Exhibit 10.2
FACILITY AGREEMENT
WESTERN MESQUITE MINES, INC.
RMB INTERNATIONAL (DUBLIN) LIMITED
EACH PARTY LISTED IN SCHEDULE 1
and
RMB RESOURCES LIMITED
Freehills
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QV.1 Building 000 Xx Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxx Xxxxxxxxx 0000 Xxxxxxxxx
Telephone x00 0 0000 0000 Facsimile
x00 0 0000 0000 xxx.xxxxxxxxx.xxx DX 000
Xxxxx
XXXXXX XXXXXXXXX PERTH BRISBANE HANOI HO
CHI MINH CITY SINGAPORE Correspondent
Offices JAKARTA KUALA LUMPUR
Liability limited by the Solicitors'
Limitation of Liability Scheme, approved
Under the Professional Standards Xxx
0000 (NSW)
Reference DAW:CEP:80559145
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TABLE OF CONTENTS
Clause Page
1 DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 14
1.3 Accounting Principles 15
1.4 Liability 16
2 COMMITMENT, PURPOSE AND AVAILABILITY OF THE FACILITY 16
2.1 Provision of Commitment 16
2.2 Purpose 16
2.3 Cancellation at end of Availability Period 16
3 CONDITIONS PRECEDENT 16
3.1 Funding Portion 16
3.2 All Funding Portions 19
3.3 Certified copies 19
3.4 Waiver of conditions precedent 19
4 FUNDING PROCEDURES 19
4.1 Delivery of Funding Notice 19
4.2 Delivery by facsimile 20
4.3 Provision of Funding Portions 20
4.4 Selection of Funding Periods 20
5 BASE INTEREST 21
5.1 Payment of base interest 21
5.2 General provisions in relation to interest 21
6 VARIABLE INTEREST 21
6.1 Definitions 21
6.2 Payment of variable interest 22
6.3 Delivery of information 22
6.4 Xxxxxxxxxxxxx xx XXX 00
0 REPAYMENT AND PREPAYMENT 23
7.1 Repayment 23
7.2 Mandatory prepayment 24
7.3 Repayment of other Secured Money 24
7.4 Prepayment 24
8 PAYMENTS 25
8.1 Manner of payment 25
8.2 Payments to be made without set-off or deduction 25
8.3 Amounts payable on demand 25
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9 REPRESENTATIONS AND WARRANTIES 25
9.1 Representations and warranties 25
9.2 Survival and repetition of representations and warranties 28
9.3 Reliance by the Finance Parties 28
10 COVENANTS 28
10.1 Terms of covenants 28
10.2 General covenants 29
10.3 Project Covenants 31
10.4 Financial covenants 34
10.5 Provision of information and reports 36
10.6 Reclamation Work 37
11 TRANSACTION ACCOUNTS 38
11.1 Transaction Accounts 38
11.2 Proceeds Account 38
11.3 Project Account 38
11.4 Priority of application - Proceeds Account 38
11.5 Priority of application - Project Account 39
12 EVENTS OF DEFAULT 40
12.1 Events of Default 40
12.2 Effect of Default 42
12.3 Borrower to continue to perform 42
12.4 Enforcement 43
13 RELEASE OF OBLIGATIONS 43
13.1 Release of obligations 43
13.2 Further assurances 43
14 INDEMNITIES 44
14.1 General indemnity 44
14.2 Foreign currency indemnity 45
14.3 Conversion of currencies 45
14.4 Continuing indemnities and evidence of loss 45
15 FEES, TAX, COSTS AND EXPENSES 46
15.1 Arrangement fee 46
15.2 Warrants 46
15.3 Tax 46
15.4 Costs and expenses 47
16 INTEREST ON OVERDUE AMOUNTS 47
16.1 Payment of interest 47
16.2 Accrual of interest 47
16.3 Rate of interest 47
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17 ASSIGNMENT 48
17.1 Assignment by Transaction Party 48
17.2 Assignment by Finance Party 48
17.3 References to a Finance Party 48
17.4 Assist transfer or assignment 48
17.5 Participation permitted 48
17.6 Lending Office 49
17.7 Disclosure 49
18 SAVING PROVISIONS 49
18.1 No merger of security 49
18.2 Exclusion of moratorium 49
18.3 Powers 49
18.4 Consents 49
18.5 Principal obligations 50
18.6 Non-avoidance 50
18.7 Set-off authorised 50
18.8 Certificates of Agent 50
18.9 No reliance or other obligations and risk assumption 51
18.10 Attorney 51
18.11 Opinion of a Finance Party 51
19 GENERAL 52
19.1 Confidential information 52
19.2 Performance by the Agent of obligations 52
19.3 Transaction Party to bear cost 52
19.4 Notices 52
19.5 Governing law and jurisdiction 53
19.6 Prohibition and enforceability 53
19.7 Waiver and Variation 53
19.8 Attorneys 54
19.9 Counterparts 54
19.10 Service of process 54
SCHEDULE 1 - GUARANTORS 55
SCHEDULE 2- FUNDING NOTICE 56
SCHEDULE 3 - PERMITTED ENCUMBRANCES 57
SCHEDULE 4 - SECURITIES 58
SCHEDULE 5 - FORM OF WARRANT 59
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THIS FACILITY AGREEMENT
is dated as of 5 November 2003 between the following parties:
1. WESTERN MESQUITE MINES, INC.
a corporation incorporated under the laws of Nevada
of 0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx 000 #000
Xxxxx, Xxxxx 00000
Xxxxxx Xxxxxx of America
(BORROWER)
2. EACH PARTY LISTED IN SCHEDULE 1
(each a GUARANTOR)
3. RMB INTERNATIONAL (DUBLIN) LIMITED
of 00 Xxxxxxxxxx Xxxx
Xxxxxxxxxxx
Xxxxxx 0 Xxxxxxx
(LENDER)
4. RMB RESOURCES LIMITED
of Xxxxx 0
Xxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
(AGENT)
RECITALS
The Borrower and each of the Guarantors have requested the Lender to
make available a loan to the Borrower on the terms and conditions
contained in this agreement.
THE PARTIES AGREE
in consideration of, among other things, the mutual promises contained
in this agreement:
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1 DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, unless the contrary intention appears:
ADJUSTED EXCESS CASH FLOW in relation to a Calculation Period, means
Excess Cash Flow for the Calculation Period less any mandatory
prepayment which is paid or will be paid with respect to that
Calculation Period in accordance with clause 7.2;
AHA means American Home Assurance;
AISLIC means American International Specialty Lines Insurance Company;
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ASSET PURCHASE AGREEMENT means the agreement so entitled dated on or
about the date of this agreement between Newmont, Hospah, WGI and the
Borrower;
AUTHORISATION includes any consent, registration, filing, agreement,
certificate, licence, approval, permit, authority or exemption from,
by or with a Governmental Agency;
AUTHORISED OFFICER means:
(a) in relation to a Transaction Party, a chief executive officer or
a chief financial officer for the time being; and
(b) in relation to a Finance Party, a director, an associate
director, a company secretary, a president, a vice president, an
officer whose title contains the word "director", "manager" or
"executive", or a person performing the functions of any of them,
or in either case, a person appointed by a party to act as an
Authorised Officer for the purposes of the Facility or the Transaction
Documents;
AVAILABILITY PERIOD means the period commencing on the date of
satisfaction of the conditions precedent set out in clause 3.1 and
ending on the earlier of:
(a) 31 December 2003;
(b) the date on which the Facility is fully drawn; or
(c) the date on which the Commitment is cancelled in full;
BASE REPAYMENT AMOUNT means US$750,000;
BOND means each bond issued or to be issued by AHA and which are
described in Endorsement No. 2 of the Reclamation Costs Policy, and
BONDS means all of them;
BUSINESS DAY means a day on which banks are open for general banking
business in both London, England and Denver, Colorado excluding
Saturdays, Sundays and public holidays;
CALCULATION PERIOD means:
(a) the period from and including the date of this agreement to and
including the Quarterly Date first occurring after that date; and
(b) thereafter, each successive Quarter;
CALUMET means Calumet Mining Company, a corporation incorporated under
the laws of Idaho;
CASHFLOW MODEL means the cashflow projections for the Project for a
period of at least 30 months or any other period of time specified to
the Borrower by the Agent;
COLLATERAL SECURITY means any present or future Encumbrance, Surety
Obligation or other document or agreement entered into by the
Borrower, another Transaction Party or another person as security for
the payment of the Secured Money;
COMMITMENT means the maximum aggregate amount agreed to be provided by
the Lender under the Facility being US$6,000,000, as reduced or
cancelled in accordance with this agreement;
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COMMUTATION ACCOUNT means the account established in the name of the
Borrower in accordance with Endorsement 3 of the Reclamations Costs
Policy;
CORPORATE BUDGET means the corporate budget for non-Project
expenditure of the Borrower and the Guarantors for a period of 18
months or any other period approved by the Agent;
DEFAULT means the occurrence of an event of default described in
clause 12.1;
DISPOSE in relation to any asset, property or right, means to sell,
transfer, assign, surrender, convey, lease, licence, discount, lend,
farm-out or otherwise dispose of any interest in the asset, property
or right;
DOCUMENTS means the Transaction Documents and the Project Documents;
ENCUMBRANCE means an interest or power:
(a) reserved in an interest in any asset including, but not limited
to, any retention of title; or
(b) created or otherwise arising in any interest in any asset under a
mortgage, charge, xxxx of sale, lien, pledge, trust or power,
by way of security for the payment of a debt, another monetary
obligation or the performance of another obligation, and includes, but
is not limited to, an agreement to grant or create any of the above;
ENVIRONMENTAL APPROVALS means all consents, approvals, licences or
other authorisations of any kind required by Environmental Law;
ENVIRONMENTAL LAW means any law, whether deriving from statute
(including, but not limited to, the relevant laws of the United States
of America and the State of California) or otherwise, concerning
environmental matters, and includes, but is not limited to, law
concerning land use, development, pollution, waste disposal, toxic and
hazardous substances, conservation of natural or cultural resources
and resource allocation including any law relating to exploration for,
and development or exploitation of, any natural resource including the
rehabilitation of any land, and including any and all rules,
regulations or ordinances promulgated pursuant to those laws;
ENVIRONMENTAL LIABILITIES means any obligation, expense, penalty or
fine under an Environmental Law which would or could be imposed on a
Transaction Party, or an Authorised Officer or employee of a
Transaction Party, or any occupier of the Project Area as a result of
activities carried on during the ownership or occupation of the
Project Area by the Borrower, or by its predecessors in title;
EQUITY FUNDING AMOUNT means equity funding for the acquisition of the
Project in the amount of not less than US$3,250,000;
EXCESS CASH FLOW for the Quarter ending on 31 January 2004 and each
subsequent Quarter, means the aggregate of:
(a) the Project Cash Flow for that Quarter; and
(b) money deposited to the credit of the Proceeds Account during that
Quarter (but with no double counting of amount),
less the following amounts paid during that Quarter or on the
Quarterly Date at the end of that Quarter:
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(1) interest payable in relation to the Facility under clause
5.1;
(2) each payment of the Principal Outstanding under clause 7.1;
and
(3) money payable under a Hedging Contract;
FACILITY means the term loan to be provided by the Lender to the
Borrower under this agreement;
FINAL REPAYMENT DATE means 31 October 2005;
FINANCE PARTY means each of the following:
(a) the Lender; and
(b) the Agent,
and FINANCE PARTIES means both of them;
FINANCIAL INDEBTEDNESS means any debt or other monetary liability in
respect of moneys borrowed or raised or financial accommodation
including, but not limited to, under or in respect of any:
(a) xxxx, bond, debenture, note, letter of credit, bank guarantee or
similar instrument;
(b) acceptance, endorsement or discounting arrangement;
(c) Surety Obligation;
(d) finance lease;
(e) deferred purchase price for more than 90 days of any asset or
service;
(f) obligation to deliver goods or provide services paid for in
advance by any financier or in relation to another financing
transaction; or
(g) amount of capital and premium payable in connection with the
redemption of preference shares or an amount of purchaser price
payable for or in connection with the acquisition of redeemable
preference shares,
and irrespective of whether the debt or liability:
(1) is present or future;
(2) is actual, prospective, contingent or otherwise;
(3) is at any time ascertained or unascertained;
(4) is owed or incurred alone or severally or jointly or both
with another person; or
(5) is a combination of the above;
FINANCING PLAN means the plan which details the sources of funds,
including the Equity Funding Amount and the Working Capital Amount, to
pay the costs of the acquisition of the Project and the costs set out
in the Project Budget and the Corporate Budget;
FINANCING STATEMENTS means:
(a) the UCC Financing Statement given by the Borrower in favour of
the Lender; and
(b) the UCC Financing Statement given by WGI in favour of the Lender;
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FORCE MAJEURE EVENT means:
(a) an act of God;
(b) war, revolution, or any other unlawful act against public order
or authority;
(c) a restraint by a Governmental Agency;
(d) any other event which a reasonable person could not foresee or
reasonably make provision for or insure against,
which wholly or partially prevents, hinders, obstructs, delays or
interferes with the development or operation of the Project or the
sale of Product;
FUNDING DATE means the date on which a Funding Portion is, or is to
be, provided to the Borrower under this agreement;
FUNDING NOTICE means a notice requesting a Funding Portion in the form
of schedule 2, specifying the matters indicated in that schedule;
FUNDING PERIOD means a period for the fixing of interest rates
determined under clause 4.4;
FUNDING PORTION means each portion of the Commitment provided under
this agreement;
FUNDING RATE for a Funding Portion, means the sum of LIBOR for that
Funding Period plus the Margin;
GOOD INDUSTRY PRACTICE means the degree of care and skill, diligence,
prudence (financial and operational), foresight and operating practice
which would reasonably and ordinarily be expected from a skilled
operator engaged in the same time of undertaking as the Project under
the same or similar circumstances;
GOVERNMENTAL AGENCY means a government or a governmental,
semi-governmental, administrative, fiscal or judicial body,
department, commission, authority, tribunal, agency or entity;
HEDGING CONTRACT means any agreement or arrangement entered into by
the Borrower with the Lender or any other financial institution to the
satisfaction of the Agent, in connection with the management and
protection of commodity risk, foreign currency risk or interest rate
risk;
HOSPAH means Hospah Coal Company a corporation incorporated under the
laws of Delaware;
HOSPAH NET OPERATING CASH FLOW ROYALTY AGREEMENT means the agreement
so entitled dated on or about 5 November 2003 between the Borrower and
Hospah;
HOSPAH NSR AGREEMENT means the NSR Royalty Agreement dated on or about
5 November 2003 between the Borrower and Hospah;
INSOLVENCY EVENT means the happening of any of these events with
respect to a Transaction Party:
(a) an application or petition is made to a court for an order, or an
order or decree is made under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law in effect
now or from time to time, that a Transaction Party be wound up,
put into administration or dissolved and the order or decree is
not stayed or any similar relief is granted under any applicable
federal or state law and is not stayed;
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(b) an application is made to a court for an order appointing a
liquidator or provisional liquidator in respect of a Transaction
Party, or one of them is appointed, whether or not under an
order;
(c) a receiver, administrator, controller, liquidator, sequestrator,
trustee, custodian or similar official is appointed in any
jurisdiction over any of the assets or undertaking of a
Transaction Party;
(d) the directors or other officers of a Transaction Party request
the appointment of a receiver, receiver and manager, official
manager, trustee, administrator, controller, liquidator, trustee
in bankruptcy, judicial custodian, compulsory manager,
administrative receiver or similar official;
(e) except to reconstruct or amalgamate while solvent on terms
approved by the Agent, a Transaction Party enters into, or
resolves to enter into, a scheme of arrangement, deed of company
arrangement or composition with, or assignment for the benefit
of, all or any class of its creditors, or it proposes a
reorganisation, moratorium or other administration involving any
of them;
(f) a Transaction Party resolves, or a meeting of a Transaction Party
is convened to consider any resolution for that Transaction
Party, to wind itself up, or otherwise dissolve itself, or gives
notice of intention to do so, except to reconstruct or amalgamate
while solvent on terms approved by the Agent or is otherwise
wound up or dissolved;
(g) a Transaction Party is or is deemed to be insolvent or is unable
to pay its debts when they are due or states that it is insolvent
or is insolvent;
(h) a Transaction Party suspends payment of its debts generally or
announces an intention to do so;
(i) by reason of actual or anticipated financial difficulties, a
Transaction Party begins negotiations with any creditor for the
rescheduling of any of its indebtedness;
(j) a Transaction Party takes any step to obtain protection
(including a moratorium) or is granted protection (including a
moratorium) from its creditors under the law of any applicable
jurisdiction or an administrator is appointed to a Transaction
Party under the law of any applicable jurisdiction;
(k) a warrant of attachment, execution or similar process has been
issued against any substantial part of the property of a
Transaction Party; or
(i) anything analogous or having a substantially similar effect to
any of the events specified above happens under the law of any
applicable jurisdiction, including with respect to the Borrower,
the laws of the any applicable jurisdiction;
INTER-COMPANY CLAIMS means all debts and liabilities of each
Subordinated Group Member to any and all other Subordinated Group
Members on any account and in any capacity, irrespective of whether
the debts or liabilities:
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(a) are present or future;
(b) are actual, prospective, contingent or otherwise;
(c) are at any time ascertained or unascertained;
(d) are owed or incurred by or on account of a Subordinated Group
Member alone or severally or jointly with another person;
(e) are owed to or incurred for the account of a Subordinated Group
Member alone, or severally or jointly with another person;
(f) are owed to another person as agent (whether disclosed or not)
for or on behalf of a Subordinated Group Member;
(g) are owed or incurred as principal, interest, fees, charges,
taxes, duties or other imposts, damages (whether for breach of
contract or tort or incurred on another ground), losses, costs or
expenses, or on any other account;
(h) are owed to or incurred for the account of a Subordinated Group
Member directly or as a result of:
(1) the assignment or transfer to a Subordinated Group Member of
a debt or monetary liability of a Subordinated Group Member
(whether by way of assignment, transfer or otherwise); or
(2) another dealing with a debt or liability of that kind;
(i) are owed to or incurred for the account of a Subordinated Group
Member before the date of this agreement, before the date of any
assignment of this agreement to a Subordinated Group Member by
another person or otherwise; or
(j) comprise a combination of the above;
LENDING OFFICE in respect of a Finance Party, means the office of that
Finance Party set out on page 1 of this agreement, or another office
notified by a Finance Party under this agreement;
LIBO PAGE means the page entitled "LIBO" on the Reuters Monitor Money
Rates Service or any other page which may replace the LIBO page for
