SECURITIES PURCHASE AGREEMENT
BETWEEN:
ROYAL OAK MINES INC.,
- and -
AGENT
made the 17th day of April, 1998
T A B L E O F C O N T E N T S
1 - DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Monetary References. . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4 Use of Singular and Plural . . . . . . . . . . . . . . . . . . . . . . 9
1.5 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . 9
1.6 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.7 Generally Accepted Accounting Principles . . . . . . . . . . . . . . . 10
1.8 Interpretation Not Affected by Headings. . . . . . . . . . . . . . . . 10
1.9 Computation of Time Periods. . . . . . . . . . . . . . . . . . . . . . 10
1.10 Day Not A Business Day . . . . . . . . . . . . . . . . . . . . . . . . 10
2 - TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Issuance of Debentures to the Lenders. . . . . . . . . . . . . . . . . 11
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Representations and Warranties by the Corporation. . . . . . . . . . . 13
3.2 Survival Representations and Warranties by the Corporation . . . . . . 26
4 - CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Conditions to the Obligations of the Agent re: the Initial
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Conditions to the Obligations of the Agent re: Additional
Purchase Price Payments. . . . . . . . . . . . . . . . . . . . . . . . 31
4.3 Waiver or Termination by the Agent . . . . . . . . . . . . . . . . . . 33
5 - CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Closing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2 Documents to be Delivered. . . . . . . . . . . . . . . . . . . . . . . 33
6 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.6 Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 38
6.10 Reliance and Non-Merger. . . . . . . . . . . . . . . . . . . . . . . . 38
6.11 Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.12 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.14 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT is made the 17th day of April, 1998
BETWEEN:
ROYAL OAK MINES INC., a corporation
amalgamated under the laws of the Province
of Ontario
(the "Corporation")
- and -
AGENT, as defined herein
WHEREAS the Corporation carries on business, inter alia, as an owner and
operator of the Kemess South Mine (as hereinafter defined);
AND WHEREAS the Agent has agreed to cause the Lenders (as hereinafter
defined) to subscribe for and purchase from the Corporation, and the Corporation
has agreed to issue to the Lenders, senior secured debentures of the Corporation
in the aggregate principal amount of Xxx Xxxxxxx xxx Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx Dollars (U.S.$120,000,000) upon and subject to the terms and conditions
hereinafter set out;
AND WHEREAS the indebtedness of the Corporation to the Lenders under the
Debentures (as hereinafter defined) is being incurred by the Corporation in
connection with the construction, development and operation of the Kemess South
Mine;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the subject matter or context is inconsistent
therewith, the following terms and expressions will have the following meanings:
(a) "Additional Purchase Price Payment" and "Additional Purchase
Price" have the meanings given to such terms, respectively, in Section
2.2(b) hereof;
(b) "Agent" means Trilon Financial Corporation;
(c) "Aggregate Additional Purchase Price" means U.S.$30,000,000;
(d) "Agreement" means this Securities Purchase Agreement made the
17th day of April, 1998 between the Corporation and the Agent, including
all schedules hereto, as it may be amended, modified, restated or
supplemented from time to time;
(e) "APM" means Arctic Precious Metals, Inc., a company incorporated
under the laws of Nevada;
(f) "Associate" has the meaning ascribed thereto in the BUSINESS
CORPORATIONS ACT (Ontario) and shall include any entity which is an
Associate of an Associate, and so on;
(g) "Audited Financial Statements" means the audited consolidated
financial statements of the Corporation as at and for the 12 month
fiscal period ended December 31, 1997, consisting of a balance sheet, an
income statement and a statement of changes in financial position,
together with the notes thereto, copies of which have been provided to
the Agent;
(h) "Business Day" means any day other than Saturday, Sunday or any
statutory holiday in Toronto, Canada;
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(i) "Change of Control of the Corporation" has the same meaning as is
given to that term in the Debentures;
(j) "Closing Date" means April 30th, 1998 or such other date as the
Agent and the Corporation may agree upon as the Closing Date;
(k) "Closing Time" means 3:00 p.m. (Toronto time) on the Closing Date
or such other time as the Agent and the Corporation may agree upon as
the Closing Time;
(l) "Common Shares" means the common shares in the capital of the
Corporation;
(m) "Consent" has the meaning as is given to that term in Section
3.1(g) hereof;
(n) "Copperstone Property" has the same meaning as is given to that
term in the Debentures;
(o) "Corporation" means Royal Oak Mines Inc., and includes any
predecessors or successors of the Corporation;
(p) "Debentures" mean the Series A Senior Secured Debentures ("Series
A Debentures") of the Corporation in the aggregate principal amount of
U.S.$85,000,000 and the Series B Secured Debentures ("Series B
Debentures") of the Corporation in the aggregate principal amount of
U.S.$35,000,000 to be issued to the Lenders pursuant to Section 2.1,
which debentures are in the forms attached as SCHEDULE A-1 AND A-2
respectively to this Agreement;
(q) "Debt" has the same meaning as is given to that term in the
Debentures;
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(r) "Default" has the same meaning as is given to that term in the
Debentures;
(s) "Disclosed Defaults" has the meaning given to such term in
