and the Borrower to
such effect, at which time the obligation of such Lender to make
such Loan shall be reinstated.
(b) If, as the result of any Regulatory Change, any Lender
shall determine (which determination, in the absence of
demonstrated error, shall be conclusive and binding on the
Borrower) that it is unlawful for such Lender to continue or
convert (but not to maintain) either type of Loan, then, upon
notice by such Lender to the Administrative Agent and the
Borrower, such Lender shall consult with the Borrower and the
Administrative Agent for a period of up to 30 days from the date
of such notice, with a view to agreeing upon a mutually
61
acceptable alternative arrangement which will avoid or
minimize such illegality. If no steps mutually
agreeable to the affected Lender, the Administrative
Agent and the Borrower are decided within such 30 day
period, the Borrower may, at its option, to the extent
not prohibited from doing so by the relevant illegality
or unlawfulness, continue or convert (using the
principles set forth in SECTION 2.2) such Lender's then
outstanding Loans or prepay, within five days after the
expiry of such 30 day period (unless required to do so
prior thereto) the Principal Amount of and interest on
such affected Lender's then outstanding Loans (subject,
however, to SECTION 5.3).
(c) If the relevant illegality or unlawfulness makes it
unlawful for a Lender to maintain either type of Loan, then upon
notice by such Lender to the Administrative Agent and the
Borrower, the Borrower shall, as soon as practicable after
receiving such notice, prepay the Principal Amount of and any
interest on such affected Lender's outstanding Loans (subject,
however to SECTION 5.3).
5.6 TAXES
All payments by either the Borrower or MMS of principal of,
and interest on, the Loans and all other amounts payable
pursuant to the relevant Finance Parties shall be made free
and clear of, and without deduction for any Taxes (other
than franchise taxes and taxes imposed on or measured by
the recipient's net income or receipts). In the event that
any withholding or deduction from any payment to be made by
such Obligor hereunder or under any other Loan Document is
required in respect of any such Taxes pursuant to any
Applicable Law, then such Obligor will:
(a) pay directly to the relevant authority the full amount to
be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative
Agent evidencing such payment to such authority; and
(c) pay to the Administrative Agent for the account of each
Person entitled thereto such additional amount or amounts as is
necessary to ensure that the net amount actually received by such
Person will be equal to the full amount such Person would have
received had no such withholding or deduction been required.
62
Moreover, if any such Taxes are directly asserted against
any Finance Party with respect to any payment received by
such Finance Party, such Finance Party may pay such Taxes
and either the Borrower or MMS will promptly pay such
additional amounts (including any penalties, interest or
expenses) as is or are necessary in order that the net
amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall
equal the amount such Person would have received had such
Taxes not been asserted.
If either the Borrower or MMS fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit
to the Administrative Agent, for its own account and/or, as
the case may be, the account of the relevant Finance Party,
the required receipts or other required documentary
evidence, such Obligor shall indemnify the Administrative
Agent or the relevant Finance Party, as the case may be,
for any incremental Taxes, interest or penalties that may
become payable by any such Person as a result of any such
failure. For the purposes of this Section, a distribution
hereunder or under any other Loan Document by the
Administrative Agent or any Finance Party, as the case may
be, to or for the account of any Finance Party shall be
deemed a payment by the relevant Obligor.
The Finance Parties agree to co-operate with the Borrower
and MMS in completing and delivering or filing tax-related
forms which would reduce or eliminate any amount of the
nature referred to in this Section; PROVIDED, HOWEVER, that
no Finance Party shall be under any obligation to execute
and deliver any such form if, in the reasonable opinion of
such Finance Party, completion of any such form could
result in an adverse consequence with respect to the
business or tax position of such Finance Party.
5.7 MITIGATION
(a) In the event that either the Borrower or MMS makes payment
of any amount pursuant to SECTION 5.4 or 5.6 or that any Lender
seeks payment of an amount pursuant to SECTION 5.4 or 5.6 or
because of circumstances resulting in the 30 day negotiation
period described in SECTION 5.1(b), 5.2(b) or 5.5(b), such
affected Lender agrees that it will take such reasonable steps as
may reasonably be open to it to mitigate the effects of the
circumstances described in the
63
foregoing Sections (such steps to include the transfer
of such Lender's Dollar Lending Office and/or Gold
Lending Office to another jurisdiction and the
application for a Tax Credit); PROVIDED, HOWEVER, that
no Lender shall be obligated to (i) take any such steps
if, in its opinion, such steps would require it to
achieve less than its expected return with respect to
the Facility or would have an adverse effect upon its
assets or financial condition or (ii) achieve any
particular result or incur any liability to either the
Borrower or MMS by virtue of any such steps resulting
in less than complete mitigation of the relevant
circumstances.
(b) If, pursuant to CLAUSE (a), any Lender effectively obtains
a refund of tax or credit (a "TAX CREDIT") against a payment made
by either the Borrower or MMS pursuant to SECTION 5.6 (a "TAX
PAYMENT"), and such Lender is able to identify such Tax Credit as
being attributable to such Tax Payment, then such Lender, after
actual receipt of such Tax Credit, shall reimburse such Obligor
for such amount as such Lender shall reasonably determine to be
the proportion of such Tax Credit as shall be reasonably
attributable to such Tax Payment; PROVIDED, HOWEVER, that no
Lender shall be required to make any such reimbursement which
would cause it to lose the benefit of such Tax Credit or would
otherwise adversely affect any matter relating to such Lender in
connection with the assessment or payment of any Taxes. If any
Lender shall claim any Tax Credit pursuant to this Section, it
shall have absolute discretion in the extent, order and manner in
which it does so. No Lender shall be obligated to disclose
information regarding its tax affairs or computations to either
the Borrower or MMS.
5.8 PAYMENTS, COMPUTATIONS, ETC.
(a) All payments by either the Borrower or MMS pursuant to this
Agreement or any other Loan Document shall be paid in Dollars,
except as specifically set forth therein or except with respect
to the payment of the Principal Amount of any Gold Loan or any
interest accruing thereon, each of which shall be payable in
Gold. All payments under this Agreement or any other Loan
Document shall be made by the relevant Obligor to the
Administrative Agent for the account of each Finance Party
entitled thereto.
64
(b) All payments under the Facility shall be made by either the
Borrower or MMS:
(i) if in Gold, to the Administrative Agent for the account of
each Finance Party entitled thereto, by delivery of Gold to an
unallocated LOCO London gold account of the Administrative Agent
at the Administrative Agent's Gold Lending Office, which account
shall be designated from time to time by notice to the Borrower
from the Administrative Agent; and
(ii) if in Dollars, to the Administrative Agent for the account
of each Finance Party entitled thereto, by delivery of Dollars in
immediately available funds to an account of the Administrative
Agent in New York City at the Administrative Agent's Dollar
Lending Office, which account shall be designated from time to
time by notice to the Borrower from the Administrative Agent,
in either such case for the account of each Finance Party
entitled thereto and, if such payment shall be of less than
the amount of the relevant payment Obligation then due and
owing, for the PRO RATA benefit of each Finance Party
entitled to share in such payment in accordance with its
respective portion of the aggregate unpaid amount of
similar payment Obligations. All such payments shall be
made, without setoff, deduction, or counterclaim, not later
than (i) 11:00 a.m., on the date when due if such payment
is denominated in Gold, and (ii) 11:00 a.m., New York City
time, on the date when due if such payment is denominated
in Dollars. Any payments received hereunder after the time
and date specified in this Section shall be deemed to have
been received by the Administrative Agent on the next
following Business Day. The Administrative Agent shall
promptly remit to each Finance Party its share (calculated
as aforesaid), if any, of such payments, in kind. If in
Gold, such remittance shall be to an unallocated LOCO
London gold account designated by such Finance Party to the
Administrative Agent by notice from time to time and
maintained at its Gold Lending Office, and, if in Dollars,
such remittance shall be to an account designated by such
Finance Party to the Administrative Agent by notice from
time to time and maintained at its Dollar Lending Office.
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5.9 PRORATION OF PAYMENTS
If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff,
or otherwise) on account of the principal amount of or
interest on any Loan in excess of its PRO RATA share of
payments then or therewith obtained by all Lenders entitled
thereto upon the principal amount of and interest on all
Loans, such Lender shall purchase from the other Lenders
such participations in Loans held by them as shall be
necessary to cause such purchasing Lender to share the
excess payment or other recovery rateably with each of
them; PROVIDED, HOWEVER, that if all or any portion of the
excess payment or other recovery is thereafter recovered
from such purchasing holder, the purchase shall be
rescinded and the purchase price restored to the extent of
such recovery, but without interest. Each of the Borrower
and MMS agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section
may, to the fullest extent permitted by Applicable Law,
exercise all its rights of payment (including pursuant to
SECTION 5.10) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower
or, as the case may be, MMS in the amount of such
participation. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a
secured claim under the Facility in lieu of a setoff to
which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the
Lenders entitled under this Section to share in the benefit
of any recovery on such secured claim.
5.10 SETOFF
In addition to and not in limitation of any rights of any
of the Finance Parties under Applicable Law, each Finance
Party (or any branch thereof) shall, upon the occurrence of
any Enforcement Event, have the right to appropriate and
apply to the payment of the Obligations owing to it
(whether or not then due), any and all balances, credits,
deposits, accounts or moneys of either the Borrower or MMS
then or thereafter maintained with such Finance Party in
whatever currency or precious metals (including Gold) (and,
as security for the Obligations owing to each such Finance
Party, but not to the exclusion of any other rights such
Finance Party may have, each relevant Obligor hereby grants
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to each such Finance Party a continuing security interest
in any and all balances, etc., as aforesaid); PROVIDED,
HOWEVER, that any such appropriation and application shall
be subject to the provisions of SECTION 5.9.
5.11 CONVERSION UPON ACCELERATION, JUDGMENT CURRENCY, ETC.
(a) Upon any Enforcement Event any Lender may, at its option,
and notwithstanding SECTION 2.2, convert any Gold Loan then
outstanding into a Dollar Loan. For the purpose of computing the
Principal Amount of any Loan outstanding after any conversion
pursuant to the foregoing sentence, any such Gold Loan shall be
converted into a Dollar Loan having a Principal Amount equal to
the Dollar equivalent (calculated at the date of conversion) of
the Principal Amount of such Gold Loan. In addition, and upon
any such Enforcement Event, any Lender may, at its option elect
that interest on the Principal Amount of any Gold Loan converted
as aforesaid which would otherwise be payable in Gold shall
instead be payable in Dollars. In addition, if upon any such
Enforcement Event or for the purposes of obtaining a judgment in
any court for any purpose hereunder (including a proceeding under
Title XI of the United States Bankruptcy Code), it becomes
necessary to determine the Dollar equivalent of any payment
obligation hereunder (whether with respect to a Principal Amount
or interest) which is payable in Gold (a "GOLD OBLIGATION"), such
determination shall be made at the time (or from time to time)
and to the extent payment (in whole or in part) has actually been
made by the Borrower or a judgment has been rendered. If the
amount of Gold that could be purchased at the time and with the
proceeds of any such payment or judgment is not sufficient to
satisfy in full the relevant Gold Obligation, the Borrower hereby
indemnifies and holds harmless each affected Lender:
(i) with respect to such deficiency; and
(ii) from all costs and expenses incurred in the event that, as
a result of any default by the Borrower hereunder or under any
other Loan Document, such Lender, at its own expense, must, at
any time or from time to time purchase Gold in an open
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exchange market to satisfy its obligations to any
funding source which has provided Gold to such
Lender to make, in whole or in part, any Gold
Loan.
Such indemnity obligations of the Borrower shall:
(A) be payable in Dollars;
(B) be determined in accordance with (and at the times
provided pursuant to) this Section; and
(C) be enforceable, insofar as this clause is
concerned, as a separate or additional cause of
action, and such enforceability shall not be
affected by any prior judgment being obtained for
any other sums due under this Agreement or any
other Loan Document.
(b) The Borrower hereby agrees that:
(i) If, for the purposes of obtaining judgment in any court, it
is necessary to convert a sum due hereunder in Dollars into
another currency, the Borrower agrees, to the fullest extent
permitted by Applicable Law, that the rate of exchange used shall
be that at which in accordance with normal banking or
administrative procedures the Administrative Agent could purchase
Dollars with such other currency on the Business Day preceding
that on which final judgment is given.
(ii) The obligation of the Borrower in respect of any sum due
from it to any Finance Party shall, notwithstanding any judgment
in a currency other than Dollars, be discharged only to the
extent that on the Business Day following receipt by such Finance
Party of any sum adjudged to be so due in such other currency,
such Finance Party may in accordance with normal banking
procedures, purchase Dollars with such other currency. In the
event that the Dollars so purchased are less than the sum
originally due to such Finance Party in Dollars, the Borrower, as
a separate obligation and notwithstanding any such judgment,
hereby indemnifies and holds harmless such Finance Party against
such loss, and if the Dollars so purchased exceed the sum
originally due to such Finance Party, such Finance Party shall
remit to the Borrower such excess.
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5.12 APPLICATION OF PROCEEDS
(a) If at any time any amount (including any proceeds received
in respect of any sale of, collection from, or other realization
upon, all or any part of any collateral security subject of any
Collateral Agreement) received by either Agent is less than the
amount then due and payable pursuant to this Agreement or any
other Loan Document such amount may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as
additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to
the Agents pursuant to SECTIONS 11.3 and 11.4 and similar
provisions contained in the other Loan Documents) in whole or in
part by the Administrative Agent against, all or any part of the
Obligations in the following order:
(i) first, to amounts outstanding to the Finance Parties under
any Loan Document (other than any Metal Trading Agreement) in
respect of any amount other than interest on, or the Principal
Amount of, any Loan;
(ii) second, PRO RATA to amounts outstanding to the Finance
Parties under any Loan Document in respect of interest on any
Loan;
(iii)third, PRO RATA to (x) amounts outstanding to the Finance
Parties under any Loan Document in respect of the Principal
Amount of any Loan and (y) net payment obligations of the
Borrower to the Finance Parties under any Metal Trading
Agreement; and
(iv) fourth, to amounts owing to the Subordinated Lenders, in
the order set forth in Section 4.11(a) of the Subordinated Loan
Agreement.