the purpose of displaying offered rates for United States Dollar
deposits;
LIBOR in relation to a Funding Period for a Funding Portion, means the
rate per cent per annum determined by the Agent to be:
(a) the average of the rates quoted on the LIBO Page as being the
rate per annum at which United States Dollar deposits are offered
for a period equivalent to the Funding Period at about 11.00 am
(London time) on the Value Date, eliminating the highest and the
lowest rates and rounding up the resultant figure to 4 decimal
places;
(b) where 2 or fewer rates are quoted for the relevant period on the
LIBO Page at the relevant time, the average of the rates notified
to the Agent by each Reference Bank to be the rate per annum at
which United States Dollar deposits are offered to that Reference
Bank for a period equivalent to the Funding Period at about 11.00
am (London time) on the Value Date, rounding up the resultant
figure to 4 decimal places; or
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(c) if LIBOR cannot be determined in accordance with paragraphs (a)
or (b) of this definition, the rate most nearly approximating the
rate that would otherwise have been calculated by the Agent in
accordance with paragraph (a) having regard to comparable indices
then available in the financial markets;
LIBOR BUSINESS DAY means a day (not being a Saturday or Sunday) on
which banks are open for general banking business in London and New
York;
MANAGEMENT AGREEMENT means the operating management agreement dated on
or about 5 November 2003 between Xxxxxxxx Western Construction
Corporation and the Borrower;
MANAGEMENT SIDE AGREEMENT means the management side agreement dated or
about the date of this agreement between Xxxxxxxx Western Construction
Corporation, the Borrower, the Lender and the Agent;
MARGIN means 6.0% per annum;
MATERIAL ADVERSE EFFECT means a material adverse effect on:
(a) the ability of a Transaction Party to perform an obligation under
a Transaction Document to which it is a party;
(b) the value of the Secured Property; or
(c) the business or operations of a Transaction Party;
MINERAL LEASE AND LANDFILL FACILITIES LEASE AGREEMENT means the
agreement so entitled dated 25 June 1993 between Hospah, Newmont (as
successor to Santa Fe Pacific Gold Corporation) and County Sanitation
District No. 2 of Los Angeles County (as successor to Xxxxxx Natural
Resources Corporation) as amended by an amendment dated 24 April 1995
and an amendment dated 24 August 1998;
MINERAL RIGHTS means:
(a) the mining claims and other mineral rights, including but not
limited to those relating to the existing heaps and processing
facilities at the date of this agreement and which are described
in the Securities;
(b) all entitlements of the Borrower or any Transaction Party under
the provisions of the Mining Law to conduct mining activities on
the Project Area;
(c) any present or future interest from time to time held by or on
behalf of the Borrower or any Transaction Party in any present or
future right, lease, licence, claim, permit or other authority
which confers or may confer a right to prospect or explore for or
mine any metals or minerals in any part of the Project Area;
(d) any present or future renewal, extension, modification,
substitution, amalgamation or variation of any of the mineral
rights described above (whether extending over the same or a
greater or lesser area); and
(e) any present or future application for or interest in any of the
above, which confers or which, when granted, will confer the same
or similar rights;
MINING LAW means any law, whether deriving from statute (including,
but not limited to, the relevant laws of the United States and the
State of California) or otherwise, concerning the acquisition by any
allowed means of interests in state
page 8
and federal public lands or private lands for the purpose of
conducting mining exploration, mine development, mining operations,
reclamation and related operations on that land, together with the
rights necessary to conduct those activities, including but not
limited to laws relating to public land use, development, conservation
of natural or cultural resources and resource allocation and includes
any laws concerning permits, licences and authorisations required to
be received before conducting any of those activities and includes any
and all rules, regulations or ordinances promulgated pursuant to or in
respect of these laws;
NEWMONT means Newmont USA Limited dba Newmont Mining Corporation, a
corporation incorporated under the laws of Delaware;
OPERATING COSTS means all expenses (including, but not limited to,
capital and recurrent expenditure of a routine nature and head office
administration costs, but excluding all other capital expenditure)
incurred and paid by the Borrower in the ordinary course of business
in connection with the day to day activities of the Project but
excluding any payments to third parties in respect of liabilities to
them covered by third party insurance;
OVERDUE RATE in relation to an unpaid amount on any date, means the
rate which is the sum of 2.0% per annum and the Funding Rate for a
Funding Portion equal to the unpaid amount and having a Funding Period
of 90 days;
PAYMENT CURRENCY means the currency in which any payment is actually
made;
PERFECTION CERTIFICATE means the perfection certificate of the
Borrower, WGI and Calumet dated 5 November 2003;
PERMITTED ENCUMBRANCES means the Encumbrances described in schedule 3;
POTENTIAL DEFAULT means an event or condition which with notice or
lapse of time or satisfaction of some other condition or any
combination of the foregoing would become a Default;
POWER means a right, power, authority, discretion or remedy conferred
on a Finance Party by a Transaction Document, an applicable law or
otherwise;
PRINCIPAL OUTSTANDING at any time, means the sum of all outstanding
Funding Portions drawn under the Facility at that time;
PROCEEDS ACCOUNT means the account described in clause 11.1(a);
PRODUCT means the Borrower's present and future right, title and
interest in and to all gold (including, without limitation, gold
bearing material, dore bullion or metallic gold and refined gold) and
other metals and minerals mined, extracted or derived from the Project
Area;
PROJECT means the Mesquite xxxxx heap extraction project in Imperial
County, State of California in the United States of America;
PROJECT AREA means the areas the subject of the Mineral Rights;
PROJECT ACCOUNT means the account described in clause 11.1(b);
PROJECT ASSETS means all the right, title and interest both present
and future of the Borrower which is attributable to the Project and
includes all the right, title and interest both present and future of
the Borrower in, to, under or derived from:
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(a) the Mineral Rights;
(b) the Product;
(c) the Project Area, including any title to or interest in the land
included in the Project Area now or at a later time held by the
Borrower;
(d) the Sales Contracts;
(e) every contract for the use by any third party of any of the
assets and property included in the Project;
(f) Authorisations in relation to the Project;
(g) any other contract, agreement, permit, lease, licence, consent,
easement, right of way and other rights or interests in land,
which relates to the construction, operation or maintenance of
the Project, or to the mining, production, transportation,
storage, treatment, processing or marketing of the Product;
(h) all exploration and mining information, documents, maps, reports,
records, studies and other written data, including all data
stored on magnetic tapes, disks or diskettes or any other
computer storage media, relating to geological, geochemical and
geophysical work, feasibility studies and other operations
conducted with respect to the Project Area;
(i) all buildings, improvements, structures, systems, fixtures,
plant, machinery, barges, tools and other personal property at
any time used or intended for use in connection with or
incidental to the exploration, mining, storage, transporting and
processing of Product, and all associated facilities and
infrastructure (including any treatment or processing plant);
PROJECT BUDGET means the budget prepared by the Borrower which sets
out the annual operating and financing budget and activities plan for
the next financial year;
PROJECT CASH FLOW in relation to a Calculation Period, means the
Revenue for the Calculation Period less the aggregate of the following
amounts actually paid by the Borrower during that Calculation Period
(or, where not actually paid at the date of any calculation, projected
or estimated by the Agent to be actually paid by the Borrower during
that Calculation Period):
(a) Operating Costs in accordance with the current Budget;
(b) any capital expenditure in respect of the Project as may be
approved by the Agent;
(c) any fees or Taxes paid to the Government of the United States of
America or the State of California or to a Governmental Agency in
respect of the Project (whether currently payable or levied or
imposed after the date of this agreement); and
(d) any payments to Hospah in respect of the Hospah Net Operating
Cash Flow Royalty Agreement;
PROJECT DOCUMENTS will be on terms acceptable to the Agent and include
the following:
(a) the Reclamation Costs Policy;
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(b) the Mineral Lease and Landfill Facilities Lease Agreement;
(c) the Asset Purchase Agreement;
(d) the Hospah Net Operating Cash Flow Royalty Agreement;
(e) the Hospah NSR Agreement;
(f) the Management Agreement;
(g) all instruments and indicia of title to the Mineral Rights and
all other documentation under which the Borrower or any
Transaction Party derives the right to explore or mine the
Project Area;
(h) any Sales Contract; and
(i) any other document executed from time to time by any person in
respect of the documents described in paragraphs (a) to (c)
inclusive or which is collateral, supplementary or related to
those documents;
QUARTER means the period of 3 months preceding a Quarterly Date;
QUARTERLY DATE means each of 31 January, 30 April, 31 July and 31
October in each year;
RECLAMATION COSTS POLICY means the Reclamation Costs Policy as
constituted by:
(a) the Reclamation Costs Policy dated on or about 5 November 2003
made between AISLIC, the Lender and the Borrower; and
(b) the Surety Side Agreement;
RECLAMATION PLAN means the mine reclamation and cost closure plan
dated February 2002 prepared by Newmont;
RECLAMATION WORK has the meaning given to that term in the Reclamation
Costs Policy;
REFERENCE BANK means the principal London offices of Barclays Bank
plc, JPMorgan Chase Bank and National Westminster Bank plc;
REVENUE for any Calculation Period, means the aggregate of the
following amounts actually received (or, where not received at any
date of calculation, projected or estimated by the Agent as likely to
be actually received) during that Calculation Period:
(a) Sales Proceeds;
(b) interest credited to any Transaction Account;
(c) liquidated damages and other amounts received under any Project
Document;
(d) moneys received under or in relation to any Hedging Contract; and
(e) any other money received in connection with the Project
(including, without limitation, proceeds of sales of assets and
insurance proceeds) and for any purpose whatsoever, which money
is not subject to any escrow or like conditions,
but excluding:
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(1) the proceeds of a Funding Portion and any financial
accommodation (other than a Hedging Contract) made available
by the Lender;
(2) the proceeds of any equity contribution or loan or other
financial accommodation provided to the Borrower by a
Guarantor or any other person; and
(3) the proceeds of any insurance in respect of liabilities to
third parties;
SALES CONTRACTS means any contract, agreement or arrangement for the
sale, transfer or other disposal, or any contract, agreement or
arrangement for any agency for sale, exchange, transfer or other
disposal, of Product;
SALES PROCEEDS means moneys received from the sale of Product
including, but not limited to, moneys received under any Sales
Contract;
SAME DAY FUNDS means a bank cheque or other immediately available
funds;
SECURED MONEY means all debts and monetary liabilities of the Borrower
and each other Transaction Party to a Finance Party under or in
relation to a Transaction Document in any capacity, irrespective of
whether the debts or monetary liabilities:
(a) are present or future;
(b) are actual, prospective, contingent or otherwise;
(c) are at any time ascertained or unascertained;
(d) are owed or incurred by or on account of the Borrower or another
Transaction Party alone or severally or jointly with another
person;
(e) are owed to or incurred for the account of a Finance Party alone,
or severally or jointly with another person;
(f) are owed to another person as agent (whether disclosed or not)
for or on behalf of a Finance Party;
(g) are owed or incurred as principal, interest, fees, charges,
taxes, duties or other imposts, damages (whether for breach of
contract or tort or incurred on another ground), losses, costs or
expenses, or on any other account;
(h) are owed to or incurred for the account of a Finance Party
directly or as a result of:
(1) the assignment or transfer to a Finance Party of a debt or
monetary liability of the Borrower (whether by way of
assignment, transfer or otherwise) or another Transaction
Party; or
(2) another dealing with a debt or monetary liability of that
kind;
(i) are owed to or incurred for the account of a Finance Party before
the date of this agreement, before the date of any assignment of
this agreement to a Finance Party by another person or otherwise;
or
(j) comprise a combination of the above;
SECURED PROPERTY means the property the subject of the Securities and
each Collateral Security;
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SECURITIES means the securities described in schedule 4;
SHARES means fully paid common shares in the capital of WGI;
SUBORDINATED GROUP means the WGI Group;
SUBORDINATED GROUP MEMBER means each member of the Subordinated Group;
SUBSIDIARY of an entity, means another entity which is a subsidiary of
the first within the meaning of any applicable law or is a subsidiary
of or otherwise controlled by the first within the meaning of
generally accepted accounting standards and principles as in effect
from time to time in the United States of America;
SURETY OBLIGATION means a guarantee, suretyship, letter of credit,
letter of comfort or another obligation (whatever called and of
whatever nature):
(a) to provide funds (whether by the advance or payment of money, the
purchase of or subscription for shares or other securities, the
purchase of assets or services, or otherwise) for the payment or
discharge of;
(b) to indemnify a person against the consequences of default in the
payment of; or
(c) to be responsible for,
a debt or monetary liability of another person or the assumption of
any responsibility or obligation in respect of the insolvency or the
financial condition of another person;
SURETY SIDE AGREEMENT means the agreement so entitled dated on or
about 5 November 2003 between AHA, the Lender and the Borrower;
TAX means:
(a) a tax, levy, charge, impost, duty, fee, deduction, compulsory
loan or withholding; or
(b) income, stamp or transaction duty, tax or charge,
which is assessed, levied, imposed or collected by, or payable to, a
Governmental Agency, except if imposed in respect of the overall net
income of a Finance Party and includes, but is not limited to,
interest, fines, penalties, charges, fees, value added tax or other
amounts imposed on or in respect of any of the above;
TRANSACTION ACCOUNTS means:
(a) the Project Account; and
(b) the Proceeds Account;
TRANSACTION DOCUMENTS means:
(a) this agreement;
(b) the Securities;
(c) the Hedging Contract;
(d) the Management Side Agreement;
(e) the Perfection Certificate;
(f) the Financing Statements; and
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(g) each document which the Borrower and the Agent agree is a
Transaction Document;
TRANSACTION PARTY means:
(a) the Borrower;
(b) each Guarantor;
(c) any other person the Borrower and the Agent agree is a
Transaction Party;
UNDRAWN COMMITMENT at any time, means the Commitment at that time less
the Principal Outstanding at that time;
UNITED STATES DOLLARS and US$ means the currency of the United States
of America;
US SECURITIES means:
(a) Security Agreement dated as of 5 November 2003 between the
Borrower, the Lender and the Agent;
(b) Mortgage, Security Agreement, Assignment and Financing Statement
dated as of 5 November 2003 between the Borrower, the Lender and
the Agent;
(c) Pledge Agreement dated as of 5 November 2003 between WGI, the
Lender and the Agent; and
(d) Deposit Account Control Agreement dated as of 5 November 2003
between the Lender, the Agent, the Borrower and Xxxxx Xxxxx
National Bank.
VALUE DATE means the date 2 Business Days before the first day of a
Funding Period;
WARRANTS means 780,000 warrants to purchase Shares to be issued to the
Agent or the Agent's nominee in accordance with clause 15.2;
WARRANT CERTIFICATE means the certificate in relation to the warrants
substantially in the form set out in schedule 5;
WGI means Western Goldfields, Inc., a company incorporated under the
laws of Idaho;
WGI GROUP means each of:
(a) the Borrower; and
(b) each Guarantor; and
WORKING CAPITAL AMOUNT means the amount of US$500,000 to be deposited
into the Project Account in accordance with clause 11.3.
1.2 INTERPRETATION
In this agreement, unless the context otherwise requires:
(a) clause headings do not affect the interpretation of this
agreement and a reference to clauses, paragraphs, schedules and
annexures is a reference to the clauses, paragraphs, schedules
and annexures in this agreement;
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(b) a reference to a statute, regulation, proclamation, ordinance or
by-law includes all statutes, regulations, proclamations,
ordinances or by-laws amending, consolidating or replacing it,
and a reference to a statute includes all regulations,
proclamations, ordinances and by-laws issued under that statute;
(c) a reference to any agreement, instrument or document includes a
reference to the agreement, instrument or document as amended,
varied, supplemented or replaced from time to time;
(d) words indicating the singular include the plural and vice versa,
expressions indicating natural persons include a company,
corporation or other body corporate, partnership, joint venture,
association and a Governmental Agency;
(e) a reference to a party includes that party's executors,
administrators, successors, substitutes and assigns, including a
person taking by way of novation;
(f) a reference to a month means a calendar month (whether or not
beginning on the first day of any month);
(g) a reference to an agreement other than this agreement includes an
undertaking, deed, agreement or legally enforceable arrangement
or understanding whether or not in writing;
(h) a reference to an asset includes all property of any nature,
including, but not limited to, a business, and all rights,
revenues and benefits;
(i) a reference to a document includes any agreement in writing, or
any certificate, notice, instrument or other document of any
kind;
(j) other parts of speech and grammatical forms of a word or phrase
defined in this agreement have a corresponding meaning;
(k) where the day on or by which a matter or thing is to be done is
not a Business Day, that matter or thing must be done on or by
the preceding Business Day; and
(l) a reference to liquidation includes official management,
appointment of an administrator, compromise, arrangement, merger,
amalgamation, reconstruction, winding-up, dissolution, assignment
for the benefit of creditors, scheme, composition or arrangement
with creditors, insolvency, bankruptcy, or any similar procedure.