Section 3.1(f) hereof;
(t) "Documents" has the same meaning as is given to that term in the
Debentures but includes this Agreement, the Royalty Agreement and the
Royalty Debenture;
(u) "Event of Default" has the same meaning as is given to that term
in the Debentures;
(v) "Existing Encumbrances" has the same meaning as is given to that
term in the Debentures;
(w) "Excluded Assets" means the Windy Craggy Property;
(x) "generally accepted accounting principles" means the accounting
principles so described and promulgated by the Canadian Institute of
Chartered Accountants which are applicable as at the date on which any
calculation made hereunder is to be effective or as at the date of any
financial statements referred to herein, as the case may be;
(y) "Glencore Agreement" means the letter agreement dated November 5,
1997 between the Corporation and Glencore Ltd. relating to the sale by
the Corporation of copper concentrate;
(z) "Governmental Body" has the same meaning as is given to that term
in the Debentures;
(aa) "Initial Purchase Price" has the meaning given to such term in
Section 2.2(a) hereof;
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(bb) "Intellectual Property" means all trade marks, trade names,
patents, patent applications, copyrights, trade secrets, logos,
processes, computer systems and application software which are owned or
used by, or which relate to the business of, the Corporation or the
Subsidiaries;
(cc) "Interim Financial Statements" means the unaudited consolidated
financial statements of the Corporation as at and for the 2 month period
ended February 28, 1998 consisting of a balance sheet, an income
statement and a statement of changes in financial position together with
any notes thereto, a copy of which has been provided to the Agent;
(dd) "Kemess Mine" means the Kemess North Property and the Kemess
South Mine;
(ee) "Kemess North Property" means all present and future property and
assets comprising or relating to what is generally referred to as the
Kemess North Property in British Columbia, Canada including, without
limitation, all mineral claims and leases referred to in SCHEDULE B-1
hereto, all buildings, equipment, fixtures and other property and assets
owned or leased by the Corporation (or in which the Corporation
otherwise has an interest) situated or used at the Kemess North Property
site, all operations, exploration and other activities carried on at
such site and all permits, authorizations, licenses and similar
approvals relating thereto;
(ff) "Kemess South Mine" means all present and future property and
assets comprising or relating to what is generally referred to as the
Kemess South Mine property in British Columbia, Canada including,
without limitation, all mineral claims and leases referred to in
SCHEDULE B-2 hereto, all buildings, equipment, fixtures and other
property and assets owned or leased by the Corporation (or in which the
Corporation otherwise has an interest) situated or used at the Kemess
South Mine site, all operations, exploration and other activities
carried on at such site and all permits, authorizations, licenses and
similar approvals relating thereto;
(gg) "Kemess Mine Production Date" has the same meaning as is given to
that term in the Debentures;
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(hh) "Knowledge" of a party means the best knowledge of the senior
management of that party (which in the case of the Corporation
specifically includes but is not limited to the Kemess Mine Project
Manager, the Kemess Mine Project Director and the Kemess Mine Manager of
Project Accounting, after having made all reasonable inquiries;
(ii) "Lenders" means such Person or Persons who purchase the
Debentures at the Closing Time or from time to time thereafter;
(jj) "Lien" has the same meaning as is given to that term in the
Debentures;
(kk) "Material Authorizations" has the same meaning as is given to
that term in the Debentures;
(ll) "Material Contracts" has the meaning given to that term in
Section 3.1(x) hereof;
(mm) "Material Subsidiaries" means APM and all Subsidiaries each of
which has total assets exceeding a fair market value of Can.$2,000,000;
(nn) "Materiality Threshold" means that the representation, warranty,
covenant or other obligation in question shall apply only to subject
matter which individually or in the aggregate is or should reasonably be
expected, as determined by the Agent and the Lenders, acting reasonably,
to be material to:
(i) the business, property or affairs of the Corporation
taken as a whole;
(ii) the construction, ownership or operation of the Kemess
Mine or the requirement that the Kemess Mine Production Date
occur on or before December 31, 1998;
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(iii) the Lenders, in their capacity as secured creditors of
the Corporation under the Documents; or
(iv) the Agent in its capacity as a party to the Royalty
Agreement and the Royalty Debenture;
(oo) "Mikwam Property" has the same meaning as is given to that term
in the Debentures;
(pp) "Mortgaged Property" has the same meaning as is given to that
term in the Debentures;
(qq) "Payment Certificate" has the meaning given to that term in
Section 4.2(c) hereof;
(rr) "Payment Date" has the meaning given to that term in
Section 2.2(b) hereof;
(ss) "Permitted Encumbrances" has the same meaning as is given to that
term in the Debentures;
(tt) "Permitted Hedging Indebtedness" has the same meaning as is given
to that term in the Debentures;
(uu) "Person" has the same meaning as is given to that term in the
Debentures;
(vv) "Proceeds Conditions" means the conditions precedent in favour of
the Agent that (i) the Kemess South Mine has produced concentrate over
the immediately preceding 30 day period, and is able to sustain and
maintain such production thereafter, of not less than 7500 short tons of
concentrate yielding mineral content that is acceptable to Glencore Ltd.