(b) Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all
the Obligations, and the termination of all Commitments (if not
then already terminated), shall be paid over to or to whomsoever
may be lawfully entitled to receive such surplus.
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6. CONDITIONS PRECEDENT TO MAKING LOANS
6.1 INITIAL LOANS
The obligations of the Lenders to make the initial Loans
shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Article.
Unless specifically stated to the contrary, each document,
certificate and other Instrument delivered pursuant to this
Section shall be dated on, or prior to, and shall be in
full force and effect on, the Borrowing Date with respect
to the initial Loans.
The Administrative Agent shall have received:
6.1.1 RESOLUTIONS, ETC.
(a) a certificate of an Authorized Representative of each
Obligor and Subordinated Creditor to the effect that
(i) the representations of such Person set forth in
each Loan Document to which it is a party shall be true
and correct as at the Effective Date and after giving
effect to the initial Loan and (ii) no Default shall
have then occurred and be continuing; and
(b) from each Obligor and Subordinated Creditor, a
certificate of its Secretary or similar officer as to:
(i) resolutions of its Board of Directors or similar body then
in force and effect authorizing the execution, delivery and
performance of each Loan Document and any other document to be
executed by it in connection with the transactions contemplated
thereby;
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to each Loan Document and any
other document executed or to be executed by it; and
(iii)its Organic Documents as then in effect,
upon which certificate the Administrative Agent may
conclusively rely until it shall have received a
further certificate of the Secretary or similar officer
of the relevant Person cancelling or amending such
prior certificate.
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6.1.2 ACQUISITION TRANSACTION, ETC.
(a) copies of the Acquisition Agreement and each of the
Subscription Agreement and the Royalty Agreement (each
as defined therein), executed by the parties thereto
and certified as being true and accurate by an
Authorized Representative of Hecla Mining or the
Borrower;
(b) evidence that the Acquisition Transaction shall have
been consummated in accordance with its terms and that
all required deliveries to be made thereunder by the
Vendor (including the MRIL Shares, the MMS Shares, and
the Monarch Mexico Shares) shall have been made;
(c) such evidence as the Administrative Agent shall
reasonably require as to the sources of moneys used by
Hecla Mining to fund the Purchase Price (including any
evidence of a drawdown under the Restated Credit
Agreement); and
(d) a resolution of the Board of Directors of the Borrower
issued pursuant to Section 39A2A of the Bermuda
Companies Xxx 0000, as to the solvency, after giving
effect to the Acquisition Transaction, of the Borrower.
6.1.3 SUBORDINATED LOAN AGREEMENT, ETC.
(a) counterparts of the Subordinated Loan Agreement, duly
executed by the Subordinated Lenders, the Collateral
Agent and the Administrative Agent and an Authorized
Representative of Hecla Mining, as borrower;
(b) counterparts of the Nationsbank Subordination
Agreement, duly executed by Nationsbank N.A., in its
capacity as agent under the Restated Credit Agreement,
as the representative of the senior creditors
thereunder, Standard Bank, as subordinated creditor,
and an Authorized Representative of Hecla Mining,
together with evidence, to be satisfactory in form and
substance to the Administrative Agent, of the granting
of consent by Nationsbank N.A., as agent under the
Restated Credit Agreement, to the execution of the Loan
Documents and the consummation of the transactions
contemplated thereby;
(c) evidence that all conditions precedent to the making of
the Subordinated Loans in the principal amount of
U.S.$3,000,000 shall have been met; and
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(d) delivery of a borrowing request for the Subordinated
Loans (in the principal amount of U.S.$3,000,000)
pursuant to the Subordinated Loan Agreement to take
effect on the proposed initial Borrowing Date
hereunder.
6.1.4 BORROWER SHARE CHARGE
(a) counterparts of the Borrower Share Charge, duly
executed by the Collateral Agent and an Authorized
Representative of Hecla Mining;
(b) evidence of the delivery of the MRIL Shares to the
Collateral Agent, together with stock powers executed
in blank; and
(c) evidence that all filings and registrations required
under the laws of Bermuda and New York (including any
required notations to be made in the stock register of
the Borrower) shall have been duly made.
6.1.5 MMS PLEDGE AGREEMENT
(a) counterparts of the MMS Pledge Agreement, duly executed
by the Collateral Agent, the Initial Lenders and an
Authorized Representative of the Borrower;
(b) evidence of the delivery of the MMS Shares to the
Collateral Agent, together with stock powers executed
in blank; and
(c) evidence that all filings and registrations (including
any required notations to be made in the share register
of MMS) required under the laws of Bermuda or Venezuela
shall have been duly made.
6.1.6 SECURITY AGREEMENT (U.S. ASSETS)
(a) counterparts of the Security Agreement (U.S. Assets),
duly executed by the Collateral Agent and Authorized
Representatives of the Borrower;
(b) evidence that Uniform Commercial Code financing
statements naming the Borrower as debtor and the
Collateral Agent as secured party shall have been duly
filed in all offices required under the laws of New
York in order to perfect the Liens under the Security
Agreement (U.S. Assets) over the Collateral described
therein; and
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(c) evidence that all necessary counterparty notices
relating to Metal Trading Agreements shall have been
duly given and all acknowledgements from the relevant
counterparties thereunder shall have been duly
obtained.
6.1.7 CANADIAN SECURITY AGREEMENT
(a) counterparts of the Canadian Security Agreement, duly
executed by the Collateral Agent and an Authorized
Representative of Hecla Mining;
(b) acknowledgement by the Vendor of the assignment by
Hecla Mining of its rights under the Acquisition
Agreement, such acknowledgement to be satisfactory in
form and substance to the Collateral Agent and its
counsel; and
(c) evidence that all filings and registrations required
under the laws of Canada shall have been duly made.
6.1.8 MMS GUARANTY
(a) counterparts of the MMS Guaranty, duly executed by the
Collateral Agent and an Authorized Representative of
MMS; and
(b) evidence that all filings and registrations required
under the laws of Venezuela shall have been duly made.
6.1.9 VENEZUELAN SECURITY DOCUMENTS
(a) delivery of powers of attorney from the Initial Lenders
to Messrs. Xxxxxx, Plaz & Xxxxxx, Venezuelan counsel to
the Finance Parties, executed and delivered under
Venezuelan law, enabling the execution and registration
of the Venezuelan Security Documents as and when
required pursuant to SECTION 8.2.11(b);
(b) substantial agreement as to the text of the Venezuelan
Security Documents in the forms of the respective
Exhibits attached hereto; and
(c) such other evidence as the Collateral Agent and its
counsel shall reasonably require to ensure the
execution and registration of the Venezuelan Security
Documents as and when required pursuant to SECTION
8.2.11(b).
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6.1.10 ACCOUNT AGREEMENT
(a) counterparts of the Account Agreement, duly executed by
the Account Bank and the Collateral Agent and
Authorized Representatives of the Borrower and MMS;
(b) evidence of the execution of all certificates and other
ancillary documentation required thereunder; and
(c) evidence that the Proceeds Account shall have been
opened.
6.1.11 INTERCOMPANY SUBORDINATION AGREEMENT
(a) counterparts of the Intercompany Subordination
Agreement, duly executed by the Collateral Agent and
Authorized Representatives of each of the Borrower and
MMS and of each Subordinated Creditor; and
(b) evidence that all filings and registrations required
under the laws of all applicable jurisdictions shall
have been made.
6.1.12 MISCELLANEOUS DOCUMENTS AND CONDITIONS
(a) counterparts of the Process Agent Acceptance, duly
executed by the Process Agent, together with evidence
of the appointment of the Process Agent by each Obligor
and Subordinated Creditor;
(b) counterparts of the Independent Consultant's
Certificate, duly executed by the Independent
Consultant;
(c) a counterpart of a summary of insurances maintained at
the Project, including as to amount, risks covered and
deductibles (the "INSURANCE SUMMARY") executed by
Sedgewick;
(d) such evidence as to the execution of Metal Trading
Agreements as the Administrative Agent shall reasonably
require;
(e) a counterpart of a Compliance Certificate of the
Borrower, computed as at the initial Borrowing Date,
certified by the chief financial or accounting
Authorized Representative of the Borrower, together
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with such information concerning the calculations
involved in such Compliance Certificate as the
Administrative Agent shall have reasonably requested;
and
(f) a counterpart of a policy of political risk insurance
("POLITICAL RISK INSURANCE") issued by a provider
satisfactory to the Administrative Agent, naming the
Collected Lenders as additional loss payees and
satisfactory in form and substance to the
Administrative Agent.
6.1.13 OPINIONS
Opinions addressed to the Finance Parties from:
(a) Debevoise & Xxxxxxxx, New York counsel to the Finance
Parties, substantially in the form of EXHIBIT N-1
attached hereto;
(b) Xxxxxx, Plaz & Xxxxxx, Venezuelan counsel to the
Finance Parties, substantially in the form of EXHIBIT N-
2 attached hereto;
(c) Xxxxx Von Xxxxxxxx Xxxxxxx Diquez, Venezuelan counsel
to the Obligors, substantially in the form of EXHIBIT N-
3 attached hereto;
(d) Xxxxxxx Xxxx & Xxxxxxx, Bermudan counsel, substantially
in the form of EXHIBIT N-4 attached hereto;
(e) Xxxxxxxxx X. Xxxxx, corporate counsel to Hecla Mining,
substantially in the form of EXHIBIT N-5 attached
hereto; and
(f) Fasken Xxxxxxxxx, Canadian counsel to the Finance
Parties, substantially in the form of EXHIBIT N-6
attached hereto.
The portions of the opinion of the Venezuelan lawyers
described in ITEMS (b) and (c) addressing the Venezuelan
Security Documents to be delivered pursuant to SECTION
8.2.11(b) may be rendered at the same time as such
Venezuelan Security Documents are executed and registered.
6.1.14 APPROVALS, PROJECT DOCUMENTS
(a) copies of the Project Documents (as in effect prior to
the initial Borrowing Date) described in CLAUSES (a)
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and (b) of the definition of such term executed and
delivered by the parties thereto, certified by an
Authorized Representative of each Obligor party
thereto;
(b) copies of the Approvals listed in PART A of ITEM 1
("CURRENT MATERIAL APPROVALS") of the Disclosure
Schedule, certified by each Obligor which was granted
such Approval; and
(c) if the Administrative Agent shall have so requested, an
English translation of any of the foregoing documents
not originally executed in English, certified by an
Authorized Representative of each Obligor party
thereto.
Without limiting SECTION 6.1, the obligations of the
Lenders to make all Loans shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent
set forth in this Section.
6.1.15 CLOSING FEES, EXPENSES, ETC.
The Administrative Agent shall have received (including, to
the extent necessary, from the proceeds of the Loans to be
made on the initial Borrowing Date) for the account of the
Finance Parties entitled thereto, all fees and expenses
(including those of the Agents' advisors then invoiced) due
and payable on or prior to such Borrowing Date.
6.2 CONDITIONS TO ALL LOANS
Without limiting SECTION 6.1, the obligations of the Lenders to
make all Loans shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in
this Section.
6.2.1 BORROWING NOTICE
The Administrative Agent shall have received a Borrowing
Notice relating to the Loans, proposed to be made on the
relevant Borrowing Date executed by an Authorized
Representative of the Borrower.
6.2.2 COMPLIANCE WITH WARRANTIES, NO DEFAULTS, ETC.
The representations and warranties of the Obligors set
forth in ARTICLE 7 and in all other Loan Documents shall be
76
true and correct as of the date initially made, and both
immediately before and after the making of the requested
Loans:
(a) such representations and warranties shall be true and
correct with the same effect as if then made (unless
stated to relate solely to an earlier date, in which
case such representations and warranties shall be true
and correct as of such earlier date); and
(b) no Default shall have then occurred and be continuing.
7. REPRESENTATIONS AND WARRANTIES
In order to induce the Finance Parties to enter into this
Agreement and to make, maintain, convert and continue the
Loans hereunder, each of the Borrower and MMS, individually
for itself and with respect to matters hereinafter relating
to it, represents and warrants unto each of the Finance
Parties, in each case as set forth in this Article. The
representations and warranties set forth in this Article
shall be made on the Effective Date and upon the delivery
of each Borrowing Notice and each Conversion Notice and
shall be deemed to be made as at each Borrowing Date and
each Conversion Date.
7.1 ORGANIZATION, POWER, AUTHORITY, ETC.
(a) The Borrower is a company validly organized and
existing and in good standing under the laws of
Bermuda.
(b) MMS is a company validly organized and existing and in
good standing under the laws of Venezuela.
(c) Each of the foregoing Obligors is duly qualified to do
business and is in good standing (where such concept is
applicable) as a foreign company in each jurisdiction
where the nature of its business makes such
qualification necessary and has full power and
authority, and holds all requisite Approvals, to own
and hold under lease its property and to conduct its
business substantially as currently conducted by it.
Each such Obligor has full power and authority to enter
into and perform its obligations under this Agreement
and the other Operative Documents executed or to be
executed by it.
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7.2 DUE AUTHORIZATION; NON-CONTRAVENTION
The execution and delivery by each of the Borrower and MMS
of this Agreement and each other Operative Document
executed or to be executed by it and the performance by
such Obligor of its obligations hereunder and thereunder,
have been duly authorized by all necessary corporate action
on its part, do not and will not require any Approval
(other than (i) those Approvals referred to in PART A and
PART B of ITEM 1 ("CURRENT MATERIAL APPROVALS" and "PENDING
MATERIAL APPROVALS") of the Disclosure Schedule, (ii) the
filings, notarizations and registrations contemplated by
this Agreement in connection with the effectiveness,
perfection and priority of the Collateral Agreements to
which either Obligor is a party and (iii) in the case of
the Project Documents only, Non-Material Approvals), do not
and will not conflict with, result in any violation of, or
constitute any default under, any provision of any
Requirement of Law or Approval (other than Non-Material
Approvals) binding on it, and will not result in or require
the creation or imposition of any Lien on any of its
properties pursuant to the provisions of any Contractual
Obligation (other than pursuant to this Agreement and the
Collateral Agreements to which such Obligor is a party).