1.3 ACCOUNTING PRINCIPLES
In this agreement, unless the context otherwise requires:
(a) all computations and determinations as to financial matters, and
all financial statements to be delivered under this agreement,
must be made or prepared in accordance with generally accepted
accounting practices of the jurisdiction applicable to the
Borrower and to each Guarantor respectively and principles for
the time being consistently applied; and
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(b) all accounting terms used in this agreement have the meanings
respectively ascribed to those terms by those practices and
principles for the time being.
1.4 LIABILITY
The obligations of the Borrower and each Guarantor under this
agreement bind each of them jointly and severally.
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2 COMMITMENT, PURPOSE AND AVAILABILITY OF THE FACILITY
2.1 PROVISION OF COMMITMENT
Subject to this agreement, the Lender will make the Commitment
available to the Borrower during the Availability Period subject to
the following terms and conditions:
(a) the Borrower may at any time during the Availability Period give
a Funding Notice in accordance with clause 4.1 to the Agent in
respect of the Commitment; and
(b) the Funding Notice given by the Borrower in respect of the
Commitment must request all of the Commitment.
2.2 PURPOSE
(a) The Borrower must use the proceeds of all Funding Portions under
the Facility to fund part of its acquisition of the Project,
including to establish the Commutation Account under the
Reclamation Costs Policy.
(b) All Funding Portions drawn by the Borrower for the purposes
referred to in clause 2.2(a) will be transmitted by the Agent in
United States Dollars to an account at a financial institution
nominated by the Borrower.
(c) The Finance Parties have no responsibility in respect of the
application of the proceeds of a Funding Portion.
2.3 CANCELLATION AT END OF AVAILABILITY PERIOD
The Undrawn Commitment is cancelled at 5.00 pm (London time) on the
last day of the Availability Period.
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3 CONDITIONS PRECEDENT
3.1 FUNDING PORTION
The Lender is not obliged to provide the Commitment until the Agent
has received all of the following in form and of substance
satisfactory to the Agent:
(a) ARTICLES OF INCORPORATION: a certified copy of the articles of
incorporation or other constituent documents of the Borrower and
each Guarantor;
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(b) TRANSACTION DOCUMENTS: an original copy of each of the
Transaction Documents, executed, and, where applicable, stamped
and in registrable form together with all fully executed
documents and other things necessary to carry out registration of
them;
(c) PROJECT DOCUMENTS: a certified copy of each of the Project
Documents executed by all parties to them and, where applicable,
stamped, each on terms acceptable to the Agent;
(d) CORPORATE AUTHORISATION: a certified copy of a resolution of the
directors or other Authorised Officers of the Borrower and each
Guarantor approving the provision of the Facility and the
transactions contemplated by the Transaction Documents,
authorising execution by the Borrower and each Guarantor of the
Transaction Documents to which each is a party, and authorising a
person or persons (being Authorised Officers) to sign notices,
certificates or other documents in connection with the
Transaction Documents on behalf of the Borrower;
(e) AUTHORISED SIGNATORIES: a certified copy of the signatures of all
Authorised Officers of the Borrower who are authorised to sign
notices, certificates or other documents in connection with the
Transaction Documents on its behalf;
(f) CERTIFICATE REGARDING MATERIAL ADVERSE EFFECT: a certificate
stating that since the end of the accounting period for the
accounts referred to in clause 3.1(p), no event has occurred (and
is continuing) which has, or may have, a Material Adverse Effect;
(g) MINERAL RIGHTS: evidence that following completion under the
Asset Purchase Agreement:
(1) the Borrower will have good title to the Mineral Rights
necessary for the operation of the Project and the Mineral
Rights held by the Borrower will be valid and in good
standing; and
(2) the Mineral Rights held by the Borrower give the Borrower
all material rights required to enable the Borrower to
operate the Project as contemplated by the Project Budget;
(h) INSURANCE: evidence of compliance with clauses 10.3(i);
(i) CASHFLOW MODEL: the Cashflow Model;
(j) BUDGETS: the Project Budget and the Corporate Budget;
(k) FINANCING PLAN: the Financing Plan;
(l) EQUITY FUNDING AMOUNT: evidence that the Equity Funding Amount
has been expended, or will be expended at the time of completion
under the Asset Purchase Agreement, in accordance with the
Financing Plan on the acquisition costs relating to the Project;
(m) HEDGING PROGRAM: evidence that the Borrower and the Agent have
agreed the terms of a gold hedging program between the Borrower
and the Lender, and have entered into any Hedging Contracts
required by that program;
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(n) PROJECT MANAGEMENT: evidence that the Borrower has entered into
the Management Agreement on terms which are satisfactory to the
Agent;
(o) DUE DILIGENCE: reports in respect of the technical and legal due
diligence in respect of the Project to the satisfaction of the
Agent;
(p) ACCOUNTS: a certified copy of each of the following:
(1) WGI's audited balance sheet as at 31 December 2002;
(2) WGI's audited profit and loss statement for the period ended
31 December 2002; and
(3) the Borrower's and WGI's management accounts as at 30
September 2003;
(q) SEARCHES AND ENQUIRIES: results of searches, enquiries and
requisitions concerning:
(1) the Borrower and each Guarantor and their capacity to enter
into and perform their obligations under the Transaction
Documents to which each is a party;
(2) the assets of the Borrower and each Guarantor;
(r) TITLE OPINION: title opinion of Xxxxxx & Xxxxxxxxx in relation to
the mineral rights titles for existing heaps and processing
facilities located on the Project Area;
(s) LEGAL OPINIONS:
(1) legal opinion of Jenkens & Xxxxxxxxx LLP as special counsel
for the Borrower; and
(2) legal opinion of Xxxxxx Xxxxxxx as counsel for the
Transaction Parties;
(t) ESTOPPEL CERTIFICATE: a certified copy of an Estoppel Certificate
of Newmont in relation to the Mineral Lease and Landfill
Facilities Lease Agreement;
and
(u) AUTHORISATIONS: evidence that all Authorisations necessary for
the Project and the transactions contemplated by the Documents
have been obtained, including any necessary approval of the
Securities by the relevant Governmental Agencies;
(v) FEES: evidence that all fees have been paid, including fees for
legal counsel;
(w) ARRANGEMENT FEE: the arrangement fee described in clause 15.1;
(x) WARRANTS: the warrants described in clause 15.2 have been issued;
(y) ACCOUNTS: evidence that the Project Account and the Proceeds
Account have been established;
(z) ENVIRONMENTAL BONDS: evidence that the Borrower has lodged
environmental bonds at any relevant Governmental Agency in
relation to
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the Project in accordance with the requirements of any applicable
law relating to the Project and the Project Area;
(aa) OTHER APPROVALS: evidence that all other approvals necessary for
the transactions contemplated by the Transaction Documents have
been obtained;
(bb) WORKING CAPITAL AMOUNT: evidence that the Working Capital Amount
has been paid into the Project Account; and
(cc) OTHER MATTERS: any other certificates, Authorisations, documents,
matters or things which the Agent, in its discretion, requires.
3.2 ALL FUNDING PORTIONS
The Lender is not obliged to provide any Funding Portion until the
following conditions are fulfilled to the complete satisfaction of the
Agent:
(a) FUNDING NOTICE: the Borrower has delivered a Funding Notice to
the Agent in respect of the Funding Portion in accordance with
clause 4;
(b) FUNDING DATE: the Funding Date for the Funding Portion is a
Business Day within the Availability Period;
(c) COMMITMENT: the Commitment is not, and will not be, exceeded if
that Funding Portion is provided;
(d) NO DEFAULT: no Default or Potential Default has occurred and is
continuing and no Default or Potential Default will arise if the
proposed Funding Portion is provided; and
(e) NO MATERIAL ADVERSE EFFECT: since the end of the accounting
period for the accounts referred to in clause 3.1(p), no event
has occurred which has, or may have, a Material Adverse Effect in
the opinion of the Agent.
3.3 CERTIFIED COPIES
Where a certified copy of a document is to be given to the Agent under
clause 3.1 or clause 3.2, an Authorised Officer of the relevant
Transaction Party must certify the copy to be a true, complete and
up-to-date copy of the original document as at a date acceptable to
the Agent.
3.4 WAIVER OF CONDITIONS PRECEDENT
A requirement in this clause 3 is for the benefit only of the Finance
Parties and may only be waived by the Agent on the instructions of the
Lender.
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4 FUNDING PROCEDURES
4.1 DELIVERY OF FUNDING NOTICE
(a) If the Borrower requires a Funding Portion, it must deliver to
the Agent a duly completed Funding Notice which must be signed by
an Authorised Officer of the Borrower and received by the Agent
not later than 12.00
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noon (London time) 3 Business Days (or any lesser period which
the Agent may agree) before the proposed Funding Date.
(b) Promptly after receipt of a Funding Notice, the Agent will notify
the Lender of its contents.
(c) If a Funding Notice is received by the Agent after 4.00 pm
(London time) on any Business Day the Agent is not obliged to
notify the Lender under clause 4.1(b) until the next Business
Day.
(d) A Funding Notice is irrevocable.
4.2 DELIVERY BY FACSIMILE
(a) A Funding Notice may be delivered to the Agent by facsimile, in
which case the Borrower will deliver the original of that Funding
Notice to the Agent by posting it within 1 Business Day of the
date of the facsimile transmission.
(b) The Borrower acknowledges that the Agent is not:
(1) bound to enquire whether the facsimile transmission has been
inaccurately transmitted or received, or, if on its face the
facsimile transmission appears to have been signed by an
Authorised Officer of the Borrower or any other person
authorised by the Borrower in writing to sign notices on its
behalf, whether the facsimile transmission has been sent by
an unauthorised person; or
(2) liable for loss or expense that may result from falsity,
inaccuracy, insufficiency, illegality or forgery of a
Funding Notice sent by facsimile where on its face the
facsimile transmission appears to have been signed by an
Authorised Officer of the Borrower or any other person
authorised by the Borrower in writing to sign notices on its
behalf.
4.3 PROVISION OF FUNDING PORTIONS
(a) If the Borrower gives a Funding Notice for a Funding Portion in
accordance with this agreement, the Lender must, subject to the
provisions of the Transaction Documents, give the Agent the
Funding Portion in Same Day Funds in United States Dollars not
later than 12 noon (London time) on the specified Funding Date
and in accordance with that Funding Notice.
(b) On receipt of the funds paid to it by the Lender under clause
4.3(a), the Agent will pay those funds in Same Day Funds in
United States Dollars to the Borrower or as directed by the
Borrower in the relevant Funding Notice.
4.4 SELECTION OF FUNDING PERIODS
(a) Subject to the subsequent provisions of this clause, a Funding
Period must be of 90 or 180 days or any other period that the
Agent agrees with the Borrower.
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(b) The initial Funding Period for a Funding Portion is the period
specified in the Funding Notice. Each subsequent Funding Period
is a period notified by the Borrower to the Agent at least 3
Business Days before the last day of the current Funding Period.
If the Borrower does not give notice the subsequent Funding
Period is to be of the same duration as the Funding Period which
immediately precedes it.
(c) If a Funding Period ends on a day which is not a Business Day, it
is regarded as ending on the next Business Day in the same month
or, if none, the preceding Business Day.
(d) A Funding Period for a Funding Portion commences either on the
first Funding Date for that Funding Portion or on the last day of
the immediately preceding Funding Period for that Funding
Portion.
(e) Each Funding Period prior to the end of the Availability Period
which commences prior to a Quarterly Date and would otherwise end
after that Quarterly Date, ends on that Quarterly Date.
(f) No Funding Period for a Funding Portion may end after the Final
Repayment Date.
(g) If the Borrower fails to select a Funding Period, the Funding
Period will be a period selected by the Agent.
(h) If the Borrower selects a Funding Period in a manner which does
not comply with this clause 4.4, the Agent may select the Funding
Period.
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5 BASE INTEREST
5.1 PAYMENT OF BASE INTEREST
(a) The Borrower must pay interest on the principal amount of each
Funding Portion at the Funding Rate for each Funding Period.
(b) The Borrower must pay accrued interest with respect to a Funding
Portion to the Agent for the account of the Lender in arrears on
each Quarterly Date and on the Final Repayment Date with the
first payment to be made on 31 January 2004.
5.2 GENERAL PROVISIONS IN RELATION TO INTEREST
Interest is calculated on daily balances on the basis of a 360 day
year and for the actual number of days elapsed from and including the
first day of each Funding Period to, but excluding, the last day of
the Funding Period.
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6 VARIABLE INTEREST
6.1 DEFINITIONS
In this clause:
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(a) IRR means the Lender's internal rate of return with respect to
the Facility calculated by the Agent in accordance with clause
6.3; and
(b) VARIABLE INTEREST RATE REDUCTION DATE means the last date of the
Quarter in relation to which the Agent first determines under
clause 6.3 that the IRR has equalled or exceeded 20%.
6.2 PAYMENT OF VARIABLE INTEREST
(a) The Borrower must pay variable interest calculated at the rate
provided in clause 6.2(b) on the Adjusted Excess Cash Flow for
each Quarter.
(b) The Borrower must pay variable interest:
(1) at the rate of 20% to and including the Variable Interest
Rate Reduction Date; and then
(2) at the reduced rate of 10% from the Variable Interest Rate
Reduction Date until economic exhaustion of gold production
from the ore currently located on the heap xxxxx facilities
on the Project Area.
(c) Variable interest for a Quarter is to be paid at the same time as
the delivery of the accounts and reports under clause 6.3 in
relation to that Quarter, with the first payment to be paid at
the time of the delivery of that information at the end of the
Quarter ended 31 January 2004.
(d) The obligation to pay variable interest continues after the
Principal Outstanding has been repaid in full.
6.3 DELIVERY OF INFORMATION
(a) No later than 21 days after the end of each Quarter the Borrower
must provide the Agent with:
(1) its calculation of the variable interest payment for that
Quarter;
(2) details of the manner in which the Borrower has calculated
that amount; and
(3) all documentation and information required by the Agent to
enable the Agent to calculate and verify that amount.
(b) To the extent that the reports provided by the Borrower under
clauses 10.5(c), 10.5(f) and 10.5(g) provide the Agent with the
information required by clause 6.3(a)(3), then the provision of
that information will be adequate compliance with this clause
6.3.
6.4 DETERMINATION OF IRR
(a) After each Quarterly Date, the Agent will determine the IRR as at
the relevant Quarterly Date with respect to the sum of
US$6,000,000 made available under the Facility. The Agent will
determine the IRR in accordance with the Agent's usual practices
for the calculation of an internal rate of return and having
regard to:
(1) repayment and prepayment of the Principal Outstanding under
clauses 7.1 and 7.4;
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(2) interest paid on the Principal Outstanding under clause 5.1;
(3) mandatory prepayments paid under clause 7.2; and
(4) variable interest payments made under clause 6.2,
which have been paid with respect to the Facility on or before
that Quarterly Date.
(b) For the avoidance of doubt when calculating the IRR, no regard
will be had to:
(1) fees received by the Agent or the Lender, including without
limitation, the arrangement fee in clause 15.1;
(2) the Warrants issued under clause 15.2 and any amount
received by the Agent or the Lender in connection with the
Warrants;
(3) any indemnity payments received by the Agent or the Lender
under any of the Transaction Documents; and
(4) any costs, expenses, reimbursible amounts or other amounts
received by the Agent or the Lender.
(c) The Agent will notify the Borrower:
(1) after each Quarterly Date, the IRR as at that Quarterly
Date; and
(2) when the Variable Interest Rate Reduction Date occurs.
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7 REPAYMENT AND PREPAYMENT
7.1 REPAYMENT
(a) The Borrower must repay to the Agent on account of the Lender the
Principal Outstanding in accordance with this clause 7.1.
(b) On each Quarterly Date during the period commencing on 31 January
2004 and ending on the Final Repayment Date, the Borrower must
pay to the Agent the Base Repayment Amount in reduction of the
Principal Outstanding.
(c) All money in the Proceeds Account as at a Quarterly Date which is
available for payment of the Principal Outstanding as
contemplated under clause 11.4(a)(6) must be used to pay the Base
Repayment Amount.
(d) If the money in the Proceeds Account is insufficient to pay the
Base Repayment Amount, then the Borrower must pay the shortfall
from the Project Account.
(e) If there are insufficient funds in the Project Account to pay the
shortfall, then any part of the Base Repayment Amount which
remains unpaid must be paid on the next Quarterly Date.
(f) If the Borrower defers payment of part of a Base Repayment Amount
to the next Quarterly Date under clause 7.1(e), then the Borrower
must on that next Quarterly Date pay to the Agent under clauses
7.1(b), 7.1(c) and 7.1(d) in reduction of the Principal
Outstanding an amount not less than
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the Base Repayment Amount. For the avoidance of doubt, if the
Borrower fails to pay not less than the Base Repayment Amount
from funds available in the Proceeds Account and the Project
Account on two consecutive Quarterly Dates, then that will be a
Default under this agreement.
7.2 MANDATORY PREPAYMENT
(a) The Borrower must pay 50% of Excess Cash Flow for each Quarter as
a prepayment of the Principal Outstanding.
(b) The prepayment is to be paid at the same time as the delivery of
the accounts and reports under clauses 10.5(c), 10.5(f) and
10.5(g) in relation to that Quarter, with the first payment to be
paid at the time of the delivery of those accounts at the end of
the Quarter ended 31 January 2004.