pursuant to the Glencore Agreement (without giving effect to any
amendments thereof), (ii) at such time the Kemess South Mine accounts
payable of the Corporation do not exceed
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U.S.$15,000,000 and (iii) at such time the Kemess South Mine accounts
payable of the Corporation are not overdue in accordance with their
respective terms;
(ww) "Proposed Leaseback Assets" has the same meaning as is given to
that term in the Debentures;
(xx) "Purchase Price" means (i) the Initial Purchase Price plus (ii)
the aggregate of the Additional Purchase Price Payments, if any;
(yy) "Reorganization Undertaking" has the meaning given to that term
in Section 4.1(1) hereof;
(zz) "Royalty Agreement" means the royalty agreement relating to the
Kemess South Mine, between the Agent and the Corporation in the form
attached as SCHEDULE C to this Agreement;
(aaa) "Royalty Debenture" means the debenture in favour of the Agent
which, inter alia, secures the Corporation's obligations to the Agent
pursuant to the Royalty Agreement in form and substance satisfactory to
the Agent;
(bbb) "Sale" has the same meaning as is given to that term in the
Debentures;
(ccc) "Security" has the same meaning as is given to that term in the
Debentures;
(ddd) "Security Documents" has the same meaning as is given to that
term in the Debentures;
(eee) "Senior Secured Debenture Facility" means the senior secured
debenture facility in the original principal amount of Can.$19,500,000
and U.S.$30,700,000 provided to the Corporation by DDJ Canadian High
Yield Fund, Xxxxxxx, Xxxxx & Co. and Mellon Bank;
8
(fff) "Series A Debentures" and "Series B Debentures" have the meanings
ascribed thereto in Section 1.1(p) hereof;
(ggg) "Subordinated Notes" means the outstanding 11% Series B Senior
Subordinated Notes of the Corporation due 2006 in the aggregate
principal amount of U.S.$175,000,000;
(hhh) "Subordinated Note Trust Indenture" means the Trust Indenture
dated as of August 12, 1996 among the Corporation, Kemess Mines Inc. and
Mellon Bank, F.S.B. relating to the Subordinated Notes, as amended by
(i) the First Supplemental Indenture dated and effective as of
December 31, 1997 by and between the Corporation and Chase Manhattan
Trust Company, National Association, the successor to Mellon Bank,
F.S.B. as Trustee, (ii) the Second Supplemental Indenture dated and
effective as of January 31, 1998 by and between the Corporation and
Chase Manhattan Trust Company, National Association, as Trustee and,
(iii) such other amendments as may be required in connection with the
transaction contemplated by this Agreement and the other Documents;
(iii) "Subsidiaries" means all of the corporations listed on SCHEDULE E
and any other corporations or limited liability companies which are or
hereafter become directly or indirectly controlled by the Corporation
and for the purposes of this definition the Corporation shall be deemed
to control a corporation if the Corporation beneficially owns, directly
or indirectly, shares to which are attached more than 50% of the voting
rights ordinarily exercisable at meetings of shareholders of such
corporation and/or 50% or more of the issued and outstanding fully
participating shares of such corporation and the Corporation shall be
deemed to own beneficially shares beneficially owned by a corporation
controlled by it, and so on indefinitely, and the Corporation shall be
deemed to control a limited liability company where it owns more than
50% of the equity interests in such limited liability company;
(jjj) "Taxes" means all taxes of any kind or nature whatsoever
including, without limitation, income taxes, sales or value-added taxes,
levies, stamp taxes, royalties, duties, and all fees, deductions,
compulsory loans and withholdings imposed, levied, collected, withheld
or assessed as of the date hereof or at any time in the future, by any
governmental authority of or within Canada or any other jurisdiction
whatsoever having power to tax, together
9
with penalties, fines, additions to tax and interest thereon; and
(kkk) "Windy Craggy Property" means the mineral claims in and around
Windy Craggy mountain in the Tatshenshini/Alsek region of northwestern
British Columbia, more particularly described in SCHEDULE F hereto.
1.2 MONETARY REFERENCES
Any reference in this Agreement to "Canadian dollars" or "Can. $" or
similar terms shall be deemed to be a reference to lawful money of Canada and
any reference in this Agreement to "United States of America dollars", "United
States dollars" or "U.S. $" or similar terms shall be deemed to be a reference
to lawful money of the United States of America. If no such references are made
with respect to any particular sum or obligation, the sum or obligation in
question shall be deemed to refer to lawful money of Canada.
1.3 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein. The
Corporation submits to the jurisdiction of the courts of Ontario to determine
all issues whether at law or in equity, arising from this Agreement.
1.4 USE OF SINGULAR AND PLURAL
Words importing the singular include the plural and vice versa and words
importing gender include all genders.
1.5 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity, illegality or unenforceability of any
such provision or part thereof by a court of competent jurisdiction shall not
affect the validity or enforceability of any other provision hereof or thereof.
Without limiting the generality of the foregoing, if any amounts on account of
fees or otherwise payable by the Corporation to the Agent hereunder exceed the
maximum amount recoverable under applicable law, the amounts so payable
hereunder shall be reduced to the maximum amount recoverable under applicable
law.
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1.6 REFERENCES
Except as otherwise specifically provided, reference in this Agreement
to any contract, agreement or any other instrument shall be deemed to include
references to the same as varied, amended, supplemented or replaced from time to
time and reference in this Agreement to any enactment, including without
limitation any statute, law, by-law, regulation, ordinance or order, shall be
deemed to include references to such enactment as re-enacted, amended or
extended from time to time.
1.7 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Unless otherwise specifically provided herein, all accounting terms
shall be applied and construed in accordance with generally accepted accounting
principles consistently applied.
1.8 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement into articles, sections, paragraphs,
subsections and clauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and
similar expressions refer to this Agreement and the schedules hereto and not to
any particular article, section, paragraph, clause or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto.
1.9 COMPUTATION OF TIME PERIODS
In this Agreement, in the computation of periods of time from a
specified date to a later specified date, unless otherwise expressly stated, the
word "from" means "from and including", and the words "to" and "until" each mean
"to but excluding".