7.3 VALIDITY, ETC.
(a) This Agreement constitutes, and each other Operative
Document executed or to be executed by each of the Borrower and
MMS constitutes, or on the due execution by each party thereto
and delivery thereof will constitute, the legal, valid and
binding obligation of such Obligor enforceable in accordance with
its terms, subject as to enforceability, to Applicable Laws
relating to bankruptcy and the enforceability of creditors'
rights generally and by the fact that the availability of
equitable remedies is discretionary and, in the case of any such
Instrument expressed to be governed by the laws of Venezuela, is
or will be in proper form for enforcement in Venezuela.
(b) Each Collateral Agreement to which either the Borrower of
MMS is party will, upon the taking of the various actions
described hereunder and thereunder, create in favor of the stated
beneficiary or secured party (howsoever denominated) thereunder,
a valid and perfected first-priority Lien on all of the assets,
78
properties and rights purported to be covered thereby
as security for the relevant obligations expressed to
be covered thereby, subject to no Liens, except (i)
Permitted Liens and (ii) for the specific exceptions
set forth in the legal opinions delivered pursuant to
this Agreement.
7.4 LEGAL STATUS
Neither MMS nor the Borrower, and none of its properties or
revenues enjoys any right of immunity from suit, set off,
attachment prior to judgment or in aid of execution, or
execution on a judgment in respect of its obligations under
any of the Loan Documents to which it is a party.
7.5 FINANCIAL STATEMENTS
All balance sheets and all other financial information of
MMS and the Borrower which have been furnished by or on
behalf of such Obligor to (or otherwise received by) the
Administrative Agent for the purposes of or in connection
with this Agreement or any transaction contemplated hereby,
including the consolidated financial statements at December
31, 1998 of MMS and its Affiliates in respect of which an
opinion was given by Xxxx, Xxxxxxx & Asociados, as
delivered in the form of Schedule L to the Acquisition
Agreement, have been prepared in accordance with GAAP
consistently applied throughout the periods involved
(except as disclosed therein) and do present fairly
(subject in the case of interim financial statements to
year-end audit adjustments) the financial position of the
relevant Obligor as at the dates thereof and the results of
its operations for the periods then ended. Neither the
Borrower nor MMS has on the date hereof any material
Contingent Liability or liability for taxes, long-term
leases or unusual forward or unusual long-term commitments
which are not reflected in its financial statements
described in this Section or in the notes thereto. For the
avoidance of doubt nothing in this Agreement shall require
the Borrower or MMS to restate the financial statements
described in this Section.
The financial projections, estimates and other expressions
of view as to future circumstances supplied by each of the
Borrower and MMS for purposes of the Base Case are fair and
reasonable and, to the best of such Obligor's knowledge,
have been arrived at after reasonable inquiry and have been
made in good faith by the Persons responsible therefor.
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7.6 ABSENCE OF DEFAULT
Neither the Borrower nor MMS is in default in the payment
of or in the performance of any material obligation
applicable to any Indebtedness (subject to any applicable
grace period), or in default under any Project Document,
any Requirement of Law or the terms or conditions upon
which any Approval has been granted.
7.7 ACQUISITION AGREEMENT
The Acquisition Transaction has been duly consummated
substantially in accordance with the terms of the
Acquisition Agreement, and, as a result, Hecla Mining is
the sole and duly registered owner of the MRIL Shares, and
the Borrower is the sole and duly registered owner of the
MMS Shares and the Monarch Mexico Shares, in each case free
and clear of Liens, except arising under each relevant
Collateral Agreement. No claim for rescission or material
modification of the Acquisition Transaction is pending or,
to the knowledge of either the Borrower or MMS, threatened
and the terms for all adjustments to the Purchase Price,
all warranty claims and all other material terms relating
to the Acquisition Transaction are contained in the
Acquisition Agreement, as in effect at the date hereof.
7.8 LITIGATION, ETC.
Except as disclosed in ITEM 3 ("LITIGATION") of the
Disclosure Schedule, there is no pending or, to the
knowledge of either the Borrower or MMS, threatened labor
controversy, litigation, arbitration or governmental
investigation or proceeding against such Obligor (including
with respect to the Acquisition Transaction) or to which
any of its business, operations, properties, assets or
revenues is subject as to which there is a reasonable
likelihood of an adverse outcome to such Obligor and which,
if adversely determined, would result in a Materially
Adverse Effect with respect to such Obligor. In the case
of any litigation described in ITEM 3 ("LITIGATION") of the
Disclosure Schedule, there has been no development in such
litigation which would result in a Materially Adverse
Effect with respect to either the Borrower or MMS.
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7.9 MATERIALLY ADVERSE EFFECT
Since the date of the most recent audited financial
statements referred to in SECTION 7.5 there have been no
occurrences which, individually or in the aggregate, would
result in a Materially Adverse Effect.
7.10 TAXES AND OTHER PAYMENTS
Except as disclosed in ITEM 4 ("TAXES") of the Disclosure
Schedule, each of the Borrower and MMS has filed all tax
returns and reports required by Applicable Law to have been
filed by it and has paid all taxes and governmental charges
thereby shown to be owing and all claims for sums due for
labor, material, supplies, personal property and services
of every kind and character provided with respect to, or
used in connection with its business and no claim for the
same exists except as permitted hereunder, except (i) any
such taxes and governmental charges which are being
diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on the books of such
Obligor or (ii) in the case of any other claims, where
failure to make payment therefor would not result in a
Materially Adverse Effect with respect to such Obligor.
7.11 MINING RIGHTS
MMS has acquired all material Mining Rights and has
obtained such other surface and other rights as are
reasonably necessary for access rights, water rights, plant
sites, waste dumps, ore dumps, abandoned heaps or ancillary
facilities which are required in connection with the
Project in accordance with sound international mining and
business practice. All Mining Rights and other rights so
acquired by MMS are sufficient in scope and substance for
the operation and maintenance of the Project in accordance
with sound international mining and business practice and
no part of the purchase price (other than any royalty
payments) payable by MMS in connection with its acquisition
of such Mining Rights and other rights remain unpaid.
7.12 OWNERSHIP AND USE OF PROPERTIES; LIENS
(a) MMS has good title to all of the Project Assets it owns or
purports to own, free and clear of all Liens or claims (including
infringement claims with respect
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to patents, trademarks, copyrights and the like) except
as permitted pursuant to SECTION 8.3.3 or except as
disclosed in ITEM 5 ("ASSETS; PROPERTIES") of the
Disclosure Schedule.
(b) MMS has complied in all material respects with all
Contractual Obligations relating to any material asset or
property leased, operated, licensed or used (but not owned) by
MMS except as disclosed in ITEM 6 ("CONTRACTUAL OBLIGATIONS") of
the Disclosure Schedule; all of MMS' interests in such assets and
properties are free and clear of all Liens or claims (including
infringement claims with respect to patents, trademarks,
copyrights and the like) except as permitted pursuant to SECTION
8.3.3, except for non-material Liens or claims or except as
disclosed in ITEM 5 ("ASSETS; PROPERTIES") of the Disclosure
Schedule; and all material Instruments pursuant to which MMS is
entitled to lease, operate, license or use such properties and
assets are in full force and effect.
7.13 SUBSIDIARIES
All of the Subsidiaries of each of the Borrower and MMS as
of the Effective Date are listed in ITEM 7
("SUBSIDIARIES") of the Disclosure Schedule.
7.14 INTELLECTUAL PROPERTY
MMS owns and possesses all such material patents, patent
rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service xxxx rights and
copyrights as MMS considers reasonably necessary for the
conduct of the business of MMS as now conducted without,
individually or in the aggregate, any substantial
infringement upon rights of other Persons and there is no
individual patent or patent license, the loss of which
would result in a Materially Adverse Effect with respect to
MMS, except as may be disclosed in ITEM 8 ("MATERIAL
PATENTS AND TRADEMARKS") of the Disclosure Schedule.
7.15 TECHNOLOGY
Except as disclosed in ITEM 9 ("TECHNOLOGY") of the
Disclosure Schedule, (a) MMS owns or has the right to use
all technologies and processes reasonably required to
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operate and maintain the Project and (b) there are no
material license agreements granting MMS or any other
Person rights in any patented process or the right to use
technical or secret know-how that are required for the
operation or maintenance of the Project.
7.16 APPROVALS; PROJECT DOCUMENTS
(a) MMS (or any other Obligor on behalf of and for the benefit
of MMS) has entered into all Instruments and obtained all
Approvals required for the operation and maintenance of the
Project in accordance with Applicable Laws and sound
international mining and business practice (other than (i) those
identified in PART B of ITEM 1 ("PENDING MATERIAL APPROVALS") of
the Disclosure Schedule which MMS believes will be obtained as
and when required and (ii) those of a non-material nature which
MMS expects will be obtained as and when necessary in the course
of the operation and maintenance of the Project (all such
Approvals of a non-material nature, collectively, "NON-MATERIAL
APPROVALS")).
(b) Each of the Project Documents executed at the time this
representation is made or deemed to be made is in full force and
effect, is the legal, valid and binding obligation of MMS thereto
and, to MMS' knowledge, of all other parties thereto in
accordance with its terms, subject to Applicable Laws relating to
bankruptcy and the enforceability of creditors' rights generally
and by the fact that the availability of equitable remedies is
discretionary.
(c) All material performance required under each Project
Document executed at the time this representation is made or
deemed to be made by each party thereto has occurred (except
performance required by such Project Document to be performed at
a later date), and, to MMS' knowledge, no default or event or
condition which with notice, lapse of time or both could
constitute a default thereunder has occurred and is continuing.
(d) Save for the Union Contract, MMS is not, at the time this
representation is made or deemed to be made, party to any
contract or agreement which would be considered a Material
Project Document other than any such contract which complies with
the terms of this Agreement as are related to the Material
Project Documents.
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7.17 ENVIRONMENTAL WARRANTIES
Except as disclosed in ITEM 10 ("ENVIRONMENTAL MATTERS") of
the Disclosure Schedule or except where failure of any of
the following statements to be made would not reasonably be
expected to have a Materially Adverse Effect:
(a) MMS (and, to MMS' knowledge, each other Project Party) is,
and has at all times been, in compliance with, or has fully
remedied any non-compliance so as to be in compliance with, all
Environmental Laws in all material respects and all Approvals
(other than Non-Material Approvals) relating to Environmental
Laws necessary in connection with the ownership and operation of
its business (including the Project) are in full force and
effect. There are no acts, omissions, events, states of facts or
circumstances which may reasonably be expected to prevent or
interfere with MMS being in substantial compliance with any
Environmental Laws, including obtaining or being in substantial
compliance with any Approvals (other than Non-Material Approvals)
relating to Environmental Laws in the future, and no material
investment is necessary to obtain or renew any Approval (other
than any Non-Material Approval) relating to Environmental Laws.
(b) There are no present or, to MMS' knowledge, past acts,
omissions, events, states of facts or circumstances which have
resulted in (or could result in) any third party (including any
regulatory authority) taking any action or making any material
claim against MMS under any Environmental Laws including remedial
action (in particular in relation to contaminated land) or the
revocation, suspension, variation or non-renewal of any Approval
under any Environmental Laws and MMS has no notice of any
complaints, demands, civil claims, enforcement proceedings or of
any action required by any regulatory authority and there are no
investigations pending or, to MMS' knowledge, threatened in
relation to the failure of MMS to obtain any Approval (other than
any Non-Material Approval) under, or comply with, any
Environmental Laws.
7.18 PARI PASSU
The payment Obligations of each of the Borrower and MMS
under each Loan Document to which it is a party rank at
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least PARI PASSU in right of payment with all of such
Obligor's other unsecured and unsubordinated Indebtedness,
other than any such Indebtedness which is preferred by
mandatory provisions of Applicable Law.
8. COVENANTS
8.1 INFORMATIONAL AND FINANCIAL COVENANTS
Each of the Borrower and MMS agrees with each Finance Party
that, until all Commitments have terminated and all
Obligations have been paid and performed in full and such
Obligor will perform its relevant obligations set forth in
this Section.
8.1.1 FINANCIAL INFORMATION, ETC.
(a) MMS will deliver to the Administrative Agent copies of the
following financial statements, reports and information:
(i) promptly when available, and in any event within 90 days
after the close of each of its Fiscal Years, its consolidated
balance sheet at the close of such Fiscal Year and related
consolidated statements of operations and cashflows, loss and
deficit, and changes in financial position, as may be relevant
(with comparable information at the close of and for the prior
Fiscal Year) and reported on without Impermissible Qualification
by an independent certified public or chartered accountant of
recognized international standing; and
(ii) promptly when available, and in any event within 45 days
after the close of the first three Fiscal Quarters of each of its
Fiscal Years, its consolidated balance sheet at the close of such
Fiscal Quarter and related consolidated statements of operations
and cashflows, loss and deficit, and changes in financial
position, as may be relevant, for such Fiscal Quarter and for the
period in such Fiscal Year ending on the last day of such Fiscal
Quarter (with comparable information at the close of and for the
corresponding Fiscal Quarter of the prior Fiscal Year and for the
corresponding portion of such prior Fiscal Year) and certified by
its accounting or financial Authorized Representative.
85
(b) The Borrower will deliver to the Administrative Agent
copies of the following reports and information:
(i) promptly when available, and in any event within 90 days
after the close of each of its Fiscal Years, its consolidated
balance sheet at the close of such Fiscal Year and related
consolidated statements of operations and cashflows, loss and
deficit, and changes in financial position, as may be relevant
(with comparable information at the close of and for the prior
Fiscal Year) and reported on without Impermissible Qualification
by an independent certified public or chartered accountant of
recognized international standing;
(ii) promptly when available, and in any event within 45 days
after the close of the first three Fiscal Quarters of each of its
Fiscal Years, its consolidated balance sheet at the close of such
Fiscal Quarter, and related consolidated statements of operations
and cashflows, loss and deficit, and changes in financial
position, as may be relevant, for such Fiscal Quarter and for the
period in such Fiscal Year ending on the last day of such Fiscal
Quarter (with comparable information at the close of and for the
corresponding Fiscal Quarter of the prior Fiscal Year and for the
corresponding portion of such prior Fiscal Year) and certified by
its accounting or financial Authorized Representative;
(iii)as soon as practicable and in any event within 30 days
following each March 31, June 30, September 30 or December 31, a
report (as to counterparties, trading dates, amounts hedged, etc)
in form and substance satisfactory to the Administrative Agent
concerning the Metal Trading Agreements then in effect; and
(iv) no later than 45 days following each June 30 and 60 days
following each December 31 of each calendar year, a Compliance
Certificate demonstrating compliance (or lack of compliance as
the case may be) with the financial ratios set forth in SECTION
8.1.5.