(c) All mandatory prepayments must be applied in or towards the
Principal Outstanding in inverse order of maturity.
7.3 REPAYMENT OF OTHER SECURED MONEY
(a) The Borrower must repay the balance of the Secured Money in full
to the Agent for the account of the Finance Party entitled to it
on the dates provided in the Transaction Documents, or if no date
is specified then on demand.
(b) All unpaid Secured Money must in all events be paid before the
Final Repayment Date or on any other date on which the Principal
Outstanding is or is required to be repaid in full.
7.4 PREPAYMENT
(a) The Borrower may prepay all or part of the Principal Outstanding
on any Quarterly Date during the period commencing on 31 January
2004 and ending on the Final Repayment Date by giving the Agent
at least 5 Business Days' prior written notice, but a partial
prepayment may only be made in an amount which is not less than
US$200,000 and is an integral multiple of US$100,000.
(b) A notice given under clause 7.4(a) is irrevocable.
(c) On the prepayment date specified in the notice given under clause
7.4(a) the Borrower must prepay the full amount of the Principal
Outstanding specified in the notice and all unpaid interest and
fees accrued to the prepayment date in respect of the prepaid
amount.
(d) The amount of Principal Outstanding prepaid under this clause may
not be redrawn.
(e) If the Agent elects to cancel all or part of the Principal
Outstanding as contemplated by clause 1.1 of the Warrant, the
amount of the Principal Outstanding which is cancelled will be
taken to be a prepayment under this agreement.
(f) All prepayments must be in applied in or towards the Principal
Outstanding in inverse order of maturity.
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8 PAYMENTS
8.1 MANNER OF PAYMENT
All payments by the Borrower to the Agent under the Transaction
Documents must be made:
(a) in Same Day Funds in United States Dollars to the account
specified by the Agent or in any other manner the Agent directs
from time to time; and
(b) not later than 11.00 am at the local time of the place where the
account specified by the Agent is located, on the due date.
8.2 PAYMENTS TO BE MADE WITHOUT SET-OFF OR DEDUCTION
All payments which a Transaction Party is required to make under a
Transaction Document must be:
(a) without set-off, counterclaim or condition; and
(b) without deduction or withholding for present or future Tax unless
the Transaction Party is compelled by law to deduct or withhold
the Tax, in which event the Transaction Party will pay to the
Agent additional amounts necessary to enable the Agent to
receive, after deduction and withholding for the Tax, a net
amount equal to the full amount which would otherwise have been
payable had no deduction or withholding been required to be made.
8.3 AMOUNTS PAYABLE ON DEMAND
If an amount payable by a Transaction Party under a Transaction
Document is not expressed to be payable on a specified date, that
amount is payable on demand by the Agent.
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9 REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES
The Borrower and each Guarantor represents and warrants to and for the
benefit of each Finance Party that:
(a) INCORPORATION: it is duly incorporated, registered and validly
existing under the laws of the State of Nevada (in the case of
the Borrower) and the State of Idaho (in the case of the
Guarantors) and it has done everything necessary to keep its
corporate existence in good standing;
(b) CORPORATE POWER: it has the corporate power to own its assets and
to carry on its business as it is now being conducted;
(c) CORPORATE AUTHORISATIONS: it has full power and authority to
enter into the Documents to which it is a party and to perform
its obligations under them;
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(d) CORPORATE AUTHORISATIONS: it has taken all necessary action to
authorise the execution, delivery and performance of the
Documents to which it is a party in accordance with their terms;
(e) BINDING OBLIGATIONS: the Documents to which it is a party
constitute its legal, valid and binding obligations and, subject
to any necessary stamping and registration, are enforceable in
accordance with their terms;
(f) TRANSACTIONS PERMITTED: the execution, delivery and performance
by it of the Documents to which it is a party do not and will not
violate, breach, or result in a contravention of:
(1) any law, regulation, authorisation, ruling, consent,
judgment, order or decree of a Governmental Agency;
(2) its articles of incorporation as amended, its by-laws as
amended or any other constituent documents; or
(3) an Encumbrance or document which is binding on it or on its
assets;
(g) AUTHORISATIONS: any Authorisations required in connection with
the execution and performance by it and the validity and the
enforceability against it of each of the Documents to which it is
a party, and its performance of the transactions contemplated by
those Documents, have been obtained and are in full force and
effect and there has been no default by it in the performance of
any of the terms and conditions of those Authorisations;
(h) NO DEFAULT OR BREACH:
(1) it is not in breach in a material respect under an agreement
or document binding on it;
(2) it is not in default in the payment of a material sum, or in
the compliance with a material obligation in respect of
Financial Indebtedness or a Surety Obligation;
(i) NO LITIGATION: no litigation, arbitration, dispute or
administrative proceeding has been commenced, is pending or to
its knowledge is threatened, which if adversely determined would,
or may have, a Material Adverse Effect;
(j) ACCOUNTS: its most recent accounts delivered to the Agent:
(1) were prepared in accordance with the applicable accounting
standards; and
(2) contain all information necessary to give a true and fair
view of its financial condition and state of affairs at the
date to which the accounts relate and the results of its
operations for the accounting period to which the accounts
relate;
(k) NO CHANGE IN AFFAIRS: there has been no change in its state of
affairs since the end of the accounting period to which the
accounts referred to in clause 9.1(j) relate which has, or may
have, a Material Adverse Effect;
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(l) NO DEFAULT: no event has occurred which constitutes a Default or
a Potential Default;
(m) DISCLOSURE:
(1) all information provided to a Finance Party by or on behalf
of it in respect of the Documents, the transactions
contemplated by them, the Transaction Parties and the
assets, business and affairs of the Transaction Parties, is
true and correct as at the time it is given in all material
respects and is not, whether by omission of information or
otherwise, misleading in a material respect;
(2) it has fully disclosed in writing to the Finance Parties all
facts relating to it, the Documents, the transactions
contemplated by them, the Transaction Parties, the assets,
business and affairs of the Transaction Parties and any
thing in connection with them which are material to the
assessment of the nature and amount of the risk undertaken
by the Finance Parties in entering into the Transaction
Documents, the transactions contemplated by them, the
Transaction Parties and the assets and business affairs of
the Transaction Parties;
(n) LAWS: it has complied in all material respects with all laws,
statutes and regulations which are applicable to it and the
business carried on by it;
(o) NO ENCUMBRANCE: there is no Encumbrance over the Secured Property
other than an Encumbrance created by a Transaction Document or a
Permitted Encumbrance;
(p) NO IMMUNITY: it does not, nor do its assets, enjoy immunity from
suit or execution;
(q) NOT A TRUSTEE: it is not a trustee of a trust or settlement;
(r) SOLVENCY: it is solvent and is able to pay its debts as and when
they become due;
(s) COMMERCIAL BENEFIT: the entry into, and performance by it of its
obligations under, the Transaction Documents to which it is a
party is for its commercial benefit and is in its commercial
interests;
(t) ASSETS: it is the sole beneficial owner of all assets included in
the accounts referred to in clause 9.1(j) free of all
Encumbrances other than the Permitted Encumbrances;
(u) TAXES: it has complied with all tax laws in all applicable
jurisdictions and it has paid all Taxes due and payable by it,
and no claims are being asserted against it in respect of any
Taxes;
(v) SHARES: the entire share capital of the Borrower consists of one
class of shares, denominated common stock, and WGI is the legal
owner of all issued and outstanding shares, free and clear of all
Encumbrances;
(w) MINERAL RIGHTS: at and from the time of the provision of the
Commitment under this agreement:
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(1) the Mineral Rights are legal, valid and continuing, and
confer on the Borrower all material rights required to
enable it to operate the Project in accordance with the
Project Budget; and
(2) the Borrower has in all material respects satisfied all of
its obligations under the Mineral Rights to the extent
required to preserve the Mineral Rights to date;
(x) PROJECT AUTHORISATIONS: the Borrower has obtained all material
Authorisations which are necessary for the operation of the
Project;
(y) PROJECT OPERATION: there has been no change in the conduct or
operation of the Project which has, or may have, a Material
Adverse Effect;
(z) PROJECT DOCUMENTS: no event has occurred or condition exists
which would permit the cancellation, termination, forfeiture or
suspension of a Project Document nor is any party to a Project
Document in default under any term of a Project Document;
(aa) ENVIRONMENTAL LIABILITIES: there are no Environmental Liabilities
affecting the Project or the Project Area which might reasonably
be expected to have a Material Adverse Effect and there are no
factors affecting the Project or the Project Area which are
likely to give rise to any Environmental Liability;
(bb) ENVIRONMENTAL APPROVALS: the operation of the Project complies
with all applicable Environmental Laws and Environmental
Approvals; and
(cc) LAND CLAIMS: no caveats, land claims or other claims have been
made in respect of the Project or the Project Area.
9.2 SURVIVAL AND REPETITION OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in, or given under, this agreement:
(a) survive the execution of each Transaction Document; and
(b) are repeated on each Quarterly Date, on the date a Funding Notice
is given and on each Funding Date with reference to the facts and
circumstances applicable from time to time.
9.3 RELIANCE BY THE FINANCE PARTIES
The Borrower and each Guarantor acknowledge that each Finance Party
has entered into each Transaction Document to which it is a party in
reliance on the representations and warranties given under this
agreement, including, but not limited to, clause 9.1.
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10 COVENANTS
10.1 TERMS OF COVENANTS
The Borrower and each Guarantor must, while any of the Secured Money
remains outstanding or any Commitment is available, at all times
comply with, or cause to be complied with, the undertakings in this
clause 10.
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10.2 GENERAL COVENANTS
(a) NOTICES TO THE AGENT: The Borrower and each Guarantor must
promptly notify the Agent as soon as it becomes aware of any of
the following:
(1) a Default or a Potential Default occurring, details of that
Default or Potential Default (as required by the Agent) and
any action being taken to remedy that Default or Potential
Default;
(2) any representation, warranty, action or statement made, or
taken to be made, by it is or becomes false, misleading or
incorrect;
(3) any litigation, arbitration or administrative proceeding in
respect of it or its assets being commenced or threatened;
(4) any Surety Obligations enforceable against a Transaction
Party; and
(5) a change in the persons authorised by it to sign notices,
certificates or other documents in connection with the
Facility, giving specimen signatures of any new authorised
person, and giving satisfactory evidence, where requested by
the Agent, of the authority of that person.
(b) PROPER ACCOUNTS: The Borrower and each Guarantor must keep proper
books of account which give a true and fair view of its financial
condition and its state of affairs, and ensure that the accounts
provided by it under clause 10.5 are prepared in accordance with
the requirements of the applicable accounting standards and
practices for financial statements for a financial year.
(c) CORPORATE EXISTENCE: The Borrower and each Guarantor must ensure
that it does all things necessary to maintain its corporate
existence in good standing and not transfer its jurisdiction of
incorporation or enter into any merger, amalgamation,
consolidation or reconstruction without the prior consent of the
Agent.
(d) REGISTRATION: Neither the Borrower nor a Guarantor may transfer
its place of registration without the prior written consent of
the Agent.
(e) CONDUCT OF BUSINESS: The Borrower and each Guarantor must carry
on and conduct its business in a proper and efficient manner in
accordance with all applicable laws.
(f) COMPLIANCE WITH LAWS: The Borrower and each Guarantor must duly
and punctually comply with all laws, statutes and regulations
which are applicable to it and the business carried on by it.
(g) PAY TAXES AND OUTGOINGS: The Borrower and each Guarantor must pay
when due all Taxes and outgoings payable by it and at the request
of the Agent, deliver to the Agent copies of all receipts or
documents evidencing payment.
(h) MAINTAIN AUTHORISATIONS: The Borrower and each Guarantor must
obtain, renew prior to expiry and maintain in full force and
effect all Authorisations, approvals and consents necessary for:
(1) the carrying on of its business and operations generally;
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(2) the entry into, and performance of its obligations under,
the Transaction Documents.
(i) PAY DEBTS: The Borrower and each Guarantor must pay or cause to
be paid its financial obligations, including, without limitation,
all rates, rents and other outgoings payable by it as and when
they respectively become due and payable.
(j) PERFECTION OF SECURITIES: The Borrower and each Guarantor must
create, perfect and maintain in force the Securities to which it
is a party and it must do all things necessary to ensure that the
Securities to which it is a party are effective and enforceable
in the jurisdiction in which they are registered, or are to be
registered.
(k) COMPLIANCE WITH TRANSACTION DOCUMENTS: The Borrower and each
Guarantor must duly and punctually comply with each of its
obligations under or in respect of the Transaction Documents to
which it is a party;
(l) CORPORATE BUDGET: The Borrower and each Guarantor must ensure
that its businesses are operated in accordance with the Corporate
Budget approved by the Agent from time to time.
(m) ARM'S LENGTH TRANSACTIONS: The Borrower and each Guarantor must
ensure that all transactions and arrangements of any kind
continuing in effect, or entered into between them or between
them and any other person are conducted on terms which are no
less favourable than they would have been if conducted on arm's
length terms in the ordinary course of business.
(n) NO PARTNERSHIP OR JOINT VENTURE: Neither the Borrower nor any
Guarantor may enter into any profit sharing arrangement in
relation to its property or any partnership or joint venture with
any other person, other than Newmont or a Subsidiary of Newmont
under the Hospah Net Operating Cash Flow Royalty Agreement or the
Hospah NSR Agreement, without the prior written consent of the
Agent.
(o) NO DISPOSAL OF SHARES:
(1) WGI must not Dispose of any of its shares in the Borrower.
(2) The Borrower must not issue any shares of any class to any
person other than WGI and the Borrower must give to the
Agent, before it issues any shares to WGI, a written notice
containing details of the number and type of shares it
proposes to issue.
(p) NO CHANGE TO NATURE OF BUSINESS: The Borrower and each Guarantor
must not change the nature of its business or operations, and it
must not conduct any business activities other than business
activities which are described in the Budget as approved by the
Agent from time to time.
(q) NO NEW SUBSIDIARIES: Neither the Borrower nor a Guarantor may
incorporate any new Subsidiary without the prior written consent
of the Agent, which consent will not be unreasonably withheld.
(r) LAWS: The Borrower and each Guarantor must duly and punctually
comply with all laws, statutes and regulations which are
applicable to it and the businesses carried on by it.
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(s) WARRANTS:
(1) WGI must use its best efforts to file a registration
statement on Form S-1, Form SB-2 or other available form in
relation to all securities which are issuable on exercise of
the Warrant (REGISTRATION STATEMENT) within 60 days from the
date the Lender has provided the Commitment.
(2) WGI must use its best efforts to cause the Registration
Statement to become effective within 6 months from the date
on which it was filed.
(3) A registration statement filed by WGI may deal solely with
the securities which are issuable on exercise of the Warrant
or may include those securities in any other registration
statement relating to the registration of other securities
of WGI.
(4) WGI must register any securities under any applicable
securities or "blue sky" laws of each State of the United
States which the Agent reasonably requests.
10.3 PROJECT COVENANTS
(a) NOTICES TO THE AGENT: The Borrower and each Guarantor must notify
the Agent as soon as possible after it becomes aware of:
(1) any pending or threatened dispute in relation to the Project
or any Project Documents, including particulars of the
dispute and the action (if any) proposed to be taken in
respect of it;
(2) any material notices given or received by the Borrower or a
Guarantor under any Project Documents;
(3) a Force Majeure Event affecting the Project;
(4) a decision to accelerate materially or expand the level of
production from the Project;
(5) a proposed material change in processing methods in respect
of the operation of the Project;
(6) a proposed material change in the operation of the Project;
(7) a change in the proposed arrangements, terms or conditions
for the sale of Product;
(8) any dispute or default by any party under or in respect of
any Project Document; and
(9) any matter which it may be anticipated may, or will have, a
Material Adverse Effect.
(b) AUTHORISATIONS: The Borrower and each Guarantor must obtain,
maintain and observe all necessary Authorisations, approvals and
consents necessary for:
(1) it to enter into, and perform its obligations under, the
Documents;
(2) the construction, development and operation of the Project
(including, but not limited to, Environmental Approvals);
and
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(3) the sale of Product.
(c) DISPOSAL OF PROJECT ASSETS: The Borrower must not Dispose of any
of its interests in the Project Assets, other than:
(1) Product;
(2) plant or equipment which is worn out or obsolete; or
(3) with the prior written consent of the Agent.
(d) COMPLIANCE WITH PROJECT DOCUMENTS: The Borrower and each
Guarantor must ensure at all times that:
(1) it duly and punctually complies with each of its obligations
under or in respect of the Project Documents to which it is
a party; and
(2) it must not waive any of its rights under, agree to any
variation or termination of, terminate or take any action
which affects the ability of a Finance Party to enforce, a
Project Document, without the Agent's prior written consent.
(e) INSPECTION OF PROJECT:
(1) The Borrower and each Guarantor must permit, and the
Borrower must procure that the manager under the Management
Agreement permits, representatives of the Agent to:
(A) visit the Project site and any of the premises where
the business of the Borrower is conducted;
(B) inspect all facilities, plant and equipment comprised
in the Project and the Project Assets;
(C) have access to the Borrower's books of account and
records; and
(D) have access to those employees, agents and contractors
of the Borrower who have or may have knowledge of
matters with respect to which the Agent seeks
information.
(2) The Borrower must provide the access described in clause
10.3(e)(1) on request from the Agent. That request will be
made with reasonable prior notice to the Borrower except if
a Default or Potential Default has occurred and is
continuing or if special circumstances (in the opinion of
the Agent) require that access.