1.10 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action is required to
be taken hereunder is not a Business Day, then such action shall be required to
be taken at or before the requisite time on the next succeeding day that is a
Business Day.
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ARTICLE 2 - TRANSACTIONS
2.1 ISSUANCE OF DEBENTURES TO THE LENDERS
On the terms and subject to the conditions hereof, at the Closing Time
the Agent will cause the Lenders to purchase from the Corporation and the
Corporation will issue and sell to the Lenders, the Series A Debentures and the
Series B Debentures substantially in the form attached hereto as SCHEDULES A-1
AND A-2 respectively.
2.2 PURCHASE PRICE
(a) Subject to compliance with the conditions precedent set forth in
Section 4.1 hereof and the terms hereof, on the Closing Date, the Agent
shall cause the Lenders to deliver to the Corporation, on account of the
purchase price for the Debentures, certified cheques, bank drafts or
wire transfers in an amount equal to U.S.$90,000,000 (the "Initial
Purchase Price") less any unpaid fees and expenses payable by the
Corporation to the Lenders or the Agent pursuant to Section 2.3 hereof.
The Corporation hereby irrevocably directs the Lenders to pay such fees
and expenses to the Agent or the Lenders, as the case may be, on its
behalf. The Initial Purchase Price shall be allocated first to the
Series B Debentures and second, to the Series A Debentures.
(b) The Additional Purchase Price shall be paid as hereinafter set
forth. Subject to compliance with the conditions precedent set forth in
Section 4.2 hereof and the terms hereof, on the 5th Business Day
following the Corporation providing to the Agent a notice in writing
requesting an Additional Purchase Price Payment, which notice shall set
out the amount thereof, the Agent shall cause the applicable Lenders to
deliver to the Corporation a certified cheque, bank draft or wire
transfer in the amount set forth in such notice (the amount of each such
payment made by the Lenders under this Section 2.2(b) being referred to
as an "Additional Purchase Price Payment" and the date of each payment
to be made hereunder being referred to as a "Payment Date"). The
aggregate of all Additional Purchase Price Payments hereunder shall be
the "Additional Purchase Price". Each Additional Purchase Price Payment
shall be in a minimum amount equal to the lesser of (i) U.S.$10,000,000
(and in denominations in excess thereof in multiples of U.S.$100,000.00)
and (ii) the unpaid portion of the Aggregate Additional Purchase Price.
The Corporation hereby irrevocably directs the Lenders to deduct from
any Additional Purchase Price Payment payable to the Corporation the
amount of any unpaid fees and expenses payable by the Corporation to the
12
Lenders or the Agent pursuant to Section 2.3 hereof and hereby directs
the Lenders to pay such fees and expenses to the Agent or the Lenders,
as the case may be, on its behalf. Notwithstanding anything to the
contrary contained in this Agreement or any of the Documents, neither
the Agent nor the Lenders shall have any obligation to make any
Additional Purchase Price Payments if any of the conditions precedent
set forth in Section 4.2 hereof shall not have been satisfied within the
time limited therefor. For greater certainty, neither the Agent nor the
Lenders will have any obligation to make any Additional Purchase Price
Payments on or after August 15, 1998, or which in the aggregate will
exceed the Agregate Additional Purchase Price.
2.3 FEES AND EXPENSES
(a) The Corporation acknowledges that the Agent and Lenders have
earned a non-refundable fee of U.S.$2,400,000 (which is payable as to
U.S.$1,200,000 to the Agent, as to U.S.$840,000.00 to the Lenders
purchasing Series A Debentures on a pro rata basis, and as to
U.S.$360,000.00 to the Lenders purchasing Series B Debentures on a pro
rata basis, which the Corporation will pay on the Closing Date. The
Corporation acknowledges and agrees that it will be responsible for and
will pay such fee whether or not the transactions hereunder are
completed and even if it is the Agent who terminates its obligations
under this Agreement pursuant to Section 4.3 hereof, unless such
termination is as a result of the Agent expressly terminating its
obligations hereunder solely pursuant to and in reliance on
Section 4.1(n) hereof, in which event the fee provided for in this
Section 2.3(a) shall be reduced to U.S.$100,000 which shall thereupon be
payable upon demand by the Corporation to the Agent. Any fee payable by
the Corporation to the Agent under this Section 2.3(a) may be made by
the Lenders paying the amount of such fees out of the Initial Purchase
Price in accordance with Section 2.2(a) hereof;
(b) The Corporation acknowledges and agrees that on the Closing Date,
the Agent will have earned and the Corporation will pay to the Agent an
additional fee, by executing and delivering to the Agent the Royalty
Agreement; and
(c) The Corporation acknowledges and agrees that in addition to the
fees payable pursuant to Section 2.3(a) and (b) hereof, it will be
responsible for and will pay or reimburse each of the Agent and the
Lenders forthwith on demand for all reasonable fees, expenses and other
out-of-pocket expenses paid or incurred by each of the Agent and the
Lenders, its representatives and
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consultants relating to their investigation of the Corporation, the
Subsidiaries and their respective businesses, the negotiation,
preparation and review of this Agreement and the other Documents and all
other matters pertaining to the transactions hereby contemplated,
including, without limitation, all reasonable fees, expenses and other
out-of-pocket expenses paid or incurred by each of the Agent and the
Lenders for legal advice and services in connection with such
transactions. The Corporation acknowledges and agrees that it will be
responsible for and will pay all such reasonable fees, expenses and
other out-of-pocket expenses whether or not the transactions hereunder
are completed and even if it is the Agent who terminates this Agreement
pursuant to Section 4.3 hereof. The Agent acknowledges receipt of the
sum of U.S.$100,000 and Can.$100,000 on account of the Corporation's
obligation under this Section 2.3(c).