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8.1.2 DEFAULTS
As soon as practicable and in any event within three
Business Days after obtaining knowledge of the occurrence
of any Default relating to it, each of the Borrower and MMS
will furnish to the Administrative Agent a statement of its
chief financial Authorized Representative setting forth
details of such Default and the action which it has taken
and proposes to take with respect thereto.
8.1.3 MISCELLANEOUS INFORMATION CONCERNING THE PROJECT
MMS and (in the case of SUB-CLAUSES (a), (f) and (i)), the
Borrower will deliver to the Administrative Agent copies of
the following reports and information:
(a) as soon as practicable and in any event within 20
Business Days following the end of each calendar month,
(i) a production and operating report in form and
substance satisfactory to the Administrative Agent
including information on material developments or
changes (if any) in the production, operational,
economic, environmental and technical circumstances of
the Project for the month then ending, (ii) cashflow
for each of the Borrower and MMS for the month then
ending and (iii) the balances (including any Cash
Equivalent Investments) standing to the credit of the
Proceeds Account for the month then ending;
(b) not later than each March 1 (and as soon as practicable
after the date MMS shall prepare any interim budget or
forecast), a budget in respect of the Project for the
then current calendar year and a forecast in respect of
the Project for the following eight years (or any
shorter period until the Project End Date) in such form
and containing such information as the Administrative
Agent shall reasonably require;
(c) as soon as practicable after the receipt or sending
thereof, copies of any material report or notice in
connection with the Project filed with or received from
any local, governmental or statutory agency;
(d) as soon as practicable and in any event within 30 days
after obtaining knowledge thereof, details of any
material disputes with insurers or any non-payment or
reduction in payment with respect to any Project
Insurances by any insurer;
87
(e) as soon as practicable prior to January 1st of each
calendar year, a memorandum, dated as at such date,
summarizing the Project Insurances then in effect;
(f) as soon as practicable details of any litigation,
arbitration or administrative proceedings, which if
resolved against either the Borrower or MMS could
result in such Obligor suffering a loss in excess of
U.S.$500,000 (or the equivalent thereof in any other
currency);
(g) not later than 90 days following the end of each of its
Fiscal Years, a report, satisfactory in form and scope
of coverage to the Administrative Agent, summarizing
the compliance (or non-compliance as the case may be)
by the Project with all relevant Environmental Laws for
the Fiscal Year then ending;
(h) not later than 90 days following the end of each of its
Fiscal Years, a report as to Reserves at the Project;
and
(i) all other information relating to its financial
condition, operations or assets the Administrative
Agent (or any Lender by notice to the Administrative
Agent, which notice shall be copied to either the
Borrower or MMS) may from time to time reasonably
request.
8.1.4 BOOKS AND RECORDS; ACCESS
Each of the Borrower and MMS will keep financial records
and statements reflecting all of its business affairs and
transactions in accordance with GAAP. MMS will, upon
reasonable notice and so as not to interfere with the
operations of the Project, permit the Independent
Consultant, any insurance consultant appointed by the
Administrative Agent (an "INSURANCE CONSULTANT"), the
Agents and the Lenders or any of their respective
representatives to inspect any and all of its properties
and operations and, if a Default shall have occurred and be
continuing, to discuss its financial matters with its
officers, independent chartered accountants and certified
public accountants, as the case may be (and hereby
authorizes such independent chartered accountants or
certified public accountants, as the case may be, to
discuss its financial matters with any of the foregoing
Persons or its representatives whether or not any
88
representative of MMS is present) and to examine (and
photocopy extracts from) any of its books or other
corporate records. Without limiting the generality of the
foregoing, MMS shall provide all relevant and reasonable
assistance to the Independent Consultant, any Insurance
Consultant and the Agents in connection with the
performance of their duties contemplated hereby. It is
expressly understood that none of the Independent
Consultant, any Insurance Consultant or any of the Finance
Parties assumes any obligation to any Obligor in respect of
the Project, unless caused by any such Person's gross
negligence or wilful misconduct.
8.1.5 FINANCIAL COVENANTS OF THE BORROWER
The Borrower agrees with each Finance Party that it shall ensure
that at each Compliance Date:
(a) the Loan Life Cover Ratio, as at any Calculation Date
coinciding with or following such Compliance Date and
with respect to each corresponding Forecast Period to
(and including) the Maturity Date, is not less than
1.5:1.0;
(b) the Project Life Cover Ratio, as at any Calculation
Date coinciding with or following such Compliance Date
and with respect to each corresponding Forecast Period
to (and including) the Project End Date, is not less
than 2.0:1.0;
(c) the Debt Service Cover Ratio for that Measurement
Period coinciding with or following such Compliance
Date (and for each subsequent Measurement Period to
(and including) the Maturity Date) is not less than
1.25:1.0;
(d) the Reserve Debt Cover Ratio is not (or is not
projected to be at any time prior to the Maturity Date)
less than 4.0:1.00; and
(e) the Reserve Tail Cover Ratio is not (or is not
projected to be at any time prior to the Maturity Date)
less than 0.30:1.0.
8.1.6 RECALCULATION OF BASE CASE
The Borrower shall, with the approval of the Administrative
Agent (acting with the assistance of the Independent
89
Consultant), such approval not to be unreasonably withheld,
update the Base Case from time to time at least on an
annual basis, no later than each April 1, commencing
April 1, 2000. Any such updated Base Case shall be the
Base Case for all purposes of this Agreement and each other
Loan Document. If no agreement between the Borrower, and
the Administrative Agent and the Independent Consultant can
be reached on a revised Base Case by April 1 of the
relevant calendar year, then the Borrower, the
Administrative Agent and the Independent Consultant shall
negotiate further in updating the Base Case so as to be
acceptable to all parties (and may utilize the services of
an independent expert); PROVIDED, HOWEVER, that if such
negotiations have not produced a Base Case acceptable to
the Administrative Agent (acting in consultation with the
Independent Consultant) by the May 30 next following, then
the Base Case then in effect shall remain the Base Case for
all purposes of this Agreement and each other Loan
Document.
8.1.7 ACCURACY OF INFORMATION
All factual information hereafter furnished by or on behalf
of either the Borrower or MMS in writing to any of the
Finance Parties for the purposes of or in connection with
this Agreement or any transaction contemplated hereby will
be true and accurate in every material respect on the date
as of which such information is dated or certified and such
information shall not be incomplete by omitting to state
any material fact necessary to make such information not
misleading.
8.2 AFFIRMATIVE COVENANTS
Each of the Borrower and MMS agrees with each Finance Party
that, until all Commitments have terminated and all
Obligations have been paid and performed in full, such
Obligor will perform its relevant obligations set forth in
this Section.
8.2.1 COMPLIANCE WITH LAWS, ETC.
Each of the Borrower and MMS will comply (a) in all
material respects with all Applicable Laws and (b) the
terms of any Operative Document to which it is a party.
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8.2.2 APPROVALS; OPERATIVE DOCUMENTS
(a) Each of the Borrower and MMS will obtain, maintain in
full force and effect, and comply in all material
respects with, all Approvals (including those
identified in ITEM 1 ("APPROVALS") of the Disclosure
Schedule but excluding Non-Material Approvals) as may
be reasonably required from time to time for such
Obligor to (i) execute, deliver, perform and preserve
its rights under any of the Operative Documents
executed or to be executed by it, (ii) grant and
perfect the Liens granted or purported to be granted
and perfected by it pursuant to any Collateral
Agreement to which it is a party and (iii) in the case
of MMS, own, lease, use or license the Project Assets
in which it holds any interest and operate the Project
in accordance with sound mining and business practice.
(b) Without limiting CLAUSE (a), each relevant Obligor will
use its best efforts to obtain all Approvals in PART B
of ITEM 1 ("PENDING MATERIAL APPROVALS") of the
Disclosure Schedule by the date set forth in the
Disclosure Schedule opposite such Approval and, within
five (5) Business Days of obtaining any such Approval
deliver to the Administrative Agent certified copies
(or originals where requested by the Administrative
Agent) of all such Approvals as then in effect.
(c) MMS will, subject to SECTION 8.3.12, enter into and/or
keep in full force and effect the Project Documents
described in ITEM 2 ("CURRENT/PENDING PROJECT
DOCUMENTS") of the Disclosure Schedule and such other
contracts or agreements as may be reasonably required
or advisable from time to time to construct, develop,
operate and maintain the Project substantially in
accordance with sound mining and business practice,
provide to the Administrative Agent (in sufficient
copies for the Lenders) a true and complete copy of all
Project Documents (including, if the Administrative
Agent shall reasonably request, an English translation
of any such Project Document executed in Spanish)
entered into after the date hereof, and shall take all
actions as the Collateral Agent shall reasonably
require in order that MMS' right, title and interest
in, to and under each Project Document will be assigned
by way of security in favor of the Finance Parties.
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8.2.3 MAINTENANCE OF CORPORATE EXISTENCE
Each of the Borrower and MMS will do and will cause to be
done at all times all things necessary to maintain and
preserve its corporate existence and to be duly qualified
to do business and be in good standing (where such concept
is relevant) as a foreign corporation in each jurisdiction
where the nature of its business requires it to be so
qualified and where there is reasonable likelihood of a
Material Adverse Effect if such Obligor is not so
qualified.
8.2.4 PAYMENT OF TAXES, ETC.
Each of the Borrower and MMS will pay and discharge, as the
same may become due and payable, all taxes, assessments,
fees and other governmental charges or levies against it or
on any of its property, as well as claims of any kind or
character (including claims for sums due for labor,
material, supplies, personal property and services);
PROVIDED, HOWEVER, that the foregoing shall not require
such Obligor to pay or discharge any such tax, assessment,
fee, charge or levy so long as it shall be diligently
contesting the validity or amount thereof in good faith by
appropriate proceedings and shall have set aside on its
books adequate reserves in accordance with GAAP with
respect thereto or, in the case of any such claims due, to
claims where failure to make payment therefor would not
result in a Materially Adverse Effect with respect to such
Obligor.
8.2.5 INSURANCE
(a) MMS will maintain with responsible insurance companies
satisfactory to the Collateral Agent acting in its reasonable
discretion: (i) insurance as required under this Agreement
(including that referred to in the Insurance Summary), the
Collateral Agreements and/or any other Operative Document, (ii)
such other insurance (including business interruption insurance)
or re-insurance with respect to the properties and business of
MMS against such casualties and contingencies and of such types
and in such amounts as is customary in the case of similar
businesses similarly situated and (iii) such other insurance and
re-insurance as may be required by any Applicable Law. MMS will
not amend in any material respect or dilute
92
its insurance coverage without the prior written
consent of the Collateral Agent. MMS agrees that the
Agents may employ an Insurance Consultant to advise the
Finance Parties from time to time on the insurance
aspects of the Project and the Facility.
(b) All of the insurance policies referred to in CLAUSE (a)
will, in each case in accordance with standard practice in the
mining industry:
(i) specify the Collateral Agent (for the rateable benefit of
the Finance Parties) as an additional insured or as a loss payee
and/or contain such endorsements in favor of the Collateral Agent
as the Collateral Agent shall reasonably require;
(ii) not be capable of cancellation (or non-renewable or subject
to a material decrease in the scope or amount of coverage
(including by way of increase in any deductible)) as against the
Collateral Agent (including for failure to pay premiums) or
subject to material alteration of any kind without at least 30
days' (or less in case of war and kindred risks) prior written
notice to the Collateral Agent;
(iii)in the case of insurance covering loss or damage to any of
the Project Assets, contain a "breach of warranty" provision
(including that the policy shall not be invalidated as against
the Collateral Agent by reason of any action or failure to act of
MMS or any other Person (including any negligence on behalf of
the foregoing)), provide for waiver of any right of set-off,
recoupment, subrogation, counterclaim or any other deduction, by
attachment or otherwise, with respect to any liability of MMS,
and shall provide that, if the Collateral Agent shall so request,
all amounts payable by reason of loss or damage to any of the
Project Assets shall be payable to the Collateral Agent for
replacement; and
(iv) provide for payments of claims thereunder in Dollars.
(c) MMS will cause proceeds of all Insurances maintained with
respect to the Project to be applied in accordance with ARTICLE
4, the Account Agreement and all relevant Collateral Agreements.
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8.2.6 MANAGEMENT AND OPERATION
MMS shall manage, operate and maintain the Project and
produce and process Project Output (and ensure that Project
Output is refined by, and all dore and similar products are
sold and, subject to Applicable Law, exported to, gold
dealers and refiners of international reputation located
outside Venezuela so as to enable the Borrower to meet its
payment and hedging obligations under this Agreement) in
accordance with Applicable Laws and sound international
mining and business practice and its other obligations
arising under the Operative Documents. MMS shall use its
best efforts to ensure that there are sufficient competent
technical and management employees engaged in connection
with the Project in order to comply with the requirements
of the foregoing sentence.
8.2.7 HEDGING - METAL PRICE
(a) The Borrower will at all dates maintain in full force
and effect Metal Trading Agreements sufficient to cover
all Dollar Loans, Taxes and royalty and similar fees
and Operating Expenditures (including Political Risk
Insurance premiums) in respect of the Project, in each
case projected to be outstanding or expended during the
period commencing as at such date and ending on the
Maturity Date (the "HEDGING PERIOD").
(b) The counterparties to all Metal Trading Agreements
shall be banks, other financial institutions or trading
institutions having Indebtedness (with a maturity of
one year or less) of Approved Credit Quality and
otherwise reasonably acceptable to the Administrative
Agent. The Borrower shall ensure that its interest in
all Metal Trading Agreements (including those initially
assigned to the Borrower by Hecla Mining or any of its
Affiliates) is assigned by way of security in favor of
the Collateral Agent (for the benefit of the Finance
Parties) pursuant to the Security Agreement (U.S.
Assets)) and take all steps required by either Agent to
effect such assignment, including requiring that such
counterparties enter into instruments acknowledging
such assignment by way of security.
(c) Notwithstanding the foregoing, the Borrower shall at no
time have in effect Committed Hedging Agreements (other
than Gold Loans) covering more than 75% of Reserves.