(3) The Agent must pay all costs and expenses in respect of the
Borrower providing the access described in clause 10.3(e)(1)
if the access is requested by the Agent or is otherwise
provided by the Borrower to the Agent in the Agent's
discretion.
(4) The Borrower must pay all costs and expenses in respect of
the Borrower providing the access described in clause
10.3(e)(1) if the access is requested by the Borrower or any
Governmental Agency or is otherwise provided by the Borrower
to the Agent in the Borrower's discretion.
(f) ENVIRONMENTAL MATTERS: The Borrower and each Guarantor must:
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(1) comply with all Environmental Laws with respect to the
Project;
(2) obtain and comply with all Environmental Approvals required
in connection with the operation of the Project;
(3) comply with international mining industry best practice
standards in relation to the environment, public health and
workers safety; and
(4) immediately notify the Agent of all claims, complaints or
notices concerning its compliance with Environmental Laws,
Environmental Approvals and the standards described in
clause 10.3(f)(3);
(g) OPERATION OF PROJECT: The Borrower and each Guarantor must ensure
that:
(1) the Project is diligently equipped, operated and maintained
in accordance with the Project Budget and all applicable
laws, Authorisations and Good Industry Practice; and
(2) all its material assets are maintained in good and efficient
operating condition.
(h) MINERAL RIGHTS: The Borrower and each Guarantor must take, or
procure to be taken, all action necessary to ensure that all
conditions and requirements relating to the Mineral Rights are
observed or performed in all material respects and that the
Mineral Rights remain valid and are in full force and effect.
(i) INSURANCE: The Borrower and each Guarantor must:
(1) insure all its assets of an insurable nature (including, but
not limited to, the Project Assets) and keep them insured
with a reputable, responsible and solvent insurer on terms,
against risks in accordance with Good Industry Practice or
any higher standard which the Agent may request;
(2) take out and maintain construction, accident, consequential
loss, force majeure, business interruption and public
liability insurances with respect to its assets with a
reputable, responsible and solvent insurer in accordance
with Good Industry Practice or any higher standard which the
Agent may request;
(3) not do anything or omit anything or permit anything to be
done which may adversely affect the Reclamation Costs Policy
or any other environmental risk insurance policy;
(4) ensure that each insurance policy has noted on it the name
of each Finance Party as an interested party;
(5) duly and punctually pay all premiums, commissions, stamp
duties, charges and other expenses necessary for keeping in
force each insurance policy;
(6) on request deliver to the Agent certificates of currency in
respect of insurances and all other details as to the
insurances the Agent requires;
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(7) not do or omit anything or permit anything to be done which
may adversely affect an insurance policy;
(8) do all things necessary and provide all documents, evidence
and information necessary to enable the Agent to collect or
recover money due or to become due under an insurance policy
relating to the Secured Property,
and, if a Transaction Party fails to keep in force an insurance
policy with respect to its assets or if an insurance policy for
any reason becomes void or voidable, the Agent may (but is not
obliged to) effect or keep in force that insurance policy at the
cost of that Transaction Party.
(j) MATERIAL CONTRACTS: The Borrower and each Guarantor must ensure
that no Project Document or any other agreement with a contract
value or consideration over the term of that agreement in excess
of US$250,000 is entered into without the prior written consent
of the Agent, which consent is not to be unreasonably withheld.
(k) PROJECT MANAGEMENT: The Borrower must not terminate the
Management Agreement without the prior written consent of the
Agent, and any replacement or other agreement to be entered into
by the Borrower in relation to the operation and management of
the Project must be on terms satisfactory to the Agent.
(l) ESTOPPEL CERTIFICATE: The Borrower must provide to the Agent, in
a form and substance satisfactory to the Agent, a certified copy
of an Estoppel Certificate of County Sanitation District No. 2 of
Los Angeles County in relation to the Mineral Lease and Landfill
Facilities Lease Agreement as soon as that certificate is
executed.
10.4 FINANCIAL COVENANTS
(a) NEGATIVE PLEDGE: The Borrower and each Guarantor must not:
(1) Dispose of;
(2) create, permit, allow to exist, or agree to, any interest or
Encumbrance, other than a Permitted Encumbrance over; or
(3) attempt to do anything listed in clause 10.4(a)(1) or clause
10.4(a)(2) in respect of,
any of its assets other than:
(4) a Disposal (other than a Disposal of Project Assets) in the
ordinary course of its ordinary business and at a market
value of less than US$250,000 in aggregate for all Disposals
during any 12 month period;
(5) a Disposal of Project Assets which is permitted in
accordance with clause 10.3(c); or
(6) with the prior written consent of the Agent.
(b) FINANCIAL INDEBTEDNESS: The Borrower and each Guarantor must not
incur any Financial Indebtedness in excess of US$250,000 other
than:
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(1) Financial Indebtedness under the Transaction Documents; or
(2) with the prior written consent of the Agent.
(c) FINANCIAL ACCOMMODATION: Neither the Borrower nor any Guarantor
may lend money or otherwise provide any financial accommodation
to any person other than with the prior written consent of the
Agent.
(d) SURETY OBLIGATIONS: Neither the Borrower nor any Guarantor may
incur any Surety Obligations other than with the prior written
consent of the Agent.
(e) PERMITTED EXPENDITURE: The Borrower and each Guarantor must not
incur any non-Project expenditure, except in accordance with the
Corporate Budget as approved by the Agent from time to time
except, provided that no Default has occurred and is continuing,
any money borrowed by the Borrower or a Guarantor from another
member of the WGI Group or raised by the Borrower or a Guarantor
can be used for the general corporate purposes of that party.
(f) TRANSFER OF FUNDS: The Borrower and each Guarantor must not
provide loans or financial accommodation to any person without
the prior written consent of the Agent.
(g) SUBORDINATION: The Borrower and each Guarantor must ensure that:
(1) all the Inter-Company Claims and payment (from whatever
source) of, and the rights and claims of each Subordinated
Group Member in respect of, all the Inter-Company Claims are
subordinated and postponed and made subject in right of
payment to all the Secured Money and payment (from whatever
source) of, and the rights and claims of the Finance Parties
in respect of, all the Secured Money;
(2) until all the Secured Money has been paid in full:
(A) the Inter-Company Claims must not (without the prior
written consent of the Agent) be paid or repaid; and
(B) no Subordinated Group Member may receive, and each
Subordinated Group Member must not pay or repay, any of
the Inter-Company Claims to, or at the direction of,
another Subordinated Group Member or any person acting,
or purporting to act, on behalf of a Subordinated Group
Member;
(3) the subordination effected by this clause applies at all
times including if and while a Subordinated Group Member is
in liquidation;
(4) if, on liquidation of a Subordinated Group Member, there is
a distribution of a Subordinated Group Member's assets
including payment in cash, property or securities, to
creditors of that Subordinated Group Member on liquidation,
all of the Secured Money must be paid in full in cash before
a payment is made for or on account of the Inter-Company
Claims;
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(5) until the Secured Money and all money due or owing under the
Transaction Documents has been paid in full, until the
subordination under this clause has been terminated and
until this agreement has been fully discharged, no
Subordinated Group Member may:
(A) make a claim or exercise a right, power or remedy
against another Subordinated Group Member under any
agreement, document or otherwise;
(B) accept, or ensure the grant of, or permit any
Encumbrance or Surety Obligation from a Subordinated
Group Member or any surety in favour of another
Subordinated Group Member to exist;
(C) exercise, or attempt to exercise, any right of set-off
against, nor realise any Encumbrance from, a
Subordinated Group Member or any surety; or
(D) raise any defence or counterclaim in reduction or
discharge of any obligation owed by a Subordinated
Group Member to another Subordinated Group Member or
any surety; and
(6) despite anything contained in this clause, the Borrower may
make payments to WGI as contemplated by clause 11.4(b).
10.5 PROVISION OF INFORMATION AND REPORTS
The Borrower and each Guarantor must promptly provide to the Agent all
of the following:
(a) AUDITED ACCOUNTS: as soon as practicable, and no later than 120
days after the end of the financial year a copy of the
consolidated audited financial statements of WGI and its
Subsidiaries;
(b) UNAUDITED ACCOUNTS: as soon as practicable, and no later than 90
days after the end of the financial half year a copy of the
unaudited consolidated management accounts of WGI and its
Subsidiaries;
(c) MONTHLY REPORTS: as soon as practicable, and no later than 21
days after the end of each month, a management report on the
development and operation of the Project, including all financial
information and cash flow reports as the Agent may require;
(d) PROJECT BUDGET: as soon as practicable, and no later than 30 days
prior to the commencement of the financial year, the Project
Budget;
(e) CORPORATE BUDGET: as soon as practicable, and no later than 30
days prior to the commencement of the financial year, a Corporate
Budget for approval by the Agent;
(f) TRANSACTION ACCOUNTS: as soon as practicable, and no later than
21 days after each Quarterly Date a statement summarising all
deposits to, and withdrawals from, each Transaction Account;
(g) CASHFLOW AND LIQUIDITY REPORT: as soon as practicable, and no
later than 21 days after the end of each month, a cashflow and
liquidity report setting
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out for the Borrower and WGI the previous month's opening cash
balances, itemised expenditures and cash inflows for the previous
month, closing balances, and forecast expenditures and cash
inflows of the Borrower and WGI for the following 6 months; and
(h) OTHER INFORMATION: at the request of the Agent, any other
information about the financial condition or state of affairs of
a Transaction Party, the Project, the Project Assets or assets of
a Transaction Party as the Agent may reasonably require.
10.6 RECLAMATION WORK
(a) RECLAMATION PLAN: The Borrower and each Guarantor must carry on
and conduct all Reclamation Work which is required by the
Reclamation Plan.
(b) COMPLIANCE WITH BONDS: The Borrower and each Guarantor must make
all payments and do all other things as may be necessary or
desirable under the terms of the Bonds so that no claims are made
under any of the Bonds.
(c) NOTICE TO THE AGENT: The Borrower must promptly notify the Agent
as soon as it becomes aware of any notice, order, requisition,
demand, complaint, claim or any other direction concerning its
compliance with the Reclamation Plan from a relevant Governmental
Agency who is holding a Bond (BONDING AGENCY), including without
limitation, California Department of Conservation, Xxxxxx xx Xxxx
Xxxxxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx
Department of the Interior, Bureau of Land Management, California
State Lands Commission and California Regional Water Quality
Control Board.
(d) RECLAMATION WORK: The Borrower and each Guarantor must consult
with the Agent as to the conduct of the Reclamation Work and
compliance with orders, requisitions, notices, demands or any
other directions issued by a Bonding Agency.
(e) CLAIMS:
(1) If a claim is made under the Bonds by a Bonding Agency, then
the Borrower must either cure or pay that claim as
contemplated by the Surety Side Agreement.
(2) if AHA pays that claim under the terms of the Surety Side
Agreement, then the Borrower must reimburse AHA within the
30 day period provided for in clause 3F of the Surety Side
Agreement.
(f) RECTIFICATION: If the Borrower fails to do any thing or fails to
procure any thing required under or in relation to the
Reclamation Plan, Reclamation Costs Policy or the Bonds,
including without limitation, complying with an order,
requisition, notice, demand or other direction from a Bonding
Authority (BOND DEFAULT) or at any time after a Default has
occurred and while it is continuing, then:
(1) the Agent may, without affecting any Power, do all things
necessary or desirable, in the opinion of the Agent, to make
good or attempt to make good a Bond Default to the
satisfaction of the Agent;
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(2) the Lender may give AISLIC and AHA a notice under clause 10
of the Reclamation Costs Policy within the 30 day period
provided for in clause 3F of the Surety Side Agreement; and
(3) clause 18.10 will apply to any action taken by the Agent in
these circumstances as if reference to Transaction Document
in that clause included the Reclamation Costs Policy,
Reclamation Plan and Bonds and a reference to Default
included Bond Default.
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11 TRANSACTION ACCOUNTS
11.1 TRANSACTION ACCOUNTS
The Borrower covenants and agrees with each Finance Party:
(a) to establish and maintain for the Borrower in Washington a United
States Dollar denominated interest bearing account with the
Agent, or another bank or financial institution approved by the
Agent, that account to be called "Western Mesquite Mines, Inc. -
Proceeds Account";
(b) to establish and maintain for the Borrower in Washington a United
States Dollar denominated interest bearing account with the
Agent, or another bank or financial institution approved by the
Agent, that account to be called "Western Mesquite Mines, Inc. -
Project Account";
(c) to maintain the Transaction Accounts with the bank or financial
institution at which those accounts were originally established
and not change those accounts to another bank or financial
institution without the Agent's prior written consent;
(d) to cause all interest and other earnings on a Transaction Account
to be credited to that Transaction Account;
(e) to deal with the moneys standing to the credit of the Transaction
Accounts in accordance with this clause 11, and not otherwise;
and
(f) that no moneys may be withdrawn by the Borrower from the
Transaction Accounts after a Default or a Potential Default has
occurred and while it is continuing.
11.2 PROCEEDS ACCOUNT
The Borrower undertakes to deposit, or cause to be deposited, into the
Proceeds Account all Revenue.
11.3 PROJECT ACCOUNT
The Borrower undertakes to deposit, or cause to be deposited, into the
Project Account the Working Capital Amount.
11.4 PRIORITY OF APPLICATION - PROCEEDS ACCOUNT
(a) All money standing to the credit of the Proceeds Account must be
applied in the following order of priority:
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(1) first, in or towards paying or meeting the Operating Costs
properly incurred as and when those amounts for due for
payment;
(2) next, in or towards paying or meeting the payments due to
Hospah under the Hospah Net Operating Cash Flow Royalty
Agreement;
(3) next, capital expenditure in respect of the Project,
properly incurred, as may be approved by the Agent as and
when those amounts fall due for payment;
(4) next, in or towards paying or meeting any fees or Taxes
payable to the Government of the United States of America or
the State of California or to any Governmental Agency in
respect of the Project as and when those amounts fall due
for payment;
(5) next, on 31 January 2004 and on each subsequent Quarterly
Date, in payment of interest in relation to the Facility
under clause 5.1;
(6) next, on 31 January 2004 and on each subsequent Quarterly
Date, in paying the Principal Outstanding under clause 7.1;
(7) next, on 31 January 2004 and on each subsequent Quarterly
Date, in paying the mandatory prepayment under clause 7.2 as
and when that amount is due for payment;
(8) next, on 31 January 2004 and on each subsequent Quarterly
Date, in paying the variable interest payment under clause
6.2 as and when that amount is due for payment; and
(9) next, to the extent that money standing to the credit of the
Project Account is less than the Working Capital Amount,
then in or towards paying money into the Project Account so
that the balance is at least equal to the Working Capital
Amount.
(b) Any money credited to the Proceeds Account after all payments in
clause 11.4(a) have been paid and subject to:
(1) no Default or Potential Default having occurred; and
(2) the Agent being satisfied that the Borrower has sufficient
funds in the Proceeds Account after the proposed withdrawal
is to be made, to meet all forecast Operating Costs and
Project Costs (in accordance with the Project Budget) for
the succeeding 28 days after the proposed withdrawal,
the aggregate balance (if any) standing to the credit of the
Proceeds Account may be withdrawn for the Borrower's corporate
purposes or, despite anything else contained in this agreement,
be paid to WGI.
11.5 PRIORITY OF APPLICATION - PROJECT ACCOUNT
Funds standing to the credit of the Project Account may be used for:
(a) general working capital purposes, but only to the extent that
money is not available in the Proceeds Account to meet those
working capital requirements as contemplated by clause 11.4(a);
and
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(b) payment of Principal Outstanding and interest which is payable
under clauses 5.1 and 7.1, but only to the extent that money is
not available in the Proceeds Account to make those payments.