2.4 USE OF PROCEEDS
The Corporation hereby covenants, agrees, represents and warrants with
and to the Agent and the Lenders that the Corporation will use the proceeds
from the issuance and sale of Debentures to the Lenders:
(a) to repay all amounts outstanding under the Senior Secured Debenture
Facility;
(b) to repay those Kemess South Mine accounts payable of the Corporation
listed in SCHEDULE G; and
(c) to fund capital and non-capital expenses of the Corporation in
connection with the construction, development and operation of the
Kemess South Mine.
In addition to the foregoing, and until the occurrence of a Default or Event of
Default hereunder:
(d) the Corporation may use such proceeds for general corporate purposes in
an amount not to exceed the aggregate of U.S.$20,000,000; and
(e) to the extent that the amounts referred to in Section 2.4(d) hereof are
insufficient to satisfy the general corporate purposes of the
Corporation, and provided that the Proceeds Conditions have then been
and remain satisfied, the Corporation may then use such proceeds for
general corporate purposes.
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES BY THE CORPORATION
The Corporation hereby represents and warrants to the Agent and to the
Lenders as follows and acknowledges that each of the Agent and the Lenders is
relying on such representations and warranties in connection with its entering
into this Agreement, the Lenders's purchase of the Debentures pursuant to this
Agreement, and in entering into the other transactions contemplated by this
Agreement:
(a) INCORPORATION AND STATUS OF THE CORPORATION. The Corporation is
the successor corporation resulting from the amalgamation on December
29, 1997 of the former Royal Oak Mines Inc. and Kemess Mines Inc., is
duly amalgamated and organized under the laws of its jurisdiction of
incorporation, is in good standing in each jurisdiction where, by reason
of its business or assets, it is required to be qualified or licensed
and has, subject to the Materiality Threshold, all powers, licenses,
franchises and permits required to own its assets and carry on its
business as the same is presently carried on.
(b) POWER AND CAPACITY. The Corporation has the corporate power to
enter into each of this Agreement and the other Documents and to do all
acts and things as are required or contemplated hereunder or thereunder
to be done, observed and performed by it.
(c) DUE AUTHORIZATION, NO CONTRAVENTION. The entering into and the
performance by the Corporation of this Agreement, the other Documents
and the transactions contemplated herein and therein (i) have been duly
authorized by all necessary corporate action on the part of the
Corporation and (ii) do not and will not contravene, violate, breach or
result in any default under the articles, by-laws, constating documents
or other organizational documents of the Corporation, or, other than the
Senior Secured Debenture Facility and the Subordinated Note Trust
Indenture, any agreement to which the Corporation is a party or, subject
to the Materiality Threshold, any term or provision of any regulatory
license or permit or any order of any court, governmental authority or
regulatory body or any law or regulation of any jurisdiction in which
the Corporation carries on its business.
(d) BINDING AGREEMENT. This Agreement and the other Documents have
15
been duly executed and delivered by the Corporation and constitute
legal, valid and binding obligations enforceable against the Corporation
in accordance with their terms, subject only to the availability of
equitable remedies and the effect of bankruptcy, insolvency and similar
laws affecting the rights of creditors generally.
(e) NO PROCEEDINGS. As of the date of execution of this Agreement,
except as is disclosed in SCHEDULE H and subject to the Materiality
Threshold there is no litigation, arbitration or administrative
proceedings, actions, suits or investigations outstanding, pending or,
to the Knowledge of the Corporation, threatened against the Corporation
or any of its properties. None of the transactions contemplated hereby
or by the other Documents have been enjoined by any Governmental Body
and no suit or other proceeding challenging the transactions
contemplated hereby or by the other Documents has been instituted or, to
the Knowledge of the Corporation, threatened, and no investigative
demand on the Corporation or any Subsidiary related to such transactions
has been made by any Governmental Body and no Governmental Body or
Person has, to the Knowledge of the Corporation, threatened to take any
such action.
(f) COMPLIANCE WITH APPLICABLE DOCUMENTS AND LAWS. Except as may be
expressly set out in SCHEDULE I (the "Disclosed Defaults") (which
Disclosed Defaults, other than amounts owed to the holders of those
Existing Encumbrances set out in Part I of SCHEDULE C1 to the
Debentures, will have been remedied on or before the Closing Date), the
Corporation is not in violation of, or in default under (and there does
not exist any event or condition which, after notice or lapse of time or
both, would constitute such a default under), any term of its articles,
by-laws, constating documents or other organizational documents, or,
subject to the Materiality Threshold, under any term of any agreement,
instrument, judgment, decree, order, statute, injunction, governmental
regulation, rule or ordinance (including, without limitation, those
relating to zoning, city planning or similar matters) applicable to the
Corporation, or to which the Corporation is bound or which may otherwise
be applicable to any property of the Corporation.