94
(d) To the extent either Hecla Mining or any of its
Affiliates (other than the Borrower) is a party to any
Metal Trading Agreements assigned to the Borrower, the
Borrower will cause such Person to acknowledge that
assignment in such a writing as the Collateral Agent
may request.
8.2.8 ENVIRONMENTAL COVENANT
(a) MMS will, and will use reasonable efforts to ensure
that each other Project Party will, use and operate the
Project, the Project Assets and all of the facilities
and properties related thereto in material compliance
with, keep all Approvals (other than Non-Material
Approvals) relating to environmental matters in effect
and remain in material compliance with and handle all
Hazardous Materials in material compliance with all
applicable Environmental Laws.
(b) MMS will immediately notify the Administrative Agent
and provide copies upon receipt of all material written
claims, complaints, notices or inquiries relating to
the condition of its facilities and properties or
compliance with Environmental Laws, and contest such
claims diligently or in good faith cure and/or (to the
extent practicable) have dismissed with prejudice any
actions and proceedings relating to compliance with
Environmental Laws.
(c) MMS will provide such information and certifications
which either Agent may reasonably request from time to
time to evidence compliance with this Section.
8.2.9 MAINTENANCE OF PROJECT ASSETS
MMS will maintain, preserve, protect and keep:
(a) all of its ownership, lease, use, license and other
interests in the Project Assets (including all Mining
Rights) as are reasonably necessary for MMS to operate
and maintain the Project substantially in accordance
with sound mining and business practice; and
(b) all of the Project Assets in good repair, working order
and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried
on in connection therewith may be properly conducted at
all times, unless the continued maintenance of any of
95
such Project Assets is no longer necessary or
economically desirable for the operation of the
Project, such operation to be substantially in
accordance with sound mining and business practice.
8.2.10 PARI PASSU
Each of MMS and the Borrower will ensure that its payment
Obligations rank at least PARI PASSU in right of payment
with all of such Obligor's other unsecured and
unsubordinated Indebtedness other than any such
Indebtedness which is preferred by mandatory provisions of
Applicable Law.
8.2.11 COLLATERAL AGREEMENTS; AFTER-ACQUIRED COLLATERAL
(a) Each of the Borrower and MMS will maintain at all times
in full force and effect (or where appropriate,
promptly renew in a timely manner) all collateral which
is the subject of the relevant Collateral Agreements
and from time to time execute, acknowledge and deliver
or cause to be executed, acknowledged and delivered
such further instruments as may be reasonably requested
by the Collateral Agent for perfecting or maintaining
in full force and effect the Liens granted under the
Collateral Agreements (including with respect to any
assets forming part of or relating to the Project
acquired or entered into after the date hereof, whether
pursuant to the Acquisition Transaction or otherwise)
upon the request of the Collateral Agent. Without
limiting the foregoing, each of the Borrower and MMS
will, upon the request of the Collateral Agent, effect,
at its own cost and expense, all relevant
notarizations, registrations and filings, and take all
other actions as may be necessary or advisable, to
ensure that a valid and first priority Lien in any such
asset (including any such asset which is not of a type
encumbered pursuant to any Collateral Agreement as at
the Effective Date) is granted in favor of the Finance
Parties.
(b) MMS will, no later than the date which falls 60 days
after the Effective Date, ensure that the Real Property
Mortgage, the Chattel Mortgage and the Pledge Without
Conveyance are executed and procure that all relevant
notarizations, registrations and filings are made, and
that all other actions as may be necessary or advisable
are taken, in each case to ensure that a valid and
96
first priority Lien is granted in favor of the Finance
Parties over each asset subject of each relevant
Collateral Agreement.
(c) In addition, as soon as practicable after the date of
execution of any Material Project Document, MMS will,
at its own cost and expense, take such actions as may
be necessary or advisable to ensure that a valid and
first priority Lien in MMS' interest in such Material
Project Document is granted in favor of the Finance
Parties pursuant to an Assignment of Contract Rights,
including ensuring that the relevant contractual
counterparty acknowledges such Lien pursuant to a
written instrument in favor of the Finance Parties.
8.3 NEGATIVE COVENANTS
Each of the Borrower and MMS agrees with each Finance Party
that, until all Commitments have terminated and all
Obligations have been paid and performed in full, such
Obligor will perform its relevant obligations set forth in
this Section.
8.3.1 BUSINESS ACTIVITIES; PLACE OF BUSINESS; ORGANIC
DOCUMENTS; FISCAL YEAR
(a)Neither the Borrower nor MMS will:
(i) maintain any chief executive office or principal
place of business (and, in the case of MMS, the
location of the Project or Puerto Xxxxx,
Venezuela) without first taking (to the
satisfaction of the Collateral Agent) all actions
necessary to protect and perfect the Liens granted
pursuant to the relevant Collateral Agreements;
(ii) (x) amend its Organic Documents in any material
respect or (y) change its corporate name;
PROVIDED, HOWEVER, that the Borrower may change
its corporate name to Hecla Resources Investments
Limited and MMS may change its corporate name to
Minera Hecla Venezolana, C.A. as long as such
Obligor first takes (to the satisfaction of the
Collateral Agent) all actions necessary to protect
and perfect the Liens granted pursuant to the
relevant Collateral Agreements as are necessary or
advisable as a result of such corporate name
changes; or
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(iii)change its Fiscal Year.
(b) The Borrower shall not engage in any business
activity other than in its capacity as a direct or
indirect shareholder of MMS, Monarch Mexico and other
Subsidiaries engaged in exploration and production
activities in the mining industry.
(c) MMS will not engage in any business activity
other than the operation and maintenance of the Project
(including exploration and development of orebodies in
the immediate area of the Project) and activities
reasonably incidental thereto.
8.3.2 INDEBTEDNESS
Neither the Borrower nor MMS will (or will permit its
Subsidiaries to) create, incur, assume, or suffer to exist
or otherwise become or be liable in respect of any
Indebtedness other than (without duplication):
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness in respect of Metal Trading Agreements
pursuant to SECTION 8.2.7;
(c) in the case of MMS, at any date (i) unsecured
Indebtedness outstanding at such date incurred by way
of open accounts of less than 270 days extended by
suppliers, or letters of credit opened for the benefit
of suppliers, on normal trade terms in connection with
purchases of goods and services in the ordinary course
of business which constitute Capital Expenditures and
Operating Expenditures (and excluding, for the
avoidance of doubt, Indebtedness incurred through the
borrowing of money, Contingent Liabilities or retainage
pursuant to any Project Document), (ii) Indebtedness
not in excess of U.S.$500,000 (or the equivalent
thereof in any other currency) incurred to suppliers of
equipment in respect of the deferred purchase price of
such equipment and (iii) Indebtedness evidenced by the
Project Documents;
(d) Indebtedness in respect of taxes, assessments or
governmental charges, and Indebtedness in respect of
claims for labor, materials or supplies incurred in the
ordinary course of business to the extent that payment
thereof shall not at the time be required to be made in
accordance with the provisions of SECTION 8.2.4;
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(e) Indebtedness in respect of judgments or awards,
enforcement of which has not been stayed by reason of a
pending appeal or otherwise, for a period of more than
21 days, which do not, in the aggregate, exceed
U.S.$500,000 (or the equivalent thereof in any other
currency) or the payment of which is not covered in
full by insurance (subject to any customary
deductibles) maintained with responsible insurance
companies;
(f) Approved Subordinated Indebtedness;
(g) any other Indebtedness disclosed in ITEM 11
("INDEBTEDNESS") of the Disclosure Schedule; and
(h) in the case of MMS, Indebtedness (but not for borrowed
money or precious metals) not otherwise permitted by
any of the foregoing, in an aggregate principal amount
not in excess of U.S.$500,000 (or the equivalent
thereof in any other currency) at any one time
outstanding.
8.3.3 LIENS
Neither the Borrower nor MMS will (or will permit its
Subsidiaries to) create, incur, assume or suffer to exist
any Lien upon any of its properties, revenues or assets,
whether now owned or hereafter acquired, except:
(a) Liens in favor of any of the Finance Parties granted
pursuant to any Loan Document;
(b) Liens arising from mandatory provisions of Applicable
Law;
(c) Liens specifically permitted by the Collateral
Agreements and the Account Agreement;
(d) in the case of MMS, Liens in respect of deferred value
added tax relating to imported goods constituting
Project Assets;
(e) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or
thereafter payable without penalty or being contested
in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have
been set aside on its books or in the case of any other
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claims, where failure to make payment therefor would
not be likely to result in a Materially Adverse Effect
with respect to such Obligor;
(f) Liens of carriers, warehousemen, mechanics,
materialmen, suppliers and landlords incurred in the
ordinary course of business for sums not overdue or
being contested in good faith by appropriate
proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its
books;
(g) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than
for borrowed money) entered into in the ordinary course
of business or to secure obligations on surety or
appeal bonds;
(h) judgment Liens (relating to judgments or awards which
do not in the aggregate, exceed U.S.$500,000 (or the
equivalent thereof in any other currency)) in existence
less than 21 days after the entry thereof or with
respect to which execution has been stayed or the
payment of which is covered in full (subject to a
customary deductible) by insurance maintained with
responsible insurance companies;
(i) in the case of MMS, Liens securing Indebtedness
permitted to be incurred pursuant to SECTION
8.3.2(c)(ii); PROVIDED, HOWEVER, that any such Lien
shall attach only to the equipment in respect of which
such Indebtedness is incurred; and
(j) any other Lien disclosed in ITEM 12 ("LIENS") of the
Disclosure Schedule.
8.3.4 CAPITAL EXPENDITURES
MMS will not incur Capital Expenditures other than (i) as
permitted by the Base Case; (ii) those required for
replacements and repairs, the maintenance of satisfactory
operating conditions essential to the Project and ensuring
that the Project is in compliance with its obligations
under SECTION 8.2.8 and (iii) additional Capital
Expenditures in an amount not to exceed U.S.$500,000 (or
its equivalent in any other currency) in any Fiscal Year.
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8.3.5 INVESTMENTS
Neither MMS nor the Borrower will acquire all or
substantially all of the assets of any other Person or form
or suffer to exist any Subsidiary (other than any
Subsidiary of the Borrower existing on the Effective Date
and listed in ITEM 7 ("SUBSIDIARIES") of the Disclosure
Schedule) and will not make, incur, assume or suffer to
exist any Investment in any other Person, except:
(a) in the case of the Borrower, Investments by way of
Approved Subordinated Indebtedness made in favor of MMS
(subject at all times to the Intercompany Subordination
Agreement) or Capital Contributions made, whether
directly or indirectly through any intermediate
Subsidiary, in favor of MMS or Monarch Mexico; and
(c) in the case of MMS and the Borrower, Cash Equivalent
Investments permitted to be made with balances standing
to the credit of the Proceeds Account pursuant to
ARTICLE 4.
8.3.6 RESTRICTED PAYMENTS, ETC.
Neither the Borrower nor MMS will:
(a) declare, pay or make any dividend or distribution (in
cash, property or obligations) on any shares of any
class of its capital stock (now or hereafter
outstanding) or on any warrants, options, convertible
securities or other rights with respect to any shares
of any class of its capital stock (now or hereafter
outstanding) or apply any of its funds, property or
assets to the purchase, redemption or other retirement
of any shares of any class of its capital stock (now or
hereafter outstanding) or warrants, options,
convertible securities or other rights with respect to
any shares of any class of its capital stock (now or
hereafter outstanding);
(b) repay, redeem, purchase or otherwise defease any
Indebtedness owing to, or make any other payment to or
on behalf of, any Affiliate (including all Approved
Subordinated Indebtedness); or
(c) make any deposit for any of the foregoing purposes or
otherwise discharge any Indebtedness incurred by any
Affiliate;
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PROVIDED, HOWEVER, that the foregoing Obligors may make
payment to any payee of any Indebtedness described above,
make any other payment to any of its Affiliates or take any
other action for any of the foregoing purposes using moneys
in the Proceeds Account so long as:
(i) such payment is made, once during each six month period
(and only on a Payment Date, after giving effect to payments of
Principal Amounts required pursuant to SECTION 3.1.1 or, if the
Principal Amount scheduled to be repaid on a Payment Date is
prepaid pursuant to SECTION 3.1.2(a), on the date of such
prepayment) but only to the extent of Available Free Cashflow
(computed as at such Payment Date) or as at the date of such
prepayment; and
(ii) no Default (including arising under SECTION 8.1.5) shall
have then occurred and be continuing or would result from such
proposed payment.
8.3.7 TAKE OR PAY CONTRACTS
Except as set forth in ITEM 13 ("TAKE OR PAY CONTRACTS") of
the Disclosure Schedule neither MMS nor the Borrower will
not enter into or be a party to any arrangement for the
purchase of materials, supplies, other property or services
if such arrangement by its express terms requires that
payment be made by such Obligor regardless of whether or
not such materials, supplies, other property or services
are delivered or furnished to it. For the avoidance of
doubt, nothing in this Section shall prohibit such Obligor
from entering into any Metal Trading Agreement.
8.3.8 CONSOLIDATION, MERGER, ETC.
Neither the Borrower nor MMS will liquidate or dissolve,
consolidate with, or merge into or with, any other
corporation, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or any
division thereof); PROVIDED, HOWEVER, with the prior
written consent of the Administrative Agent (not to be
unreasonably withheld), each such Obligor may be involved
in reorganizations by Hecla Mining of its Subsidiaries as
long as the structure of and the benefits conferred by the
Liens pursuant to the Collateral Agreements in effect
before such reorganization shall be maintained.
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8.3.9 ASSET DISPOSITIONS, ETC.
Neither MMS nor the Borrower will sell, transfer, lease or
otherwise dispose of, or grant options, warrants or other
rights with respect to, any of its assets (including
accounts receivable) to any Person, unless, in the case of
MMS:
(a) such disposition is made in the ordinary course of
business and consists of finished goods inventories
(which may consist of gold bearing concentrates, dore,
gold-bearing ore, refined gold or other product forms
customarily sold as end products in the mining
industry);
(b) such disposition is of obsolete, redundant or replaced
assets, which are no longer used or useful to MMS; or
(c) the net book value of all assets disposed of by MMS
(excluding, however, assets disposed of pursuant to
CLAUSES (a) and (b)) in the same Fiscal Year does not
exceed U.S.$500,000 (or the equivalent thereof in any
other currency) and fair value in cash is received
therefor.