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12 EVENTS OF DEFAULT
12.1 EVENTS OF DEFAULT
It is a Default, whether or not it is within the control of a
Transaction Party, if:
(a) FAILURE TO PAY BY A TRANSACTION PARTY: a Transaction Party fails
to pay any part of the Secured Money payable by it when due;
(b) NON-REMEDIABLE FAILURE: a Transaction Party fails to comply with
any undertaking, obligation or agreement in, or given in relation
to, a Transaction Document (other than as referred to in clause
12.1(a)) and that failure is not, in the opinion of the Agent,
remediable;
(c) REMEDIABLE FAILURE: if the failure described in clause 12.1(c)
is, in the opinion of the Agent, remediable, and the Transaction
Party does not remedy the failure within 10 days, or a longer
period determined by the Agent, after receipt by the Transaction
Party of a notice from the Agent specifying the failure;
(d) MINERAL RIGHTS: a material Mineral Right is terminated or
otherwise ceases to be in full force and effect;
(e) PROJECT DOCUMENTS: a Transaction Party fails to perform or
observe any of its undertakings or obligations under a Project
Document and the Transaction Party does not remedy the failure
within the grace period stated in a Project Document or, if no
grace period is stated, within 10 days;
(f) AMENDMENT TO PROJECT DOCUMENTS: there is a revocation or
variation to the conditions in relation to any Project Document
or any Mineral Right;
(g) ABANDONMENT: all or any part of the Project is abandoned or
placed on a "care and maintenance" basis;
(h) AUTHORISATIONS: an Authorisation necessary to enable a
Transaction Party to comply with its obligations under a Document
to which it is a party ceases to be in full force and effect;
(i) MISREPRESENTATION: a warranty, representation or statement by a
Transaction Party is or becomes false, misleading or incorrect
when made or regarded as made by a Transaction Party under a
Transaction Document or under a document contemplated by a
Transaction Document;
(j) ACCELERATION OF PAYMENTS: a Transaction Party does anything which
constitutes an event, whatever called, which causes or enables
the acceleration of a payment to be made under a Document, or the
enforcement, termination or rescission of a Document;
(k) CROSS DEFAULT: any Financial Indebtedness of a Transaction Party
in an amount in excess of US$100,000:
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(1) becomes due and payable, or becomes capable of being
declared due and payable, before the scheduled date for
payment; or
(2) is not paid when due (after taking into account any
applicable grace period);
(l) ENCUMBRANCE: any Encumbrance is enforceable against any asset of
a Transaction Party;
(m) SURETY OBLIGATION: a Surety Obligation of a Transaction Party is
not discharged within 5 days of:
(1) its maturity; or
(2) when it is called;
(n) JUDGMENT: a judgment in an amount exceeding US$100,000 (or its
equivalent in another currency) is obtained against a Transaction
Party, and is not stayed, set aside or satisfied within 7 days;
(o) EXECUTION: distress, attachment, execution or other process of a
Governmental Agency in an amount exceeding US$100,000 (or its
equivalent in another currency) is issued against, levied or
enforced on any part of the Secured Property, and is not set
aside or satisfied within 7 days;
(p) INSOLVENCY EVENT: an Insolvency Event occurs with respect to a
Transaction Party;
(q) AMENDMENT OF CONSTITUTION: the constitution or other constituent
document of a Transaction Party is amended, without the prior
written consent of the Agent;
(r) DEFAULT: a Default (as that expression is defined in any of the
Securities) occurs;
(s) CEASING BUSINESS: a Transaction Party ceases or threatens to
cease to carry on business;
(t) INVESTIGATION: a person is appointed under any legislation in
respect of companies to investigate the affairs of a Transaction
Party;
(u) VITIATION OF DOCUMENTS: all or part of a provision of a Document
is or becomes illegal, void, voidable, unenforceable or otherwise
of limited force or effect, or a person is or becomes entitled to
terminate, rescind or avoid all or a material part or material
provision of a Document;
(v) EXPROPRIATION: any assets of the Borrower or ore reserves
available for the purposes of the Project or any other part of
the Secured Property are seized, nationalised or expropriated by
a Governmental Agency or a restraint, restriction, prohibition,
intervention, law, decree or other order of a Governmental Agency
or any other matter or thing occurs which wholly or partially
prevents or hinders:
(1) the performance by a Transaction Party of any of its
obligations under a Document; or
(2) the construction, development or operation of the Project;
(w) DESTRUCTION OF SECURED PROPERTY: all or a material part of the
Secured Property is destroyed, lost or damaged beyond repair or
proves to be
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materially defective in circumstances not covered by any
insurance in favour of a Transaction Party;
(x) ADVERSE CHANGE: a Material Adverse Effect (in the reasonable
opinion of the Agent) occurs;
(y) BREACH OF UNDERTAKING: an undertaking given in writing to a
Finance Party or its solicitors by a Transaction Party, or
another person for or on behalf of a Transaction Party, in
connection with a Transaction Document is breached or not wholly
performed within the period specified in the undertaking or, if
no period is specified, within 10 days from the date of the
undertaking;
(z) CHANGE OF CORPORATE STATUS: after the ordinary share capital of
WGI or any company of which WGI is the wholly owned Subsidiary
(the LISTED ENTITY) is listed on a stock exchange, except with
the prior written consent of the Agent, the Listed Entity ceases
to have its ordinary shares currently listed and trading on a
stock exchange, other than as a result of an involuntary
suspension extending for a period of not more than 10 trading
days; or
(aa) SECURITIES: a Security is enforceable against an asset of a
Transaction Party.
12.2 EFFECT OF DEFAULT
(a) On or after the occurrence of a Default, the Agent may, by notice
to the Borrower:
(1) declare that the Secured Money is immediately due and
payable;
(2) declare that the Commitment is cancelled;
(3) take any action or proceedings necessary or desirable in
order to exercise any Power conferred by the Transaction
Documents,
or a combination of any of those things.
(b) The Borrower must following receipt of a notice under clause
12.2(a)(1) immediately repay in full the Secured Money to the
Agent for the account of the Lender.
(c) Where a Security provides that the Security may be enforced after
a Default (as defined in that Security) occurs without the
requirement of notice to any person, then nothing in this
agreement is to be construed as inferring that the Security can
only be enforced after a notice has first been given under clause
12.2(a).
12.3 BORROWER TO CONTINUE TO PERFORM
If the Agent makes a declaration under clause 12.2 then, without
affecting the obligations of the Borrower under clause 12.2, the
Borrower must continue to perform its obligations under the
Transaction Documents as if the declaration had not been made, subject
to the directions that may be given by the Agent from time to time.
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12.4 ENFORCEMENT
(a) The Transaction Documents may be enforced without notice to or
consent by a Transaction Party or another person even if a
Finance Party accepts any part of the Secured Money after a
Default or there has been another Default.
(b) No Finance Party is liable to a Transaction Party for any loss or
damage a Transaction Party becomes liable for arising out of a
Finance Party exercising a Power under a Transaction Document.
(c) Without prejudice to a Finance Party's rights under a Security,
the parties agree that on the Agent giving notice under clause
12.2, the rights of the Borrower in relation to the Transaction
Accounts cease and all moneys held in the Transaction Accounts
may be used to pay the Secured Money.
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13 RELEASE OF OBLIGATIONS
13.1 RELEASE OF OBLIGATIONS
Despite anything contained in this agreement, as soon as the Agent is
satisfied that:
(a) no further Secured Money, other than payments of variable
interest under clause 6.2, is owed by a Transaction Party
contingently or otherwise to the Agent or the Lender under a
Transaction Document;
(b) no amount paid by a Transaction Party under a Transaction
Document is capable of being avoided or otherwise set aside on
the liquidation or administration of the payer or otherwise; and
(c) no Default has occurred and is continuing,
(the date on which the Agent notifies the Borrower that the Agent is
satisfied as to these things is the RELEASE DATE), the Borrower and
each Guarantor is, from the Release Date, released from all
representations and warranties, covenants and obligations in this
agreement and the Securities, other than in the case of the Borrower:
(1) the obligation to make variable interest payments under
clause 6;
(2) clause 8 relating to the manner of making payments;
(3) the general undertakings in clauses 10.2(b), 10.2(c),
10.2(o) and 10.2(r);
(4) the project undertakings in clauses 10.3(b), 10.3(c),
10.3(e), 10.3(f), 10.3(g) (on the basis that the words "the
Project Budget and" are deleted from that clause) and
10.3(h);
(5) clause 16 relating to default interest payments; and
(6) clauses 17.1, 17.2, 17.3 and 17.4 relating to assignment.
13.2 FURTHER ASSURANCES
The Agent must after the Release Date:
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(a) give a notice to AISLIC as contemplated in the definition of
"Facility Release Date" in the Reclamation Costs Policy;
(b) give a notice of termination required by clause 4.5 of the
Management Side Agreement; and
(c) at the written request of the Borrower or a Guarantor and at that
party's cost execute any other document or do any other act,
matter or thing which the Borrower or a Guarantor requests to
complete or give effect to the release of the Securities in
clause 13.1.
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14 INDEMNITIES
14.1 GENERAL INDEMNITY
(a) The Borrower indemnifies each Finance Party against any claim,
action, damage, loss (including currency exchange loss),
liability, Environmental Liability, cost, expense or payment
which that Finance Party pays, suffers, incurs or is liable for,
in respect of the following:
(1) a Funding Portion required by a Funding Notice not being
provided for any reason including, but not limited to, a
failure by a Transaction Party to fulfil a condition
precedent contained in clause 3, but excluding a default by
that Finance Party;
(2) a repayment or prepayment of all or part of a Funding
Portion being made on a date other than the last day of a
Funding Period (on the basis that despite clause 7.4(a) the
Borrower repays or prepays all or part of a Funding Portion
on a date other than the last day of a Funding Period);
(3) a payment being made or received in a currency other than
the currency in which the Borrower is obliged to make the
relevant payment;
(4) the occurrence of a Potential Default or a Default;
(5) that Finance Party exercising its Powers consequent on or
arising out of the occurrence of a Potential Default or a
Default;
(6) financial accommodation under a Transaction Document being
repaid, discharged or made payable for any reason other than
at its maturity in accordance with the Transaction Documents
or any other payment required to be made under any
Transaction Document not being made on its due date; or
(7) any failure by a Transaction Party to perform any of its
obligations under clause 10.6, including for any work or any
other act which is performed by the Agent as a result of the
failure by a Transaction Party to comply with clause 10.6.
(b) Without limitation to the indemnity contained in clause 14.1(a),
that indemnity includes:
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(1) the amount determined by the Finance Parties as being
incurred by reason of the liquidation or re-employment of
deposits or other funds acquired or contracted for by the
Finance Parties to fund or maintain the Commitment, the
Principal Outstanding or the relevant Funding Portion and
includes, but is not limited to, loss of margin; and
(2) reasonable legal costs and expenses on a full indemnity
basis.
14.2 FOREIGN CURRENCY INDEMNITY
If at any time:
(a) a Finance Party receives or recovers any amount payable by a
Transaction Party for any reason including, but not limited to:
(1) any judgment or order of any Governmental Agency;
(2) any breach of any Transaction Document;
(3) the liquidation or bankruptcy of a Transaction Party or any
proof or claim in that liquidation or bankruptcy; or
(4) any other thing into which the obligations of a Transaction
Party may have become merged; and
(5) the Payment Currency is not in United States Dollars,
the Borrower indemnifies that Finance Party against any shortfall
between the amount payable in United States Dollars and the amount
actually received or recovered by that Finance Party, after the
Payment Currency is converted or translated into United States Dollars
under clause 14.3.
14.3 CONVERSION OF CURRENCIES
In making any currency conversion under clause 14.2, a Finance Party
may itself or through its bankers purchase one currency with another,
whether or not through an intermediate currency, whether spot or
forward, in the manner and amounts and at the times it thinks fit, but
that purchase must be on competitive arms length terms.
14.4 CONTINUING INDEMNITIES AND EVIDENCE OF LOSS
(a) Each indemnity of the Borrower contained in this agreement is a
continuing obligation of the Borrower despite:
(1) a settlement of account; or
(2) the occurrence of any other thing,
and remains in full force and effect until:
(3) all money owing, contingently or otherwise, under the
Transaction Documents has been paid in full;
(4) the Secured Money is fully and finally repaid; and
(5) each of the Transaction Documents has been finally
discharged.
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(b) Each indemnity of the Borrower contained in this agreement is an
additional, separate and independent obligation of the Borrower
and no one indemnity limits the generality of another indemnity.
(c) Each indemnity of the Borrower contained in this agreement
survives the termination of a Transaction Document.
(d) A certificate signed by an Authorised Officer of a Finance Party
detailing the amount of damage, loss, liability, cost, expense or
payment covered by any indemnity in this agreement is prima facie
evidence of the matter certified. The Borrower has the right to
review that certificate for any inaccuracy or manifest error and
the Borrower has the right to request a Finance Party to provide
to the Borrower details of the calculation of the amount of
damage, loss, liability, cost, expense or payment specified in
that certificate.
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15 FEES, TAX, COSTS AND EXPENSES
15.1 ARRANGEMENT FEE
The Borrower must pay to the Agent, as consideration for arranging the
provision of the Facility, an arrangement fee (which is not refundable
in any circumstances) of US$360,000.
15.2 WARRANTS
The Borrower must issue to the Agent or the Agent's nominee, as
consideration for arranging the provision of the Facility, 780,000
Warrants on the following terms:
(a) each Warrant entitles the holder to purchase 1 Share (subject to
customary adjustments);
(b) the Warrants may be exercised at any time during a period of
three years commencing on the date of this agreement;
(c) the exercise price is US$1.00 for each Share; and
(d) the Warrants are to be substantially on the terms set out in the
Warrant Certificate.
15.3 TAX
(a) The Borrower must pay any Tax, in respect of the execution,
delivery, performance, release, discharge, amendment, enforcement
or attempted enforcement or otherwise in respect of any of the
following:
(1) a Transaction Document;
(2) an agreement or document entered into or signed under a
Transaction Document; or
(3) a transaction contemplated under a Transaction Document or
an agreement or document described in clause 15.3(a)(2).
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(b) The Borrower must pay fines, penalties or other costs in respect
of a failure to pay a Tax described in clause 15.3(a) except to
the extent that a fine, penalty or other cost is caused by the
Agent's failure to lodge money received from the Borrower before
the due date for lodgement.
(c) The Borrower indemnifies each Finance Party against an amount
payable under clause 15.3(a) or 15.3(b) or both.
15.4 COSTS AND EXPENSES
The Borrower must pay all costs and expenses of each Finance Party and
any employee, Authorised Officer, agent or contractor of each Finance
Party in relation to:
(a) the legal due diligence, technical due diligence, negotiation,
preparation, execution, delivery, stamping, registration,
completion, variation and discharge of a Transaction Document;
(b) the enforcement, protection or waiver, or attempted enforcement
or protection, of any rights under a Transaction Document;
(c) the consent or approval of a Finance Party given under a
Transaction Document; and
(d) any enquiry by a Governmental Agency involving the Borrower or a
Guarantor,
including, but not limited to, administration costs of a Finance Party
in connection with the matters referred to in clauses 15.4(b) and
15.4(d) and legal costs and expenses and professional consultant's
fees for any of the above on a full indemnity basis.
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16 INTEREST ON OVERDUE AMOUNTS
16.1 PAYMENT OF INTEREST
The Borrower must pay interest on any part of the Secured Money due
and payable, but unpaid.
16.2 ACCRUAL OF INTEREST
Interest payable under clause 16.1:
(a) accrues from day to day from and including the due date for
payment up to the actual date of payment, before and, as an
additional and independent obligation, after judgment or other
thing into which the liability to pay the Secured Money becomes
merged; and
(b) may be capitalised by the Agent at 90 day intervals.
16.3 RATE OF INTEREST
The rate of interest payable under clause 16 on any part of the
Secured Money is the higher of:
(a) the Overdue Rate determined by the Agent:
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(1) on the date that part of the Secured Money becomes due and
payable but is unpaid; and
(2) on each date which is 30 days after the immediately
preceding date on which the Overdue Rate was determined
under this clause 16.3(a); and
(3) the rate fixed or payable under a judgment or other thing
referred to in clause 16.2(a).
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17 ASSIGNMENT
17.1 ASSIGNMENT BY TRANSACTION PARTY
A Transaction Party must not transfer or assign any of its rights or
obligations under a Transaction Document without the prior written
consent of the Agent.
17.2 ASSIGNMENT BY FINANCE PARTY
A Finance Party may at any time, without the consent of any
Transaction Party, assign any of its rights or transfer by novation
any of its rights and obligations under a Transaction Document to any
person in the RMB group of companies (which term includes any person,
partnership or corporate entity in that group) or to a reputable bank
or financial institution or to a combination of reputable banks and
financial institutions.
17.3 REFERENCES TO A FINANCE PARTY
(a) If a Finance Party transfers its rights, benefits or obligations
under the Transaction Documents in accordance with clause 17.2
any reference in the Transaction Documents to that Finance Party
(unless provided otherwise) is a reference to that Finance Party
and its transferee.
(b) If a Finance Party transfers all of its rights, benefits and
obligations by novation then any reference to that Finance Party
is a reference to its transferee.
17.4 ASSIST TRANSFER OR ASSIGNMENT
At the request of a Finance Party, the Borrower and each Guarantor
must do any thing including, but not limited to, executing any
documents or amending any Transaction Document, to effect any transfer
or assignment under this clause 17.
17.5 PARTICIPATION PERMITTED
A Finance Party may grant by way of sub-participation (being a right
to share in the financial effects of this agreement without any rights
against a Transaction Party) all or part of the Finance Party's rights
and benefits under this agreement to any other person without having
to obtain the consent of or to notify a Transaction Party or any other
person.
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17.6 LENDING OFFICE
(a) A Finance Party may change its Lending Office at any time.
(b) A Finance Party must promptly notify any other Finance Party and
the Borrower of the change.
17.7 DISCLOSURE
A Finance Party may disclose to a proposed assignee, transferee or
sub-participant any information relating to a Transaction Party or the
Transaction Documents whether or not confidential and whether or not
the disclosure would be in breach of any law or of any duty owed to a
Transaction Party.
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18 SAVING PROVISIONS
18.1 NO MERGER OF SECURITY
(a) Nothing in this agreement merges, extinguishes, postpones,
lessens or otherwise prejudicially affects a Power, Encumbrance
or indemnity in favour of the Finance Parties.
(b) No other Encumbrance or Transaction Document held by the Finance
Parties adversely affects any Power under this agreement.
18.2 EXCLUSION OF MORATORIUM
To the extent not excluded by law, a provision of any legislation
which at any time directly or indirectly lessens or otherwise varies
or affects in favour of a Transaction Party any obligations under this
agreement or any Collateral Security, or stays, postpones or otherwise
prevents or adversely affects the exercise by the Finance Parties of
any Power, is negatived and excluded from this agreement and any
Collateral Security and all relief and protection conferred on a
Transaction Party by or under that legislation is also negatived and
excluded.
18.3 POWERS
(a) The Powers are cumulative and do not exclude any other right,
power, authority, discretion or remedy.
(b) Where a Power is inconsistent with a right, power, authority,
discretion or remedy conferred by applicable law then, to the
extent not prohibited by that law, those conferred by applicable
law are regarded as negatived or varied to the extent of the
inconsistency.
18.4 CONSENTS
Whenever the doing of any thing by a Transaction Party is dependent on
the consent or approval of a Finance Party, the Finance Party may
withhold its consent or approval or give it conditionally or
unconditionally in its absolute discretion unless expressly stated
otherwise in a Transaction Document. Any conditions must be complied
with by a Transaction Party. Any consent of a
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Finance Party which may be required and which is not contemplated in
any Transaction Document will not be unreasonably withheld by a
Finance Party.