(g) NO CONSENTS REQUIRED. Except as may be expressly set out in
SCHEDULE J hereto (the "Consents") there are no consents, permits,
approvals, confirmations and acknowledgements required in order for the
Corporation to carry out the transactions contemplated hereby and by the
Documents, provided that the granting of fixed and specific Liens or
assignments which the
16
Lenders may request following the Closing Date pursuant to its right to
do so under the Documents may require consents or approval of other
Persons so as not to constitute events of default under any agreements
with such Persons.
(h) SHARES. SCHEDULE E sets out the name and jurisdiction of
incorporation, continuance or amalgamation of the Corporation and each
Subsidiary, and SCHEDULE K accurately describes the respective
authorized and issued share capital as of the date hereof of the
Corporation and each Material Subsidiary. Other than as disclosed in
Section 3.1(i) hereof, there are no shareholders' agreements, pooling
agreements, voting trusts or other similar agreements with respect to
the ownership or voting of any of the shares of the Corporation or of
Material Subsidiaries or pursuant to which any person may have any right
or claim in connection with any existing or past equity interest in the
Corporation or such Material Subsidiaries.
(i) NO OBLIGATION TO ISSUE SHARES. Except for (i) agreements,
options, warrants, rights and conversion or other rights granted to
current or former directors and employees of the Corporation in respect
of which no more than 10 million Common Shares of the Corporation may be
acquired, (ii) agreements to issue to the Corporation shares of APM
(which shares when issued will be subject to the Security and all share
certificates in respect thereof will, at the request of the Lenders, be
delivered to the Lenders), and (iii) special warrants and common shares
which may be issued by the Corporation to its creditors, in lieu of
partial payment to such creditors, and to other Persons, there are no
agreements, options, warrants, rights of conversion or other rights
pursuant to which the Corporation or any of the Subsidiaries is or may
become obligated to issue any shares or any securities convertible into,
or exchangeable for, shares.
(j) FINANCIAL STATEMENTS. The Audited Financial Statements and the
Interim Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied (subject
to usual year-end adjustments in the case of the Interim Financial
Statements) and fairly present the financial position of the Corporation
and the Subsidiaries and the results of their operations at the times
and for the periods indicated. The Corporation and each of the
Subsidiaries has no outstanding liabilities, contingent or otherwise,
other than those disclosed in the Audited Financial Statements and the
Interim Financial Statements and other than trade or business
obligations subsequently incurred in the ordinary course of business,
which such trade and business obligations are currently in good standing
in accordance with their respective terms, other than as set forth in
SCHEDULE L.
17
(k) PERMITS, COMPLIANCE WITH LAWS. This section 4.1(k) shall be
subject to the Materiality Threshold. The Corporation has all licences,
permits, approvals and franchises that it requires, or is required to
have, to own its properties and assets and to carry on its business as
presently conducted including, without limitation, in respect of the
construction and development of the Kemess South Mine. All such
licences, permits, approvals and franchises are in good standing and,
except as is disclosed in item 11 of SCHEDULE H, no actions,
proceedings, investigations or other steps of any kind are in process,
pending, to the Knowledge of the Corporation threatened, or reasonably
foreseeable which might result in any such licence, permit, approval or
franchise being terminated, revoked, withdrawn, suspended or otherwise
made unavailable to the Corporation for any period of time. The
Corporation has applications pending for all additional licences,
permits, approvals and franchises necessary or desirable for the
commencement of mining operations at the Kemess Mine in the manner and
to the full extent contemplated in plans and projections disclosed to
the Lenders (a list of which additional licenses are attached hereto as
SCHEDULE M) and has no reason to believe that any or all such additional
licences, permits, approvals and franchises will not be granted to
prevent, impair or interfere with the Kemess Mine Production Date
occurring on or before December 31, 1998. Except as is disclosed in
item 11 of SCHEDULE H, the Corporation is conducting its business in
compliance with all applicable laws, regulations, by-laws and ordinances
of each jurisdiction in which its business is carried on, including
without limitation all laws, regulations, by-laws and ordinances
relating to mining concessions.
(l) NO RESTRICTIONS. Except as may be provided for in agreements
between the Province of British Columbia and the Corporation respecting
economic assistance, copies of which have been provided to the Agent,
the Corporation is not a party to or bound by any agreement which would
restrict or limit its right to carry on any business or activity or to
solicit business from any Person or in any geographical area or
otherwise to conduct the business of the Corporation. The Corporation
is not subject to any legislation or any judgment, order or requirement
of any court or governmental authority which is not of general
application to persons carrying on a business similar to the business of
the Corporation.
(m) LIMITATION ON PAYMENT RESTRICTIONS. Except for restrictions
contained herein, in the Senior Secured Debenture Facility and in the
Subordinated Note Trust Indenture, neither the Corporation nor any
Subsidiary is subject to any
18
consensual restriction on its ability (a) to pay dividends or make any
other distributions on its equity securities to, or pay any indebtedness
owing to, or repurchase or redeem any equity securities from, the
holders of such equity securities, the Corporation or any other
Subsidiary, (b) to make any loans or advances to the Corporation or any
other Subsidiary, or (c) to transfer any of its property or assets to
the Corporation or any other Subsidiary.