Nothing in this Section is intended to restrict MMS'
ability to sell, transfer or otherwise dispose of the
Monarch Mexico Shares or any assets of Monarch Mexico,
whether to an Affiliate of Hecla Mining or otherwise.
8.3.10 TRANSACTIONS WITH AFFILIATES
Neither MMS nor the Borrower will enter into, or cause,
suffer or permit to exist:
(a) any arrangement or contract pursuant to which any
Indebtedness is extended by such Obligor to any
Affiliate;
(b) any arrangement or contract with any of its Affiliates
of a nature customarily entered into by Persons which
are Affiliates of each other (including management or
similar contracts or arrangements relating to the
allocation of revenues, taxes and expenses or
otherwise) requiring any payments to be made by such
Obligor to any Affiliate unless such arrangement is
fair and equitable to such Obligor; and
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(c) any other transaction, arrangement or contract with any
of its other Affiliates which would not be entered into
by a prudent Person in the position of such Obligor
with, or which is on terms which are less favorable to
such Obligor than are obtainable from, any Person which
is not one of its Affiliates.
8.3.11 RESTRICTIVE AGREEMENTS, ETC.
Neither MMS nor the Borrower will enter into any agreement
(excluding this Agreement and the Loan Documents)
prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or
hereafter acquired, or the ability of such Obligor to amend
or otherwise modify this Agreement or any other Operative
Document.
8.3.12 PROJECT DOCUMENTS
(a) MMS will not in any material respect (x) amend, modify
or waive, terminate, replace or discharge performance
under any Material Project Document without the prior
written consent of the Administrative Agent or (y)
amend, modify or waive, terminate, replace or discharge
performance under any Project Document (not being a
Material Project Document) without giving notice (as
soon as practicable and in any event within 30 days
following the relevant event) to the Administrative
Agent.
(b) MMS will not enter into any contract or agreement that
would be considered a Material Project Document without
the prior written consent of the Administrative Agent.
For the avoidance of doubt, any such new contract or
agreement entered into by MMS to which the
Administrative Agent shall have granted its consent
shall be considered and designated a "MATERIAL PROJECT
DOCUMENT" for all purposes of this Agreement.
(c) MMS will not enter into any contract or agreement
relating to the operation or maintenance of the Project
with a contractual value (however denominated) in
excess of U.S$500,000 or the equivalent thereof in any
other currency (other than any Material Project
Document, any Project Document described in SUB-CLAUSE
(b) of the definition thereof or any permitted
replacement therefor) without giving notice thereof to
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the Administrative Agent as soon as practicable (and in
any event no later than 30 days thereafter). Any such
new contract or arrangement shall be considered and
designated a "PROJECT DOCUMENT".
(d) MMS will, as soon as practicable following execution
thereof, provide a true and complete copy of any new or
replacement contract or agreement (or amendment thereof
or supplement thereto) described in CLAUSE (a), (b) or
(c) to the Administrative Agent and will take all
actions as the Collateral Agent shall reasonably
require in order that MMS' right, title and interest
into and under such contract or agreement will be
assigned by way of security in favor of the Finance
Parties.
8.3.13 ROYALTY AGREEMENTS
MMS will not enter into any agreement relating to the
granting of royalties or net profits interests in
connection with the Project other than as set forth in the
royalty agreements listed in ITEM 14 ("ROYALTY AGREEMENTS")
of the Disclosure Schedule.
9. EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT
The term "EVENT OF DEFAULT" shall mean any of the events
set forth in this Section.
9.1.1 NON-PAYMENT OF OBLIGATIONS
Any Obligor:
(a) shall default in the payment or prepayment when due of
any Principal Amount of or shall default in the
provision of collateral pursuant to an election made
under SECTION 3.1.2(b)(y); or
(b) shall default in the payment when due of any other
Obligation (and such default shall continue unremedied
for a period of two days).
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9.1.2 NON-PERFORMANCE OF CERTAIN COVENANTS
(a) At any date or with respect to any date described in
the definitions of any of the ratios set forth in the
following clauses at which compliance is required in
the future: (i) the Loan Life Cover Ratio shall be (or
shall be projected to be) less than 1.25:1.0, (ii) the
Project Life Cover Ratio shall be (or shall be
projected to be) less than 1.5:1.0 or (iii) the Debt
Service Cover Ratio shall be (or shall be projected to
be) less than 1.15:1.0.
(b) Any relevant Obligor shall default in the due
performance and observance of any of its obligations
under SECTION 8.1.5(d) or (e), 8.2.3, 8.2.10 or 8.3
(other than, to the extent such default shall have
arisen as a result of any action or event beyond the
control of the relevant Obligor, SECTION 8.3.2 or
8.3.3).
9.1.3 NON-PERFORMANCE OF OTHER OBLIGATIONS
The Borrower or any other Obligor shall default in the due
performance or observance of any term, condition, covenant
or agreement, whether contained herein or in any other Loan
Document executed by it (other than a default arising
pursuant to SECTION 9.1.1 or 9.1.2) and, if capable of cure
or remedy, such default shall continue unremedied for a
period of 10 Business Days (or such longer period as the
Administrative Agent may agree, if the Administrative Agent
determines that such default is reasonably capable of being
cured within such longer period) after notice thereof shall
have been given to the Borrower or such other Obligor by
the Administrative Agent.
9.1.4 BREACH OF REPRESENTATION OR WARRANTY
Any representation or warranty of the Borrower or any other
Obligor hereunder or in any other Loan Document executed by
it or in any other writing furnished by or on behalf of
such Obligor to any Finance Party for the purposes of or in
connection with this Agreement or any such Loan Document is
or shall be incorrect when made in any material respect.
9.1.5 DEFAULT ON OTHER INDEBTEDNESS
A default shall occur in the payment when due (subject to
any applicable grace period), whether by acceleration or
106
otherwise, by any of the Borrower or MMS under any
Indebtedness (excluding Indebtedness described in SECTION
9.1.1) of such Obligor having a principal amount,
individually or in the aggregate, in excess of U.S.$500,000
(or the equivalent of any of the foregoing in any other
currency), or a default shall occur in the performance or
observance of any obligation or condition with respect to
such Indebtedness if (a) (i) the effect of such default is
to permit (after the passage of time, the giving of notice,
the making of any required determination or any combination
of the foregoing) the acceleration of the maturity of any
such Indebtedness and (ii) in the reasonable opinion of the
Administrative Agent such default is not capable of being
cured within the applicable period for cure set forth in
the relevant documentation relating to such Indebtedness,
or (b) such default shall continue unremedied for any
applicable period of time sufficient to permit the holder
or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due
and payable prior to its expressed maturity.
9.1.6 BANKRUPTCY, INSOLVENCY, ETC.
Any Obligor shall:
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for such
Person, or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for such
Person or for a substantial part of the property of any thereof,
and such trustee, receiver, sequestrator or other custodian shall
not be discharged within 60 days, provided that each of the
Borrower and MMS hereby expressly authorizes the Administrative
Agent to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend the
rights of the Finance Parties under the Loan Documents;
107
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of
any Person and, if such case or proceeding is not commenced by
such Person, such case or proceeding shall be consented to or
acquiesced in by such Person or shall result in the entry of an
order for relief or shall remain for 60 days undismissed,
provided that each of the Borrower and MMS hereby expressly
authorizes the Administrative Agent to appear in any court
conducting any relevant proceeding during such 60-day period to
preserve, protect and defend the rights of the Finance Parties
under the Loan Documents;
(e) suffer any comparable event to any of the foregoing in any
jurisdiction; or
(f) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
9.1.7 METAL TRADING AGREEMENTS
Any default shall occur under any of the Metal Trading
Agreements or any of the foregoing shall terminate or cease
in whole or in part to be the legal, valid and binding
obligation of the counterparty thereunder or the assignment
by Hecla Mining (or any Affiliate thereof other than the
Borrower) of any of such Metal Trading Agreements to the
Borrower shall terminate or cease in whole or in part to
transfer their benefits to the Borrower; PROVIDED, HOWEVER,
that no Event of Default shall be deemed to have occurred
pursuant to this Section if, within five Business Days
after such default, termination or cessation, the Borrower
effects replacement Metal Trading Agreements such that the
Borrower would again be in compliance with the obligations
set forth in SECTION 8.2.7.
9.1.8 PROJECT DOCUMENTS, ETC.
(a) Any of the Project Documents (other than as permitted
by in SECTION 8.3.12(a)) shall terminate or for any
reason cease to be in full force and effect in
accordance with its terms except if such termination or
cessation is (i) capable of cure or remedy by MMS, in
which case such termination or cessation is not
remedied within ten Business Days after the occurrence
thereof or (ii) in the normal course of the relevant
contractual terms of such Project Documents.
108
(b) A default by any party under any of the Project
Documents (other than as permitted by SECTION
8.3.12(a)) shall occur, and such default would result
in a Materially Adverse Effect with respect to MMS and
such default, if capable of cure or remedy, is not
remedied within twenty (20) Business Days after
notification to MMS from the Administrative Agent that
it is of such opinion.
9.1.9 IMPAIRMENT OF LOAN DOCUMENTS
This Agreement or any other Loan Document shall terminate
or cease in whole or part to be the legal, valid, binding
and enforceable obligation of the relevant Obligor party
thereto; the relevant Obligor shall, directly or
indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability; or any Lien
securing any Obligation shall, in whole or in part, cease
to be a perfected Lien which, except as permitted by
SECTION 8.3.3, ranks first in priority.
9.1.10 ABANDONMENT, MINING RIGHTS
(a) MMS shall abandon all or any significant portion of its
interest in the Project or any material Project Assets,
put the Project on a care and maintenance basis or
surrender, cancel or release, or suffer any termination
or cancellation of any of its material rights or
interests in the Project or the Project Assets, other
than as specifically permitted by this Agreement or
other than as MMS shall have evidenced to the
Administrative Agent are not required in connection
with the Project.
(b) Any Person other than MMS shall acquire valid Mining
Rights in respect of all or any portion of the Project
Assets, unless the Borrower shall have evidenced to the
Administrative Agent that such Mining Rights (as so
acquired by such other Person) would not be required in
connection with the Project.
9.1.11 JUDGMENTS
Any judgment or order for the payment of money in excess of
U.S.$500,000 (or the equivalent thereof in any other
currency) shall be rendered against either the Borrower and
MMS and either:
(a) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order; or
109
(b) there shall be any period of 21 consecutive days during
which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not
be in effect, unless the payment of such judgment is
covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance
companies.
9.1.12 CHANGE IN CONTROL
Any Change in Control shall occur.
9.1.13 MATERIALLY ADVERSE EFFECT
Any event (other than as enumerated in any other provision
of this Article) shall occur or condition shall exist which
constitutes a Materially Adverse Effect.
9.1.14 CEASE TO CARRY ON BUSINESS
MMS ceases or threatens to cease to carry on, or is
restrained from carrying on in the ordinary course the
Project, its business or a substantial part thereof, and in
the case of any restraint caused by a Person other than
MMS, MMS does not recommence its business as aforesaid
within 60 days (unless such cessation or restraint is
covered by business interruption insurance and the
Administrative Agent is of the view that MMS would be able
to recommence its business after the end of such 60 day
period and continue to perform its obligations under the
Operative Documents to which it is a party).
9.1.15 POLITICAL RISK EVENTS
(a) Any risk or event covered by Political Risk Insurance
shall occur.
(b) Any Governmental Agency shall condemn, nationalize,
seize or otherwise expropriate all or any substantial
part of the Project or the MMS Shares or assume custody
or control of the Project.
9.2 ACTION IF BANKRUPTCY
If an Insolvency Event shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate,
without notice, and the outstanding principal amount of all
110
outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable,
without notice or demand.
9.3 ACTION IF OTHER EVENT OF DEFAULT
If any Event of Default (other than an Insolvency Event)
shall occur for any reason, whether voluntary or
involuntary, and be continuing the Administrative Agent may
(acting with the consent of the Required Lenders), and upon
the direction of the Required Lenders, shall, upon notice
or demand to the Borrower, declare all or any portion of
the outstanding principal amount of the Loans to be due and
payable and any or all other Obligations (excluding,
however, unless express instructions to the contrary are
received from the relevant Lender, Obligations in respect
of any Metal Trading Agreement to which such Lender is a
party) to be due and payable and/or the Commitments (if not
theretofore terminated) to be terminated, whereupon the
full unpaid amount of such Loans and any and all other such
Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without
further notice, demand or presentment, and/or, as the case
may be, such Commitments shall terminate.
10. THE AGENTS
10.1 ACTIONS
Each Lender authorizes the Collateral Agent and the
Administrative Agent to act in the relevant capacity on
behalf of such Lender under this Agreement and each other
Loan Document and, in the absence of other written
instructions from the Required Lenders received from time
to time by such Agent (with respect to which such Agent
agrees that it will, subject to the last paragraph of this
Section, comply in good faith except as otherwise advised
by counsel to the effect that any such compliance might
subject such Agent to any liability of whatsoever nature),
to exercise such powers hereunder and thereunder as are
specifically delegated to or required of such Agent by the
terms hereof and thereof, together with such powers as may
be reasonably incidental thereto.
Without limiting the generality of the foregoing, each
Lender hereby authorizes:
111
(a) the Collateral Agent to act on behalf of such Lender to
execute and accept on its behalf the Collateral
Agreements and to take all such actions thereunder
necessary or appropriate with respect to management or
enforcement of the collateral security provided by such
Collateral Agreements and enforcement of the rights of
the Finance Parties thereunder; and
(b) the Administrative Agent to approve (i) in consultation
with the Borrower and the Independent Consultant, the
Base Case and (ii) take all such actions as may be
necessary or appropriate in connection with the
technical aspects of this Agreement, the other
Operative Documents and the transactions contemplated
hereby and thereby.