18.5 PRINCIPAL OBLIGATIONS
This agreement and each Collateral Security is:
(a) a principal obligation and is not ancillary or collateral to an
Encumbrance (other than another Collateral Security) or other
obligation however created; and
(b) independent of, and unaffected by an Encumbrance or other
obligation however created which the Finance Parties may hold at
any time in respect of the Secured Money.
18.6 NON-AVOIDANCE
If a payment by a Transaction Party to a Finance Party is at any time
avoided for any reason including, but not limited to, a legal
limitation, disability or incapacity of or affecting the Transaction
Party, and whether or not:
(a) a transaction relating to the Secured Money was illegal, void or
substantially avoided; or
(b) any thing was or ought to have been within the knowledge of a
Finance Party,
(c) the Borrower:
(d) as an additional, separate and independent obligation,
indemnifies that Finance Party against that avoided payment; and
(e) acknowledges that the liability of a Transaction Party under the
Transaction Documents and the Powers of each Finance Party are
the same as if that payment had not been made.
18.7 SET-OFF AUTHORISED
If a Transaction Party does not pay any part of the Secured Money when
due to a Finance Party, the Borrower authorises that Finance Party in
the name of a Transaction Party or of a Finance Party, to do any act
or thing including, but not limited to, executing documents or
effecting currency conversions which may be required.
18.8 CERTIFICATES OF AGENT
A certificate signed by an Authorised Officer of the Agent stating:
(a) the amount of the Secured Money (whether currently due and
payable or not) or an amount due and payable by a Transaction
Party under a Transaction Document; or
(b) the opinion or determination of a Finance Party as to any thing,
is prima facie evidence of that amount or that opinion or
determination (as the case requires) at the date stated on the
certificate or failing that as at the date of that certificate. The
Borrower has the right to review that certificate for any inaccuracy
or manifest error and the Borrower has the right to request the Agent
--------------------------------------------------------------------------------
page 50
to provide to the Borrower details of the calculation of that amount
or details of that opinion or determination (as the case requires).
18.9 NO RELIANCE OR OTHER OBLIGATIONS AND RISK ASSUMPTION
The Borrower and each Guarantor acknowledges and confirms that:
(a) it has not entered into a Transaction Document in reliance on a
representation, warranty, promise or statement made by a Finance
Party or a person on behalf of a Finance Party;
(b) in respect of the transactions evidenced by the Transaction
Documents, the Finance Parties have no obligations other than
those expressly set out in the Transaction Documents; and
(c) in respect of interest rates or exchange rates, the Finance
Parties are not liable for:
(1) movements in interest rates or exchange rates; or
(2) information, advice or opinions provided by the Finance
Parties or a person on behalf of the Finance Parties, even
if:
(A) provided at the request of a Transaction Party (it
being acknowledged by each of the Borrower and the
Guarantor that such matters are inherently
speculative); or
(B) relied on by a Transaction Party.
18.10 ATTORNEY
In consideration of the Finance Parties agreeing to provide the
accommodation referred to in this agreement and on the occurrence of a
Default, the Finance Parties and each of their respective Authorised
Officers for the time being (each with a power to appoint a substitute
or substitutes) is irrevocably appointed the attorney of a Transaction
Party to:
(a) execute and deliver all documents; and
(b) do all things (including the signing and lodging of proofs of
debt and similar claims in the bringing and enforcing of legal
proceedings, the compromise of disputes, the enforcement of each
Transaction Document or any of them),
which the attorney thinks requisite or desirable for giving effect to
the provisions of each Transaction Document.
18.11 OPINION OF A FINANCE PARTY
Where a Finance Party is required or entitled under this agreement to
form or hold an opinion or view, this may be formed or held on its
behalf by a person authorised by that Finance Party to act on its
behalf in relation to this agreement or by its board of directors or
by one or more Authorised Officers of that Finance Party.
--------------------------------------------------------------------------------
page 51
19 GENERAL
19.1 CONFIDENTIAL INFORMATION
The Finance Parties may disclose to a person documents or records of,
or information about, a Transaction Document, or the assets, business
or affairs of a Transaction Party, whether or not confidential and
whether or not the disclosure would be in breach of a law or of a duty
owed to a Transaction Party:
(a) for the purpose of exercising any Power after a Default has
occurred and while it is continuing; or
(b) if the person to whom disclosure is made first undertakes to keep
the relevant documents, records or information confidential.
19.2 PERFORMANCE BY THE AGENT OF OBLIGATIONS
If a Transaction Party defaults in fully and punctually performing an
obligation contained or implied in a Transaction Document, the Agent
may, without affecting any Power, do all things necessary or
desirable, in the opinion of the Agent, to make good or attempt to
make good that default to the satisfaction of the Agent.
19.3 TRANSACTION PARTY TO BEAR COST
Any thing which must be done by a Transaction Party under a
Transaction Document, whether or not at the request of a Finance
Party, must be done at the cost of the Transaction Party.
19.4 NOTICES
Any notice or other communication including, but not limited to, a
request, demand, consent or approval, to or by a party to a
Transaction Document:
(a) must be in legible writing and in English addressed as follows:
(1) if to the Borrower or a Guarantor:
Address: 0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx 000 # 000
Xxxxx, Xxxxx 00000
Xxxxxx Xxxxxx of America
Attention: Xx Xxxx Xxxxxxx
Facsimile: x0 000 000 0000;
(2) if to the Agent or to the Lender:
Address: Xxxxx 0
Xxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xx Xxxxxxx Xxxxxxxxx
--------------------------------------------------------------------------------
page 52
Facsimile: x00 000 000 0000,
or as specified to the sender by a party by notice;
(b) must be signed by an Authorised Officer or under the common seal
of the sender;
(c) is regarded as being given by the sender and received by the
addressee:
(1) if by delivery in person, when delivered to the addressee;
(2) if by post, 2 Business Days (if posted within one country)
or 10 Business Days (if posted from one country to another)
as the case may be, from and including the date of postage;
or
(3) if by facsimile transmission, whether or not legibly
received, on receipt of a transmission report confirming
successful transmission, without error or omission,
but if the delivery or receipt is on a day which is not a
Business Day or is after 4.00 pm (addressee's time) it is
regarded as received at 9.00 am (addressee's time) on the
following Business Day; and
(d) can be relied on by the addressee and the addressee is not liable
to another person for the consequences of that reliance if the
addressee believes it to be genuine, correct and authorised by
the sender.
19.5 GOVERNING LAW AND JURISDICTION
(a) This agreement is governed by the laws of the State of Colorado.
(b) The Borrower and each Guarantor irrevocably and unconditionally:
(1) submits to and accepts the non-exclusive jurisdiction of the
courts of the State of Colorado; and
(2) waives any objection to the venue of any legal process on
the basis that the process has been brought in an
inconvenient forum.
19.6 PROHIBITION AND ENFORCEABILITY
(a) A provision of, or the application of a provision of, a
Transaction Document or a Power which is prohibited in a
jurisdiction is, in that jurisdiction, ineffective only to the
extent of that prohibition.
(b) A provision of, or the application of any provision of, a
Transaction Document which is void, illegal or unenforceable in a
jurisdiction does not affect the validity, legality or
enforceability of that provision in another jurisdiction or of
the remaining provisions in that or another jurisdiction.
19.7 WAIVER AND VARIATION
(a) Waiver of a Power arising under, or a provision of, this
agreement (including this clause), must be in writing and signed
by the party granting the waiver.
(b) A failure or delay in exercise, or partial exercise, of a Power
(arising on the occurrence of a Default or otherwise) does not
operate as a waiver of
--------------------------------------------------------------------------------
page 53
that Power or preclude another or further exercise of that or
another Power.
(c) The variation of a term of this agreement must be in writing and
signed by the parties.
19.8 ATTORNEYS
Each of the attorneys executing this agreement states that the
attorney has no notice of the revocation of the power of attorney
appointing that attorney.
19.9 COUNTERPARTS
This agreement may be signed in any number of counterparts and all
counterparts together constitute one and the same instrument.
19.10 SERVICE OF PROCESS
Without preventing any other mode of service, any document in an
action (including any writ of summons or other originating process or
any third or other party service) may be served on any party by being
delivered to or left for that party at its address for service of
notices under clause 19.4.
--------------------------------------------------------------------------------
page 54
--------------------------------------------------------------------------------
SCHEDULE 1 - -GUARANTORS
1. Western Goldfields, Inc., a company incorporated under the laws
of Idaho.
2. Calumet Mining Company, a company incorporated under the laws of
Idaho.
--------------------------------------------------------------------------------
page 55
--------------------------------------------------------------------------------
SCHEDULE 2- -FUNDING NOTICE
To: RMB RESOURCES LIMITED (AGENT)
ATTENTION: XXXXXXX XXXXXXXXX
----------------------------------------------------------------------
We refer to the project facility agreement dated as of 5 November 2003
between Western Mesquite Mines, Inc., RMB International (Dublin)
Limited, each party described in schedule 1 to that agreement and the
Agent (FACILITY AGREEMENT).
Under clause 4 of the Facility Agreement:
(a) We give you irrevocable notice that we wish to draw under the
Facility by means of a Funding Portion to be provided
on 2003 (FUNDING DATE);
(b) The aggregate amount to be drawn is [US$ ];
(c) The proceeds of the Funding Portion are to be used for
(insert proposed usage).
(d) We request that the proceeds be remitted to account number
at ;
(e) We represent and warrant that:
(1) [EXCEPT AS DISCLOSED IN PARAGRAPH (E)(3)] each
representation and warranty in the Facility Agreement is
true, correct and not misleading as though it had been made
at the date of this Funding Notice and the Funding Date
specified above in respect of the facts and circumstances
then subsisting; [AND]
(2) [(EXCEPT AS DISCLOSED IN PARAGRAPH (E)(3)] no Default or
Potential Default is subsisting or will result from the
provision of a Funding Portion [; AND
(3) [DETAILS OF THE EXCEPTIONS TO PARAGRAPHS (E)(1) AND (E)(2)
ARE AS FOLLOWS: , AND WE [ HAVE TAKEN/PROPOSE THE FOLLOWING
REMEDIAL ACTION ];]
--------------------------------------------------------------------------------
page 56
Expressions defined in the Facility Agreement have the same meaning
when used in this Funding Notice.
Dated: [INSERT DATE]
SIGNED for and on behalf of
WESTERN MESQUITE MINES, INC.
___________________________
Authorised Officer's signature
___________________________
Name (please print)
--------------------------------------------------------------------------------
SCHEDULE 3 - -PERMITTED ENCUMBRANCES
A Transaction Document which is an Encumbrance, including without
limitation the Securities.
--------------------------------------------------------------------------------
page 57
--------------------------------------------------------------------------------
SCHEDULE 4 - -SECURITIES
1. US Securities.
2. Deed of Guarantee dated on or about the date of this agreement
between the Agent and each of the parties described in the
schedule to that deed.
3. Each Collateral Security.
--------------------------------------------------------------------------------
page 58
--------------------------------------------------------------------------------
SCHEDULE 5 - FORM OF WARRANT
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR
THE HOLDER OF THE SECURITIES SATISFACTORY TO THE COMPANY STATING THAT
SUCH TRANSACTION IS EXEMPT FROM REGISTRATION OR (C) THE COMPANY
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
--------------------------------------------------------------------
No. W- [INSERT WARRANT NUMBER] WARRANT TO PURCHASE
780,000 WARRANTS
--------------------------------- ---------------------------------
Issued: [Insert Date of Issuance] $0.01 PAR VALUE COMMON STOCK
--------------------------------------------------------------------
Western Goldfields, Inc.
Warrant
-------
THIS IS TO CERTIFY that, for cash consideration of $ 100 and other
value received, and subject to these terms and conditions, "RMB
---
Resources Limited", a company incorporated under the laws of England
-------------------
and Wales ("Agent"), or such other person or entity to which or whom
-----
this Warrant is transferred (the "Holder"), is entitled to exercise
------
this Warrant to purchase [INSERT NUMBER OF WARRANT SHARES] fully paid
and nonassessable shares of Western Goldfields, Inc., an Idaho
corporation (the "Company"), $0.01 par value per share common stock
-------
(the "Warrant Stock"), at a price per share of $1.00 (the Exercise
-------------- --------
Price") (the number of shares, type of security and the Exercise Price
-----
being subject to adjustment as provided below).
1. Method of Exercise
--------------------
1.1 Cash Exercise Right. This Warrant may be exercised by the Holder,
-------------------
at any time during the period (the "Exercise Period") that (a)
---------------
commences on the date of the facility agreement between Western
Mesquite Mines, Inc., RMB International (Dublin) Limited, the
Company and each other party described in schedule 1 to that
agreement and the Agent ("Facility Agreement") and (b) ends on a
------------------
date 3 years from the date of the Facility Agreement. During the
Exercise Period the Holder may exercise this Warrant in whole or
in part, by delivering to the Company at 0000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxx 000 #000, Xxxxx, Xxxxx 00000 (or any other office
or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books
of the Company) (x) this Warrant certificate, (y) a certified or
cashier's cheque payable to the Company, or cancelled
indebtedness of the Company to the Holder, in the amount of the
Exercise Price multiplied by the number of
--------------------------------------------------------------------------------
page 59
shares for which this Warrant is being exercised (the Purchase
------------
Price"), and (z) the Notice of Cash Exercise attached as Exhibit A
----- ---------
duly completed and executed by the Holder. On exercise, the Holder
will be entitled to receive from the Company a stock certificate in
proper form representing the number of shares of Warrant Stock
purchased.
1.2 Net Issuance Right. Despite the payment provisions described
--------------------
above, the Holder may elect to convert all or a portion of this
Warrant into shares of Warrant Stock by surrendering this Warrant at
the office of the Company at the address set out in Section 1. 1 and
delivering to the Company the Notice of Net Issuance Exercise attached
as Exhibit B duly completed and executed by the Holder, in which case
---------
the Company will issue to the Holder the number of shares of Warrant
Stock of the Company equal to the result obtained by (a) subtracting B
from A, (b) multiplying the difference by C, and (c) dividing the
product by A as set out in the following equation:
X = (A-B)x C where:
---------
A
X = the number of shares of Warrant Stock issuable on net
issuance exercise pursuant to the provisions of this Section
1.2.
A = the Fair Market Value (as defined below) of one share of
Warrant Stock on the date of net issuance exercise.
B = the Exercise Price for one share of Warrant Stock under
this Warrant (as adjusted from time to time pursuant to
Section 4 hereof).
C = the number of shares of Warrant Stock as to which this
Warrant is exercisable pursuant to the provisions of this
Warrant or, if only a portion of this Warrant is being
exercised, the portion of this Warrant being exercised as
set out in the Notice of Net Issuance Exercise.
If the foregoing calculation results in a negative number, then no
shares of Warrant Stock shall be issued on net issuance exercise
pursuant to this Section 1.2.
"Fair Market Value" of a share of Warrant Stock means:
-------------------
(a) if the net issuance exercise is in connection with a transaction
specified in Section 4.1, the value of the consideration
(determined, in the case of noncash consideration, in good faith
by the Company's Board of Directors) to be received pursuant to
such transaction by the holder of one share of Warrant Stock;
(b) if the net issuance exercise is after the occurrence of the
initial public offering of the Company's Common Stock:
(1) if the Company's Common Stock is traded on an exchange or is
quoted on the Nasdaq National Market, the average of
--------------------------------------------------------------------------------
page 60
the closing or last sale price reported for the ten business
days immediately preceding the date of net issuance exercise
multiplied by the number of shares of Common Stock into
which such shares of Warrant Stock could be converted on the
date of net issuance exercise, if such Warrant Stock is then
convertible into Common Stock;
(2) if the Company's Common Stock is not traded on an exchange
or on the Nasdaq National Market, but is traded in the
over-the-counter market, the average of the closing bid and
asked prices reported for the ten market days immediately
preceding the date of net issuance exercise multiplied by
the number of shares of Common Stock into which shares of
Warrant Stock could be converted on the date of net issuance
exercise, if that Warrant Stock is then convertible into
Common Stock; and
(c) in all other cases, the fair value as determined in good faith by
the Company's Board of Directors.
On net issuance exercise in accordance with this Section 1.2, the
Holder shall be entitled to receive from the Company a stock
certificate in proper form representing the number of shares of
Warrant Stock determined in accordance with the foregoing.
2. Delivery of Stock Certificates; No Fractional Shares
----------------------------------------------------------
(a) Within 10 days after the payment of the Purchase Price
following the exercise of this Warrant (in whole or in part)
or after notice of net issuance exercise and compliance with
Section 1.2, the Company at its expense will issue in the
name of and deliver to the Holder (i) a certificate or
certificates for the number of fully paid and nonassessable
shares of Warrant Stock to which the Holder will be entitled
on the exercise of this Warrant, and (ii) a new Warrant of
like tenor to purchase up to that number of shares of
Warrant Stock, if any, as to which this Warrant has not been
exercised if this Warrant has not expired. The Holder will
for all purposes be deemed to have become the holder of
record of the shares of Warrant Stock on the date this
Warrant was exercised (the date the Holder has fully
complied with the requirements of Section 1. 1 or 1.2),
irrespective of the date of delivery of the certificate or
certificates representing the Warrant Stock; provided that,
if the date this Warrant is exercised is a date when the
stock transfer books of the Company are closed, a person
will be deemed to have become the holder of record of such
shares of Warrant Stock at the close of business on the next
succeeding date on which the stock transfer books are open.