(n) NO MATERIAL ADVERSE CHANGES, DAMAGE OR ACCIDENTS. Since March 1,
1998, the Corporation has operated its business diligently and only in
the ordinary course of business and except for the Disclosed Defaults,
there has not been any material adverse change in the condition
(financial or otherwise), assets, liabilities, affairs, business or
operations of the Corporation, any substantial loss of or damage to the
assets of the Corporation, or any accident (subject to the Materiality
Threshold) relating to the mines, properties or mining operations of the
Corporation in which any employee of the Corporation was injured. For
greater certainty, since March 1, 1998 the Corporation has not:
(i) incurred any liabilities other than in the ordinary
course of business consistent with past practice;
(ii) sold, encumbered, assigned or transferred any assets or
properties of the Corporation, other than for fair market value,
to purchasers at arms length to the Corporation and in the
ordinary course of business consistent with past practice;
(iii) created, incurred, assumed or guaranteed any Debt except
in the ordinary course of business consistent with past practice
or subjected any of its assets to any Lien except for Existing
Encumbrances;
(iv) changed or amended its governing documents in any
respect;
(v) declared, set aside, paid or made any distributions in
cash or property on its equity securities including its Common
Shares;
(vi) directly or indirectly redeemed, purchased or otherwise
acquired any of its equity securities;
19
(vii) other than the resignations of Xxxx Xxx, Xxxxx Xxxxxx and
Xxxxx Xxxxx, suffered any resignation or termination of
employment of any key officers or directors or become aware of
any impending resignation or termination of employment of any
such key officers or directors;
(viii) except in the ordinary course of its business, or as
disclosed in writing to the Agent prior to the date hereof,
materially increased the compensation payable or to become
payable to any of its officers or directors or materially
increased any bonus, insurance, pension or other employee benefit
plan, payment or arrangement made for or with any such officers
or directors;
(ix) materially changed its accounting methods, principles or
practices; or
(x) entered into any agreement or commitment to do any of the
things described in this section.
(o) NO WORK ORDERS. Except as is disclosed in item 11 of SCHEDULE H
and subject to the Materiality Threshold, no work orders, directions or
notices have been issued pursuant to any applicable law relating to the
business of the Corporation or any part of the Mortgaged Property or
relating to or pursuant to any environmental matters affecting the
foregoing and the Corporation has not received any notification from any
Governmental Body that any work, repairs, construction or capital
expenditures are required to be made in respect of the Mortgaged
Property or any part thereof as a condition of continued compliance with
any applicable law or any Material Authorizations issued thereunder.
(p) NO DEFAULT. Subject to the Materiality Threshold, the
Corporation is not in default or breach under any material commitment or
obligation under the terms and conditions relating to any Material
Authorizations and there exists no state of facts which, after notice or
the passage of time or both, would constitute such a default or breach
and there are no proceedings in progress, pending or, to the Knowledge
of the Corporation, threatened which may result in the revocation,
cancellation, suspension, non-grant or any adverse
20
modification of any Material Authorization except as is disclosed in
item 11 of SCHEDULE H. The Corporation has obtained all Material
Authorizations necessary or desirable to carry on all activities
currently and previously carried on at the Kemess Mine.
(q) NON-ARM'S LENGTH TRANSACTIONS. Except as is described in
employment agreements and correspondence delivered to the Agent prior to
the date hereof, the Corporation is not a party to any contract,
commitment or transaction (including by way of loan) with any officer,
director or shareholder of the Corporation, any of the Subsidiaries, or
any of their respective affiliates or associates, other than as
disclosed in the Audited Financial Statements and the Interim Financial
Statements and other than employment contracts in the ordinary course of
business.
(r) TAX MATTERS.
(i) The Corporation has prepared and filed on a timely basis
with all appropriate Governmental Bodies all returns with respect
to Taxes and other documents that it is required to file in
respect of any Taxes for all fiscal periods ending on or prior to
the Closing Date and all such returns or other documents are
correct and complete in all material respects;
(ii) The Corporation has paid in full all Taxes due on or
before the Closing Date and, in the case of Taxes accruing on or
before the Closing Date that are not due on or before the Closing
Date, the Corporation will have made adequate provision in its
books and records and financial statements for such payment; and
the Corporation does not have any liability for Taxes other than
those provided for in the Audited Financial Statements and the
Interim Financial Statements and those arising subsequently in
the ordinary course of the operation of its business;
(iii) The Corporation has withheld from each payment made to
any of its present or former employees, officers, directors and
to all persons who are non-residents of the applicable
jurisdictions all amounts required pursuant to Applicable Law to
be withheld or remitted and will continue to do so until the
Closing Date and furthermore has remitted such amounts within the
applicable periods to the appropriate Governmental Body; the
Corporation has remitted all Canada Pension Plan
21
contributions, unemployment insurance premiums, employer health
taxes and other Taxes payable by it in respect of its employees
and has or will have remitted such amounts to the appropriate
Governmental Body within the time required under the applicable
legislation; and the Corporation has charged, collected and
remitted on a timely basis all Taxes as required under applicable
legislation on any sale, supply, or delivery whatsoever, made by
the Corporation;
(iv) Except for a disputed assessment of fuel taxes payable by
the Corporation to the government of Canada in the approximate
amount of Can.$100,000, there are no reassessments of the
Corporation with respect to Taxes that have been issued and are
outstanding; no Governmental Body has challenged, disputed or
questioned the Corporation in respect of Taxes or in respect of
any returns, filings or other reports filed under any statute
providing for Taxes; the Corporation has not received any
indication from any Governmental Body that an assessment or a
reassessment in respect of the Corporation is proposed; and the
Corporation has not executed or filed any agreement extending the
period for assessment, reassessment or collection of any Taxes.