Each Lender agrees (which agreement shall survive any
termination of this Agreement) to indemnify each Agent, PRO
RATA, according to such Lender's Percentage, from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or
asserted against such Agent in any way relating to or
arising out of this Agreement or any other Loan Document,
including the reimbursement of each Agent for all
out-of-pocket expenses (including attorneys' fees and
expenses) incurred by such Agent hereunder or in connection
herewith or with any other Loan Document or in enforcing
the Obligations under this Agreement or any other Loan
Document (subject as aforesaid) in all cases as to which
such are not reimbursed by the Borrower (or another
Obligor); PROVIDED, HOWEVER, that no Lender shall be liable
for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
determined by a court of competent jurisdiction in a final
proceeding to have resulted from either Agent's gross
negligence or wilful misconduct. Neither Agent shall be
required to take any action hereunder or under any other
Loan Document, or to prosecute or defend any suit in
respect of this Agreement or any other Loan Document,
unless it is indemnified to its satisfaction by the
relevant Lenders against loss, costs, liability and
expense. If any indemnity in favor of either Agent shall
become impaired, it may call for additional indemnity and
cease to do the acts indemnified against until such
additional indemnity is given.
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10.2 FUNDING RELIANCE, ETC.
Unless the Administrative Agent shall have been notified by
telephone, confirmed in writing, by any Lender by 5:00 p.m.
on the day prior to the proposed Borrowing Date or
Conversion Date that such Lender will not make available
the amount which would constitute its Percentage of the
Loans to be made by all the Lenders on such date, the
Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent and, in
reliance upon such assumption, make available to the
Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to
the Administrative Agent, such Lender and the Borrower
severally agree to repay the Administrative Agent forthwith
on demand such corresponding amount together with interest
thereon, for each day from the date the Administrative
Agent made such amount available to the Borrower to the
date such amount is repaid to the Administrative Agent, at
the interest rate applicable at the time to the relevant
Loans.
10.3 EXCULPATION
Neither Agent nor any of its directors, officers, employees
or agents shall be liable to any Finance Party for any
action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection
herewith or therewith, except for its own wilful misconduct
or gross negligence, or responsible for any recitals or
warranties herein or therein, or for the effectiveness,
enforceability, validity or due execution of this Agreement
or any other Loan Document, or to make any inquiry
respecting the performance by the Borrower or any other
Obligor of its obligations hereunder or thereunder, or the
validity, genuineness, creation, perfection or priority of
the Liens created by any Loan Document, or the validity,
genuineness, enforceability, existence, value or
sufficiency of any collateral security. Each Agent shall
be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate,
statement, or writing which it believes to be genuine and
to have been presented by a proper Person.
10.4 SUCCESSORS
Either Agent may resign as such at any time upon at least
30 days' prior notice to the Borrower and all the Lenders.
If either Agent at any time shall resign, the Required
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Lenders may appoint another Lender as the relevant
successor Agent which shall thereupon become such Agent
hereunder. If no such successor Agent shall have been so
appointed as aforesaid, and shall have accepted such
appointment, within 30 days after such retiring Agent's
giving notice of resignation, then the retiring Agent may,
on behalf of the Required Lenders, appoint a relevant
successor Agent, which shall be one of the Lenders or a
commercial banking institution having a combined capital
and surplus of at least U.S.$500,000,000 (or the equivalent
thereof in another currency). Upon the acceptance of any
appointment as an Agent hereunder by any successor Agent,
such successor Agent shall be entitled to receive from the
relevant retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request,
and shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the relevant
retiring Agent and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and
each other Loan Document.
10.5 LOANS BY STANDARD BANK
Standard Bank shall have the same rights and powers with
respect to the Loans made by it or any of its Affiliates as
any Lender and may exercise the same as if it were not the
Administrative Agent or the Collateral Agent. Each of
Standard Bank and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of business
with any Obligor or any Affiliate of any thereof as if
Standard Bank were not an Agent.
10.6 STANDARD BANK AS ADMINISTRATIVE AGENT
In acting as Administrative Agent for the Lenders, Standard
Bank's banking division will be treated as a separate
entity from any other of its divisions (or similar unit of
the Administrative Agent in any subsequent re-organization)
or subsidiaries (the "OTHER DIVISIONS") and, in the event
that the Administrative Agent should act for any Obligor or
Affiliate thereof in a corporate finance or other advisory
capacity ("ADVISORY CAPACITY"), any information given by
such person to one of the Other Divisions is to be treated
as confidential and will not be available to any of the
Finance Parties without the consent of such persons
provided that:-
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(a) the consent of such Obligor or Affiliate will not be
required in relation to any information which the
Administrative Agent in its discretion determines
relates to a Default or in respect of which the Lenders
have given a confidentiality undertaking in a form
satisfactory to the Administrative Agent and the
relevant Obligor or Affiliate acting reasonably; and
(b) if representatives or employees of the Administrative
Agent receive information in relation to an Obligor or
Affiliate or while acting in an Advisory Capacity they
will not be obliged to disclose such information to
representatives or employees of the Administrative
Agent in their capacity as agent bank hereunder or to
any of the Lenders if to do so would breach any rule or
regulation or fiduciary duty imposed upon such Persons.
10.7 CREDIT DECISIONS
Each Lender acknowledges that, it has, independently of the
Agents and each other Lender, and based on the financial
and other information referred to in SECTION 7.5 and such
other documents, information and investigations as it has
deemed appropriate, made its own credit decision to
maintain its Commitments and participate in the Facility.
Each Lender also acknowledges that it will, independently
of the Agents and each other Lender, and based on such
other documents, information and investigations as it shall
deem appropriate at any time, continue to make its own
credit decisions as to exercising or not exercising from
time to time any rights and privileges available to it
under this Agreement or any other Loan Document.
10.8 COPIES, ETC
Each Agent shall give prompt notice to each Lender of each
notice or request required or permitted to be given to such
Agent by any Obligor pursuant to the terms of this
Agreement or any of the other Loan Documents. Each Agent
will distribute to the relevant Lenders each Instrument
received for its account (but excluding, for the avoidance
of doubt, any fee letter referred to in SECTION 3.3.1) and
copies of all other communications received by such Agent
from any Obligor for distribution to the Lenders by such
Agent in accordance with the terms of this Agreement or any
other of the Loan Documents.
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11. MISCELLANEOUS
11.1 WAIVERS, AMENDMENTS, ETC
The provisions of this Agreement and of each other Loan
Document (except to the extent expressly otherwise set
forth in such Loan Document) may from time to time be
amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by
the Borrower (or any other relevant Obligor party to such
Loan Document), the Required Lenders (or, in the case of
the MMS Guaranty, the Account Agreement and the Collateral
Agreements, the Required Collected Lenders), the Collateral
Agent (but only if such provision involves the rights or
obligations of the Collateral Agent) and the Administrative
Agent (but only if the relevant provision involves the
rights or obligations of the Administrative Agent);
PROVIDED, HOWEVER, that no such amendment, modification or
waiver which would:
(a) modify any requirement hereunder that any particular action
be taken or a determination be made by, or with the consent of or
in consultation with all the Lenders or the Collected Lenders or
by the Required Lenders or by the Required Collected Lenders
shall be effective unless consented to by each Lender;
(b) modify this Section, change the definition of "REQUIRED
LENDERS" or "REQUIRED COLLECTED LENDERS", increase the Aggregate
Commitment Amount, change the definition of "PERCENTAGE" with
respect to any Lender, or otherwise subject any Lender to any
additional obligation hereunder, shall be effective without the
consent of all the Lenders;
(c) extend the due date for, or reduce the amount of, any
payment or prepayment of principal of or interest on any Loan or
any commitment commission or any other amount payable hereunder
or under any other relevant Loan Document shall be made without
the consent of all the Lenders;
(d) reduce any fee described in SECTION 3.3.1 or affect the
interests, rights or obligations of either Agent QUA Agent shall
be made without the consent of such Agent;
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(e) except as specifically provided for in this Agreement or
any relevant Collateral Agreement, authorize or effect the
release of any material collateral which is the subject of any
Lien granted or purported to be granted pursuant to any such
Collateral Agreement shall be made without the consent of all the
Lenders or the Collected Lenders; or
(f) modify any term of this Agreement or any other Loan
Document expressly relating to the priority of payment of, or the
granting of any security in respect of, any obligations of the
Borrower under any Metal Trading Agreement or similar arrangement
to which any Lender is a party shall be made without the consent
of such Lender.
No failure or delay on the part of any of the Finance
Parties in exercising any power or right under this
Agreement or any other Loan Document to which it is a party
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on the
Borrower or MMS in any case shall entitle it to any notice
or demand in similar or other circumstances. No waiver or
approval by any Finance Party under this Agreement or any
other Loan Document to which it is a copy shall, except as
may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or
approval hereunder shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder.
11.2 NOTICES
All notices and other communications provided to any party
hereto under this Agreement or any other Loan Document
shall be in writing or by telex or by facsimile and
addressed or delivered to it at the relevant address for
such party set forth below its signature hereto and
designated as its "ADDRESS FOR NOTICES" or at such other
address as may be designated by such party in the relevant
Loan Document or a notice to the other parties. Any
notice, if sent by hand delivery or courier delivery, shall
be deemed received on the Business Day when delivered and,
if transmitted by telex or facsimile, shall be deemed given
on the Business Day when transmitted (answerback confirmed
in the case of telexes and transmission confirmed by the
sending facsimile machine in the case of facsimiles).
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11.3 COSTS AND EXPENSES
(a) Without prejudice to similar obligations of any Obligor
under any other Loan Document, the Borrower agrees to pay on
demand all Political Risk Insurance premiums (to the extent
payable by either Agent), all reasonable out-of-pocket expenses
(inclusive of United Kingdom Value Added Tax or any other similar
tax) of each Agent for the negotiation, preparation, execution
and delivery of this Agreement and each other Loan Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or
any other Loan Document as may from time to time hereafter be
required (including the reasonable fees and expenses of counsel
and designated local counsel to either Agent from time to time
incurred in connection therewith), whether or not the
transactions contemplated hereby are consummated, and all
expenses (inclusive as aforesaid) of the Agents (including
reasonable fees and expenses of counsel and designated local
counsel to either Agent and any stamp or other taxes) incurred in
connection with the preparation and review of the form of any
Instrument relevant to this Agreement or any other Loan Document,
the consideration of legal questions relevant hereto and thereto
and the filing, recording, refiling or re-recording of any Loan
Document and all amendments or supplements to any thereof and any
and all other documents or Instruments of further assurance
required to be filed or recorded or refiled or re-recorded by the
terms hereof or of any other Loan Document.
(b) The Borrower agrees to pay on demand all reasonable
expenses of each of the Administrative Agent's officers or agents
in connection with its on-site inspections of the Project and all
fees and reasonable expenses of (i) the independent chartered
accountants and certified public accountants in connection with
the performance of their duties described in SECTION 8.1.4 and
(ii) the Independent Consultant, any Insurance Consultant and the
Account Bank in performing their functions under this Agreement
and each other relevant Loan Document. Notwithstanding the
foregoing, prior to the occurrence of a Default, the Borrower
shall only be required to pay the fees and reasonable expenses of
(i) the Independent Consultant in connection with its semi-annual
on-site
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inspections of the Project (during the first two years
following the Effective Date) and its annual on-site
inspections of the Project thereafter, (ii) any
independent chartered accountants and certified public
accountants in case of a BONA FIDE dispute with the
Borrower or MMS concerning the financial statements
delivered pursuant to SECTION 8.1.1(a) or 8.1.1(b) and
(iii) an Insurance Consultant in case of any dispute
with MMS concerning its obligations described in
SECTION 8.2.5.
(c) The Borrower agrees to reimburse each Finance Party upon
demand for all reasonable out-of-pocket expenses (including
attorneys' fees and expenses and inclusive of United Kingdom
Value Added Tax or any other similar tax) incurred by such
Finance Party in connection with (i) the negotiation of any
restructuring or "work-out", whether or not consummated, of any
Obligations and (ii) the enforcement of any such Obligations.
11.4 INDEMNIFICATION
In consideration of the execution and delivery of this
Agreement by each Finance Party and the extension of the
Commitments, each of the Borrower and MMS (without
prejudice to any similar obligations of any of the Obligors
pursuant to any applicable Loan Document) hereby
indemnifies, exonerates and holds each Finance Party and
each of such Finance Party's Affiliates, officers,
directors, shareholders, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless
from and against any and all actions, causes of action,
suits, losses, costs, liabilities and damages and expenses
in connection therewith, in each case arising from the
claims of third parties including reasonable attorneys'
fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by the Indemnified Parties or any of them as a
result of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties;
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(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating
to the protection of the environment or the release by MMS of any
Hazardous Material in connection with the Project; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases or
threatened releases from, any real property owned or operated by
MMS of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law), regardless of whether caused by, or
within the control of, MMS,
except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful
misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the
Borrower and MMS hereby agree to make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities for which each is liable hereunder
and which is permissible under Applicable Law.
11.5 SURVIVAL
The obligations of the Borrower and MMS under SECTIONS 3.3,
5.2, 5.3, 5.4, 5.6, 11.3 and 11.4 and the obligations of
the relevant Lenders under SECTION 10.1, shall, in each
case, survive any termination of this Agreement. The
representations and warranties made by the Obligors in this
Agreement and in each other Loan Document to which it is a
party shall survive the execution and delivery of this
Agreement and each such other Loan Document.
11.6 SEVERABILITY
Any provision of this Agreement or any other Loan Document
which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or
such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
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11.7 HEADINGS
The various headings of this Agreement and of each other
Loan Document are inserted for convenience only and shall
not affect the meaning or interpretation of this Agreement
or such other Loan Document or any provisions hereof or
thereof.
11.8 COUNTERPARTS; EFFECTIVENESS
This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be executed by
the Borrower, MMS, the Collateral Agent and the
Administrative Agent and be deemed to be an original and
all of which shall constitute together but one and the same
agreement. This Agreement shall become effective on the
date (the "EFFECTIVE DATE") when counterparts hereof
executed on behalf of the Borrower, MMS, the Collateral
Agent and each Lender (or notice thereof satisfactory to
the Administrative Agent) shall have been received by the
Administrative Agent.
11.9 GOVERNING LAW; ENTIRE AGREEMENT
(a) THIS AGREEMENT AND, UNLESS OTHERWISE SPECIFIED THEREIN,
EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
(b) This Agreement and the other Loan Documents constitute
the entire understanding among the parties hereto with
respect to the subject matter hereof and thereof and
supersede any prior agreements, written or oral, or
document with respect thereto.