(b) No fractional shares will be issued upon the exercise of
this Warrant. In lieu of fractional shares, the Company will
pay the Holder a sum in cash equal to the fair market value
of the fractional shares (as determined by the Company's
Board of Directors) on the date of exercise such fraction
multiplied by the Exercise Price.
--------------------------------------------------------------------------------
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3. Covenants as to Warrant Stock.
----------------------------------
(a) The Company covenants that at all times during the Exercise
Period there will be reserved for issuance and delivery on
exercise of this Warrant the number of shares of Warrant
Stock as is necessary for exercise in full of this Warrant
and, from time to time, it will take all steps necessary to
amend its Articles of Incorporation to provide sufficient
reserves of shares of Warrant Stock. All shares of Warrant
Stock issued pursuant to the exercise of this Warrant will,
on their issuance, be validly issued and outstanding, fully
paid and nonassessable, free and clear of all liens and
other encumbrances or restrictions on sale and free and
clear of all pre-emptive rights, except restrictions arising
(i) under federal and state securities laws, (ii) not by or
through the Company, or (iii) by agreement between the
Company and the Holder or its successors.
(b)
(i) The Company must use its best efforts to file a
registration statement on Form S-1, Form SB-2 or other
available form in relation to all securities which are
issuable on exercise of this Warrant (REGISTRATION
STATEMENT) within 60 days from the date the Lender has
provided the Commitment (as defined in the Facility
Agreement).
(ii) The Company must use its best efforts to cause the
Registration Statement to become effective within 6
months from the date on which it was filed.
(iii) A registration statement filed by the Company may deal
solely with the securities which are issuable on
exercise of this Warrant or may include those
securities in any other registration statement relating
to the registration of other securities of the Company.
(iv) The Company must register any securities under any
applicable securities or "blue sky" laws of each State
of the United States which the Agent reasonably
requests.
4. Adjustments; Termination of Warrant on Certain Events.
-----------------------------------------------------------
4.1 Effect of Reorganization. On a merger, consolidation,
--------------------------
acquisition of all or substantially all of the property or stock,
liquidation or other reorganization of the Company (collectively,
a "Reorganization") during the Exercise Period, as a result of
which the share holders of the Company receive cash, stock or
other property in exchange for their shares of Warrant Stock,
lawful provision will be made so that the Holder will then be
entitled to receive, on exercise of this Warrant, the number of
shares of securities of the successor corporation resulting from
the Reorganization (and cash and other property), to which a
holder of the Warrant Stock issuable upon exercise of this
Warrant would have been entitled in the Reorganization if this
Warrant had been exercised immediately before to the
Reorganization. If the per share consideration payable to the
Holder for shares in connection with any Reorganisation is in a
form other than cash
--------------------------------------------------------------------------------
page 62
or marketable securities, then the value of the consideration
will be determined in good faith by the Company's Board of
Directors. In each case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) will be made in
the application of the provisions of this Warrant with respect to
the rights and interest of the Holder after the Reorganization to
the end that the provisions of this Warrant (including
adjustments of the Exercise Price and the number and type of
securities purchasable pursuant to the terms of this Warrant)
will be applicable after that event, as near as reasonably may
be, in relation to any shares deliverable after that event on the
exercise of this Warrant.
4.2 Adjustments for Stock Splits, Dividends, Reclassification, etc.
----------------------------------------------------------------
If the Company issues any shares of the same class as the Warrant
Stock as a stock dividend or subdivides the number of outstanding
shares of the same class into a greater number of shares, then,
in either case, the Exercise Price in effect before the dividend
or subdivision will be proportionately reduced and the number of
shares of Warrant Stock at that time issuable pursuant to the
exercise of this Warrant shall be proportionately increased; and,
conversely, if the Company contracts the number of outstanding
shares of the same class as the Warrant Stock by combining shares
of the same class into a smaller number of shares, then the
Exercise Price in effect before that combination will be
proportionately increased and the number of shares of Warrant
Stock at that time issuable pursuant to the exercise or
conversion of this Warrant will be proportionately decreased. If
the Company at any time while this Warrant, or any portion of
this Warrant, remains outstanding and unexpired will, by
reclassification of securities or otherwise, change any of the
securities as to which purchase rights under this Warrant exist
into the same or a different number of securities of any other
class or classes, this Warrant will then represent the right to
acquire the number and kind of securities as would have been
issuable as the result of a change with respect to the securities
which were subject to the purchase rights under this Warrant
immediately prior to the reclassification or other change and the
Exercise Price will be appropriately adjusted all subject to
further adjustments as provided in Section 4. Each adjustment in
the number of shares of Warrant Stock issuable will be to the
nearest whole share.
4.3 Adjustment to Exercise Price for Dilutive Issues. In case the
----------------------------------------------------
Company at any time or from time to time before or during the
Exercise Period issues any shares of Warrant Stock (other than
shares issued as a stock dividend or stock split as provided in
Section 4.2) for a consideration per share that is less than the
Exercise Price, then on the date of that issue the Exercise Price
shall be reduced to a price (calculated to the nearest cent)
equal to the quotient of (a) the sum of (i) the per-share
consideration received by the Company in that issue plus (ii) the
product of the number of fully diluted shares of equity
securities of the Company outstanding immediately before the
issuance times the Exercise Price, divided by (b) the number of
fully diluted shares of equity securities of the Company
outstanding immediately after the issuance. In the case of the
issuance of options to purchase or rights to subscribe for
Warrant Stock, securities by their terms convertible into or
exchangeable for Warrant Stock, or options
--------------------------------------------------------------------------------
page 63
to purchase or rights to subscribe for convertible or
exchangeable securities, the following provisions shall apply:
(a) the aggregate maximum number of shares of Warrant Stock
deliverable on exercise of options to purchase or rights to
subscribe for Warrant Stock will be deemed to have been
issued at the time those options or rights were issued for a
consideration equal to the consideration received by this
corporation on the issuance of the options or rights plus
the minimum purchase price provided in the options or rights
for the Warrant Stock covered by the options or rights, but
no further adjustment to the Exercise Price will be made for
the actual issuance of Warrant Stock on the exercise of the
options or rights in accordance with their terms;
(b) the aggregate maximum number of shares of Warrant Stock
deliverable on conversion of or in exchange for any
convertible or exchangeable securities or on the exercise of
options to purchase or rights to subscribe for convertible
or exchangeable securities and subsequent conversion or
exchange of those securities will be deemed to have been
issued at the time the securities were issued or the options
or rights were issued for a consideration equal to the
consideration received by this corporation for any
convertible or exchangeable securities and related options
or rights, plus the additional consideration, if any, to be
received by this corporation on the conversion or exchange
of those securities or the exercise of any related options
or rights, but no further adjustment to the Exercise Price
will be made for the actual issuance of Warrant Stock on the
conversion or exchange of the securities in accordance with
their terms;
(c) if options, rights or convertible or exchangeable securities
by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to
this corporation, or decrease in the number of shares of
Warrant Stock issuable, on the exercise, conversion or
exchange of those securities, the Exercise Price computed on
the original issue thereof, and any subsequent adjustments,
will, on that increase or decrease becoming effective, be
recomputed to reflect the increase or decrease with respect
to the options, rights and securities not already exercised,
converted or exchanged before the increase or decrease
became effective, but no further adjustment to the Warrant
Price will be made for the actual issuance of Warrant Stock
on the exercise of any options or rights or the conversion
or exchange of those securities in accordance with their
terms;
(d) on the expiration of any options or rights, the termination
of any rights to convert or exchange or the expiration of
any options or rights related to convertible or exchangeable
securities, the Exercise Price will promptly be readjusted
to the Exercise Price as would have been obtained had the
adjustment which was made on the issuance of the options,
rights or securities or options or rights related to those
securities been made on the basis of the issuance of
page 64
only the number of shares of Warrant Stock actually issued
on the exercise of the options or rights, on the conversion
or exchange of those securities or on the exercise of the
options or rights related to those securities.
4.4 Calculation of Consideration. In the case of an issue of
------------------------------
additional shares of Warrant Stock for cash, the consideration
received by the Company will be deemed to be the net cash
proceeds received for the shares. In the case of an issue of
additional shares of Warrant Stock for noncash consideration, the
Company's Board of Directors will determine the value of the
consideration and the determination, unless shown by the Holder
to have been made other than in good faith, will be conclusive.
4.5 Certificate as to Adjustments. In the case of any adjustment in
-------------------------------
the Exercise Price or number and type of securities issuable on
exercise of this Warrant, the Company will promptly give written
notice to the Holder in the form of a certificate, certified and
confirmed by an officer of the Company, setting out the
adjustment in reasonable detail.
5. Securities Laws Restrictions; Legend on Warrant Stock
-----------------------------------------------------------
(a) This Warrant and the securities issuable on exercise have
not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or applicable state
---------------
securities laws, and no interest may be sold, distributed,
assigned, offered, pledged or otherwise transferred unless
(i) there is an effective registration statement under the
Securities Act and applicable state securities laws covering
any transaction involving the securities, (ii) the Company
receives an opinion of legal counsel for the holder of the
securities satisfactory to the Company stating that the
transaction is exempt from registration, or (iii) the
Company otherwise satisfies itself that the transaction is
exempt from registration. Despite any thing else contained
in clause 5(a), the Company will not require the Holder to
provide a legal opinion for transfers of this Warrant or the
securities issuable on exercise of this Warrant if a
transfer is made in full compliance with Rule 144 of the
Securities Act.
(b) A legend setting out or referring to the restrictions in
clause 5(a) will be placed on this Warrant, any replacement
and any certificate representing the Warrant Stock, and a
stop transfer order will be placed on the books of the
Company and with any transfer agent until the securities may
be legally sold or otherwise transferred.
6. Exchange of Warrant; Lost or Damaged Warrant Certificate. This
-----------------------------------------------------------
Warrant is exchangeable on its surrender by the Holder at the
office of the Company. On receipt by the Company of satisfactory
evidence of the loss, theft, destruction or damage of this
Warrant and either (in the case of loss, theft or destruction)
delivery of an indemnity agreement reasonably satisfactory in
form and substance to the Company or (in the case of damage) the
surrender of this Warrant for cancellation, the Company will
execute and deliver to the Holder, without charge, a new Warrant
of like denomination.
7. Notices of Record Date, etc.
-------------------------------
--------------------------------------------------------------------------------
page 65
In the event of.
(a) any taking by the Company of a record of the holders of
Warrant Stock for the purpose of determining the holders who
are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire
any shares or stock of any class or any other securities or
property, or to receive any other right;
(b) any Reorganization of the Company, or any reclassification
or recapitalization of the capital stock of the Company;
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
(d) any proposed issue or grant by the Company to the holders of
Warrant Stock of any shares of stock of any class or any
other securities, or any right or warrant to subscribe for,
purchase or otherwise acquire any shares of stock of any
class or any other securities; or
(e) any other event as to which the Company is required to give
notice to any holders of Warrant Stock,
then the Company will mail to the Holder a notice specifying (1)
in relation to clause 7(a), the date on which any record is to be
taken, (ii) in relation to clause 7(b) and clause 7(c), the date
on which any Reorganization, reclassification, recapitalization,
dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as to which the holders of record of
Warrant Stock or securities into which the Warrant Stock is
convertible will be entitled to exchange their shares for
securities or other property deliverable on such Reorganization,
reclassification, recapitalization, dissolution, liquidation or
winding-up, (iii) in relation to clause 7(d), the amount and
character of any stock or other securities, or rights or
warrants, proposed to be issued or granted, the date the proposed
issue or grant and the persons or class of persons to whom the
proposed issue or grant is to be offered or made, and (v) in
relation to clause 7(e), in reasonable detail, the facts,
including the proposed date, concerning any other event. Such
notice shall be delivered to the Holder at least twenty business
days prior to the date specified in the notice.
8. Miscellaneous.
-------------
8.1 Holder as Owner. The Company may deem and treat the holder of
-----------------
record of this Warrant as the absolute owner for all purposes
regardless of any notice to the contrary.
8.2 No Shareholder Rights. This Warrant does not entitle the Holder
-----------------------
to any voting rights or any other rights as a shareholder of the
Company or to any other rights except the rights stated in this
Warrant; and no dividend or interest will be payable or will
accrue in respect of this Warrant or the Warrant Stock, until
this Warrant is exercised.
8.3 Notices. Unless otherwise provided, any notice under this Warrant
-------
will be given in writing and will be deemed effectively given (a)
upon personal delivery to the party to be notified, (b) on
confirmation of receipt by fax by
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the party to be notified, (c) one business day after deposit with
a reputable overnight courier, prepaid for overnight delivery and
addressed as set out in (d), or (d) three days after deposit with
the United States Post Office, postage prepaid, registered or
certified with return receipt requested and addressed to the
party to be notified at the address indicated below, or at any
such other address as such party may designate by twenty days'
advance written notice to the other party given in the foregoing
manner.
If to the Holder:
To the address last furnished
in writing to the Company by
the Holder
If to the Company:
Western Goldfields, Inc.
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx 000 #000
Xxxxx, Xxxxx 00000
TELEPHONE: + 0 000 000 0000
FAX: + 0 000 000 0000
8.4 Amendments and Waivers. Any term of this Warrant may be amended
------------------------
and the observance of any term may be waived (either generally or
in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and
the Holder. Any amendment or waiver effected in accordance with
this Section 8.4 will be binding on each future Holder and the
Company.
8.5 Governing Law; Jurisdiction; Venue. This Warrant will be governed
----------------------------------
by and construed under the laws of the State of Colorado without
regard to principles of conflict of laws. The parties irrevocably
consent to the exclusive jurisdiction and venue of the state and
federal courts located in the City and County of Denver,
Colorado, in connection with any action relating to this Warrant.
8.6 Successors and Assigns. The terms and conditions of this Warrant
-----------------------
shall inure to the benefit of and be binding on the respective
successors and assigns of the parties.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
Western Goldfields, Inc.
By: ____________________
Name: ____________________
Title: ____________________
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Exhibit A - NOTICE OF CASH EXERCISE
To: Western Goldfields, Inc.
The undersigned hereby irrevocably elects to purchase [________]
shares of $________ per share par value common stock of Western
Goldfields, Inc. (the "Company") issuable on the exercise of the
attached Warrant and requests that ---- certificates for these shares
be issued in the name of and delivered to the address of the
undersigned, at the address stated below and, if the number of shares
set out in this notice are not all the shares that may be purchased
pursuant to the attached Warrant, that a new Warrant evidencing the
right to purchase the balance of the shares be registered in the name
of, and delivered to, the undersigned at the address stated below. The
undersigned agrees with and represents to the Company that the shares
of the common stock of the Company are acquired for the account of the
undersigned for investment and not with a view to, or for sale in
connection with, any distribution or public offering within the
meaning of the Securities Act of 1933, as amended (the "Securities
Act"). In addition, the undersigned represents that he, she or it (as
the case may be) is an "accredited investor" as such term is defined
in Rule 501 (a) of the Securities Act.
[PAYMENT ENCLOSED IN THE AMOUNT OF $______.]
[COMPANY DEBT CANCELLED IN THE AMOUNT OF $______.]
Dated: ________________
Name of Holder of Warrant:
(please print)
Address:
Signature:
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page 1
Exhibit B - NOTICE OF NET ISSUANCE EXERCISE
To: Western Goldfields, Inc.
The undersigned hereby irrevocably elects to convert that amount of
the attached Warrant as specified below into the specified number of
shares of $________ per share par value common stock of Western
Goldfields, Inc. (the "Company") as is determined pursuant to Section
1.2 of the attached Warrant. The undersigned requests that
certificates for the net issuance shares be issued in the name of and
delivered to the address of the undersigned, at the address stated
below. The undersigned agrees with and represents to the Company that
the shares are acquired for the account of the undersigned for
investment and not with a view to, or for sale in connection with, any
distribution or public offering within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"). In addition, the
undersigned represents that he, she or it (as the case may be) is an
"accredited investor" as such term is defined in Rule 501(a) of the
Securities Act.
Dated:________________
Name of Holder of Warrant:
(please print)
Number of Shares to be Converted:
Address:
Signature:
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page 2
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EXECUTED AS AN AGREEMENT:
SIGNED for
WESTERN MESQUITE MINES, INC.
by:
/s/Xxxx X. Xxxx
-------------------------------------------
Signature
/s/ Secretary
-------------------------------------------
Title
Xxxx X. Xxxx
-------------------------------------------
Name (please print)
SIGNED for
WESTERN GOLDFIELDS, INC.
by:
/s/Xxxx X. Xxxx
-------------------------------------------
Signature
/s/ Secretary
-------------------------------------------
Title
Xxxx X. Xxxx
-------------------------------------------
Name (please print)
SIGNED for
CALUMET MINING COMPANY
by:
/s/Xxxx X. Xxxx
-------------------------------------------
Signature
/s/ Secretary
-------------------------------------------
Title
Xxxx X. Xxxx
-------------------------------------------
Name (please print)
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SIGNED for
RMB INTERNATIONAL (DUBLIN) LIMITED
by:
/s/ D. Cottzee /s/ X. Xxxxxxxxx
------------------------------ ----------------------------------
Authorised Signatory Authorised Signatory
D. Cottzee X. Xxxxxxxxx
------------------------------ ----------------------------------
Name (please print) Name (please print)
SIGNED for
RMB RESOURCES LIMITED
by:
/s/ X.X. Xxxxxxxx /s/ Xxxxxx Xxxx
------------------------------ ----------------------------------
Director Director/Secretary
X.X. Xxxxxxxx Xxxxxx Xxxx
------------------------------ ----------------------------------
Name (please print) Name (please print)
--------------------------------------------------------------------------------
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