11.10SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that:
(a) neither the Borrower nor MMS may assign or transfer its
rights or obligations without the prior written consent
of the Administrative Agent, the Collateral Agent and
all the Lenders; and
(b) the rights of sale, assignment, and transfer of the
Lenders are subject to SECTION 11.11.
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11.11SALE AND TRANSFER OF LOANS; PARTICIPATIONS IN LOANS
Each Lender may assign, or sell participations in, its
Loans and Commitments in accordance with this Section.
11.11.1 ASSIGNMENTS
Any Lender, with notice to the Borrower and the
Administrative Agent, may assign and delegate to any of its
Affiliates or to any other Lender or to one or more
commercial banks, as set forth in this Section. Each
Person described as being the Person from or to whom such
assignment and delegation is to be made, being hereinafter
referred to as an "ASSIGNOR LENDER" or "ASSIGNEE LENDER",
respectively.
Each Assignor Lender may assign and delegate all or any
fraction of such Assignor Lender's total Loans and
Commitments. Such assignment and delegation shall be of a
constant, and not a varying, percentage of all the Assignor
Lender's Loans and Commitments in a minimum aggregate
amount of U.S.$3,000,000 (or the Gold equivalent thereof
calculated at the Original Gold Price); PROVIDED, HOWEVER,
that any transfer by any Lender of any Commitment shall
require the consent (not to be unreasonably withheld or
delayed) of the Administrative Agent; and PROVIDED,
FURTHER, HOWEVER, that, the Borrower, MMS and each Agent
shall be entitled to continue to deal solely and directly
with the Assignor Lender in connection with the interests
so assigned and delegated to an Assignee Lender until:
(a) written notice of such assignment and delegation,
together with payment instructions, addresses and
related information with respect to such Assignee
Lender, shall have been given to the Borrower and the
Administrative Agent by such Assignor Lender and such
Assignee Lender;
(b) such Assignee Lender shall have executed and delivered
to the Borrower and the Administrative Agent a Lender
Assignment Agreement, which shall have been accepted by
the Administrative Agent;
(c) the Administrative Agent shall have been provided with
such evidence as the Administrative Agent may
reasonably request in connection with any Approval
required or advisable in connection with such
assignment and delegation; and
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(d) the processing fees (if any) described below shall have
been paid.
From and after the date that the Administrative Agent
accepts such Lender Assignment Agreement (which shall be
promptly after the delivery of the documentation referred
to above and after the Administrative Agent shall be
satisfied that the relevant assignment is in compliance
with the requirements of this Agreement and each other Loan
Document under which the assignment is being effected), (x)
the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the
extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and
under the other Loan Documents, (y) the Assignor Lender, to
the extent that rights and obligations hereunder have been
assigned and delegated by it in connection with such Lender
Assignment Agreement, shall be released from its
obligations hereunder and under the other Loan Documents,
and (z) the Collateral Agreements which are expressed to be
governed by the laws of Venezuela shall be endorsed and
amended, and all necessary steps taken in relation thereto,
to reflect such assignment and delegation.
Accrued interest on that part of the Loans assigned to the
Assignee Lender, and accrued fees in respect thereof, shall
be paid as provided in the Lender Assignment Agreement.
Except in the case where any such Assignee Lender is an
Affiliate of such Assignor Lender, such Assignor Lender or
such Assignee Lender shall also pay a processing fee to the
Administrative Agent upon delivery of any Lender Assignment
Agreement in the amount of U.S.$1,500. Any attempted
assignment and delegation not made in accordance with this
Section shall be null and void.
In no event shall the Borrower be required to pay any
amount under SECTIONS 5.2, 5.3, 5.4, 5.5 and 5.6 existing
at the time of any proposed assignment to any Assignee
Lender hereunder which would otherwise be payable if such
assignment took place.
11.11.2 PARTICIPATIONS
Any Lender may at any time sell to one or more commercial
banks (each of such commercial banks and other Persons
being herein called a "PARTICIPANT") participating
interests in any of the Loans, Commitments or other
interests of such Lender; PROVIDED, HOWEVER, that:
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(a) no participation contemplated in this Section shall
relieve such Lender from its Commitment or its other
obligations hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitment and such other
obligations;
(c) the Borrower, MMS and each Agent shall continue to deal
solely and directly with such Lender in connection with
such Lender's rights and obligations under this
Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate
of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from
taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any
Participant that such Lender will not, without such
Participant's consent, take any actions of the type
described in SECTION 11.1(b) or (c); and
(e) the Borrower shall not be required to pay any amount
under SECTIONS 5.2, 5.3, 5.4, 5.5 and 5.6 that is
greater than the amount which it would have been
required to pay had no participating interest been
sold.
The Borrower acknowledges and agrees that each Participant,
for the purposes of SECTIONS 5.2, 5.3, 5.4, 5.5, 5.6, 5.7,
5.9, 5.10, 5.11, 11.3 and 11.4, shall be considered a
Lender.
11.12OTHER TRANSACTIONS
Without prejudice to the provisions of SECTION 10.5,
nothing contained herein shall preclude any Finance Party
from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document,
with any Obligor or any of their Affiliates in which such
Obligor or such Affiliate is not restricted hereby from
engaging with any other Person.
11.13FORUM SELECTION AND CONSENT TO JURISDICTION; WAIVER OF
IMMUNITY
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
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STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
AGENTS, THE LENDERS, THE BORROWER OR MMS MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND IN ADDITION IN THE COURTS OF ANY JURISDICTION
WHERE ANY COLLATERAL OR OTHER PROPERTY OF ANY OBLIGOR MAY
BE FOUND, INCLUDING, IN THE CASE OF MMS, THE COMPETENT
COURTS OF CARACAS, VENEZUELA. EACH OF THE BORROWER AND MMS
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. EACH OF THE BORROWER AND MMS HEREBY
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM WITH OFFICES ON
THE DATE HEREOF AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000,
AS ITS AGENT FOR SERVICE OF PROCESS IN NEW YORK (THE
"PROCESS AGENT"). SERVICE OF PROCESS MAY BE MADE UPON EACH
OF THE BORROWER AND MMS BY MAILING OR DELIVERING A COPY OF
SUCH PROCESS TO IT IN CARE OF THE PROCESS AGENT AT THE
PROCESS AGENT'S ADDRESS AND EACH OF THE BORROWER AND MMS
HEREBY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN NEW YORK
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY
THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS
FOR NOTICES SET FORTH BELOW ITS SIGNATURE HERETO. EACH OF
THE BORROWER AND MMS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT EITHER THE BORROWER OR MMS HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH OBLIGOR HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
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11.14WAIVER OF JURY TRIAL
THE AGENTS, THE LENDERS, THE BORROWER AND MMS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENTS, THE
LENDERS, THE BORROWER OR MMS. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT.
11.15ENGLISH LANGUAGE
This Agreement and the other Loan Documents have been
negotiated in English and, other than the Venezuelan
Security Documents and the MMS Pledge Agreement, executed
in the English language. All certificates, reports,
notices and other documents and communications given or
delivered pursuant to this Agreement and the other Loan
Documents shall be in the English language or, if not in
the English language, shall be accompanied by a certified
English translation thereof. In the case of any document
originally issued in a language other than English, the
English language version of any such document shall, absent
demonstrated error, control the meaning and interpretation
of the matters set forth therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MONARCH RESOURCES INVESTMENTS
LIMITED
as the Borrower
By: XXXX X. XXXXXXXX
Title: VICE PRESIDENT & CHIEF
FINANCIAL OFFICER
Address for Notices:
care of Hecla Mining Company
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000
Facsimile No.: 0-000-000-0000
Attention: Chief Operating Officer
With a copy to:
Xxxxxxx Xxxxx Esq.
Xxxxxxx Xxxxxxxx Xxxx
00 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
XX XX
Facsimile No.: 0-000-000-0000
MONARCH MINERA SURAMERICANA, C.A.
By: XXXX X. XXXXXXXX
Title: VICE PRESIDENT & CHIEF
FINANCIAL OFFICER
Address for Notices:
care of Hecla Mining Company
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000
127
Facsimile No.: 0-000-000-0000
Attention: Chief Operating Officer
With a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxx Von Xxxxxxxx Xxxxxxx Xxxxxx
Xxxx 0, Xxxxxxx 8-D
Xxxxxxx Xxxxxxxx, Xx Xxxxxxxxxx
Xxxxxxx 00-00, Xxxxxxxxx
Facsimile No.: 00-0-000-0000
Commitment Amount : U.S.$11,000,000
STANDARD BANK LONDON LIMITED
as a Lender
By: XXXXXX X. XXXXXX
Title: ASSISTANT GENERAL MANAGER
By: X.X. XXXXXXX
Title: HEAD OF MINING FINANCE
Dollar Lending Office:
Gold Lending Office:
Address for Notices:
Standard Bank London Limited
Xxxxxx Xxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: 00-000-000-0000
Attention: Xxxxxx Xxxxxx
128
STANDARD BANK LONDON LIMITED
as Administrative Agent
By: XXXXXX X. XXXXXX
Title: ASSISTANT GENERAL MANAGER
By: X.X. XXXXXXX
Title: HEAD OF MINING FINANCING
Address for Notices:
Standard Bank London Limited
Xxxxxx Xxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: 00-000-000-0000
Attention: Xxxxxx Xxxxxx
STANDARD BANK LONDON LIMITED
as Collateral Agent
By: XXXXXX X. XXXXXX
Title: ASSISTANT GENERAL MANAGER
By: X.X. XXXXXXX
Title: HEAD OF MINING FINANCE
Address for Notices:
Standard Bank London Limited
Xxxxxx Xxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: 00-000-000-0000
Attention: Xxxxxx Xxxxxx
129
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 1 - APPROVALS
Part A - Existing Material Approvals
AGENCY REQUIRED APPROVAL DATE OBTAINED
OR NOTIFICATION
Ministry of Energy Mining Companies In effect
and Mines Registration (#3993)
Ministry of Energy Gold, Diamonds and August 17, 1995
and Mines Precious Stones
Merchants registry
(#0708-J)
Venezuelan Central Bank Gold Providers Registry In effect
Venezuelan Central Bank Gold Exporters Registry
(BCV-045) November 17, 1995
Ministry of Energy Foreign Investment In effect
and Mines / Registration
Superintendancy of
Foreign Investments
Office
130
Item 2 - Current/Pending Project Documents
NAME OF CONTRACT PURPOSE COUNTERPARTY DATE OF EXECUTION
Refining / Refining of Project
TRANSPORTATION Output and shipment
CONTRACT to refiners outside
of Venezuela
ITEM 3 - LITIGATION
N/A
ITEM 4 - TAXES
The assets tax liability owing to the Government of Venezuela for
1997 and 1998, as well as the estimated assets tax for 1999, have
not been paid by MMS but are shown as accrued on the March 31,
1999 financial statements of MRIL delivered in connection with
the Acquisition Agreement. The liability includes interest and
penalties. The liability will continue to accrue interest until
paid.
ITEM 5 - ASSETS; PROPERTIES
N/A
ITEM 6 - CONTRACTUAL OBLIGATIONS
N/A
ITEM 7 - SUBSIDIARIES
The Borrower (or its nominees) owns 100% of the shares of each of
monarch Mexico and MMS.
ITEM 8 - MATERIAL PATENTS AND TRADEMARKS
N/A
ITEM 9 - TECHNOLOGY
N/A
ITEM 10 - ENVIRONMENTAL MATTERS
MMS is subject to the performance of certain obligations to raise
the level of the tailings impoundments and to construct a new
tailings impoundment adjacent to those existing; permits for the
drainage of water therefrom may require amendment and are being
considered for submission to the governmental authorities.
ITEM 11 - INDEBTEDNESS
N/A
ITEM 12 - LIENS
N/A
ITEM 13 - TAKE OR PAY CONTRACTS
N/A
ITEM 14 - ROYALTY AGREEMENTS
N/A
131
SCHEDULE III
ADDITIONAL COSTS RATE
1. The Additional Costs Rate applicable to an Interest Period
shall be the rate determined by each relevant Lender (and
communicated to the Administrative Agent) to be equal to the
arithmetic mean (rounded upwards, if necessary, to four decimal
places) of the rates resulting from the application of the
following formula:
A x 0.01%
--------
300
where, in each case, on the day of application of that
formula by each relevant Lender:
A is the rate of charge payable by each relevant Lender
to the Financial Services Authority under paragraph
2.02 or 2.03 (as the case may be) of the Fees
Regulations (but where, for this purpose, the figures
at paragraph 2.02(b) and 2.03(b) of the Fees
Regulations shall be deemed to be zero) and expressed
in pounds per 1 million (British pounds) of the Fee
Base of such Lender.
2. For the purposes of this Schedule:-
"ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
meanings given to those terms under the Bank of Xxxxxxx Xxx
0000 or by the Bank of England (as may be appropriate), on
the day of the application of the formula;
"FEE BASE" has the meaning given to that term for the
purposes of, and shall be calculated in accordance with, the
Fees Regulations;
"FEES REGULATIONS" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998; or
(b) such regulations as from time to time may be in force
relating to the payment of fees for banking supervision
in respect of periods subsequent to 28 February 1999.
132
3. The Additional Costs Rate applicable to a Loan for an
Interest Period shall be calculated at or about 11:00 am on the
first day of that Interest Period and shall be payable on the
date on which interest is payable in respect of that Loan under
this Agreement.
4. Each relevant Lender shall determine the Additional Costs
Rate by application of the formula set out in paragraph 1 above
on the first day of each Interest Period.
5. If there is any change in applicable law or regulation, or
the interpretation thereof, by any governmental authority charged
with the administration thereof, or in the nature of any request
or requirement by the Financial Services Authority, the Bank of
England, or other applicable banking authority, the effect of
which is to impose, modify or deem applicable any fees or any
reserve, special deposit, liquidity or similar requirements
against assets held by, or deposits in, or for the account of, or
advances by such Lender, or in any other respect whatsoever, the
relevant Lender shall be entitled to vary the formula set out in
paragraph 1 above so as (but only so as) to restore such Lender's
position - in terms of overall return to the Lender - to that
which prevailed before that change became necessary. The Lender
shall notify the Borrower and the Administrative Agent of any
such necessary variation to the formula and the formula, as so
varied, shall be the formula for the purposes of this Agreement
with effect from the date of notification.