(s) NO ENCUMBRANCES. Each of the Corporation and APM owns and has
good and marketable title, free and clear of all Liens except Existing
Encumbrances, to all assets used in connection with its business
including, without limitation, all assets reflected on the balance sheet
included in the Audited Financial Statements and the Interim Financial
Statements or acquired by it after the date of such balance sheet except
for changes in such assets in the ordinary course of business subsequent
to that date. All material operating facilities, equipment and other
material items of tangible property and assets owned by the Corporation
are in good operating condition and repair, subject to normal wear and
maintenance and having regard to their respective ages, are usable in
the regular and ordinary course of business and conform to all
Applicable Laws relating to their construction, use and operation,
except where such failure, individually or in the aggregate, would not
have a material adverse effect on the Corporation. The Corporation's
annual report on Form 10-K for the fiscal year ended December 31, 1997
filed with the United States Securities And Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended contains a complete
and accurate description of all material property and assets owned by
the Corporation except that since the date of such annual report, the
Proposed Leaseback Assets have been sold and leased back by the
Corporation pursuant to an operating lease. SCHEDULE
22
N contains a complete and accurate description of all material
property and assets owned by the Corporation relating to the Kemess
Mine. Subject to the Materiality Threshold, all equipment or other
tangible assets or property situated on the premises of the
Corporation, or necessary to the operation of the business of the
Corporation, which is leased under a capital lease or under a
material operating lease is listed in SCHEDULE O. Subject to the
Materiality Threshold, the Corporation is in compliance with all
terms of agreements and arrangements governing the leased items
listed in SCHEDULE O.
(t) MATERIAL INDEBTEDNESS. SCHEDULE P contains a list of all
material indebtedness of the Corporation in excess of Can$1,000,000 and
the identity of the Persons to whom it is owed. The accounts payable of
the Corporation listed in SCHEDULE G relate only to the construction,
development and operation of the Kemess South Mine.
(u) SECURITY DOCUMENTS
(i) At the Closing Time, the Security Documents and the other
Documents (other than this Agreement, the Royalty Agreement and
the Royalty Debenture) will create a valid and enforceable
security interest and Lien upon the Mortgaged Property securing
the payment and satisfaction of all obligations of the
Corporation and APM to the Lenders. At the Closing Time, such
security interests will be perfected security interests subject
to no prior Liens or Liens ranking senior in priority to the
Liens in favour of the Lenders, except for such Liens in favour
of the Agent pursuant to the Royalty Agreement and the Royalty
Debenture and except for such Liens relating to or securing Debt
of the Corporation not in excess of Can.$10,000,000 as may be
held by holders of those Existing Encumbrances set out in Part 1
of SCHEDULE C1 to the Debentures.
(ii) At the Closing Time, the Royalty Agreement and the
Royalty Debenture will create a valid and enforceable security
interest and Lien upon the Kemess South Mine securing the payment
and satisfactions of all obligations thereunder of the
Corporation to the Agent. At the Closing Time, such security
interests will be perfected security interests subject to no
prior Liens or Liens ranking senior in priority to the Liens in
favour of the Agent, except for such Liens relating to or
securing Debt of the Corporation not in excess of Can.$10,000,000
as may be held by holders of those Existing Encumbrances set out
in Part 1 of SCHEDULE C1 to the Debentures.
23
(v) EMPLOYMENT MATTERS. Except as is disclosed in SCHEDULE Q, the
Corporation is not a party to or is not bound by any:
(i) written contract or commitment for the employment of any
employee or officer providing for an annual salary (including
benefits) of in excess of Can.$200,000 or a payment on
termination of in excess of six months salary and benefits;
(ii) oral contract or commitment for the employment of any
employee or officer, except for contracts of indefinite hire
terminable by the Corporation without cause on reasonable notice;
(iii) in the case of the Kemess Mine only, contract with or
commitment to any trade union, council of trade unions, employee
bargaining agent or affiliated bargaining agent (collectively
called "labour representatives") and the Corporation has not
conducted negotiations with respect to any such future contracts
or commitments; no labour representatives hold bargaining rights
with respect to any employees of the Corporation relating to the
Kemess Mine; no labour representatives have applied to have the
Corporation declared a related employer pursuant to the
applicable labour legislation; and, to the Knowledge of the
Corporation, there are no current or threatened attempts to
organize or establish any trade union or employee association
with respect to the Kemess Mine project provided, however, that
the Corporation anticipates that steps may be taken by its
employees to unionize and negotiate collective bargaining
agreements for the Kemess Mine at some time in the future; or
(iv) except as is disclosed in financial information made
available to the Agent prior to the date hereof and subject to
the Materiality Threshold, bonus, pension, multi-employer, profit
sharing, deferred compensation, retirement, disability, health
insurance or similar benefit plan, with respect to any of its
employees or others (including without limitation any agreements
in respect of employee share ownership plans), other than Canada
Pension Plan, the Ontario Health Insurance Plan and other similar
health plans established and administered by any other
governmental authority or workers' compensation insurance
24
provided pursuant to statute.
Subject to the Materiality Threshold, there is no work stoppage or other
concerted action, grievance or dispute existing or, to the Knowledge of
the Corporation, threatened against the Corporation, and there is no
material complaint, grievance, claim, work order or investigation that
has been filed, made, commenced or, to the Knowledge of the Corporation,
threatened against the Corporation pursuant to any human rights,
occupational health and safety, workers compensation, employment
standards or pay equity legislation or any similar legislation of any
jurisdiction in which the Corporation carries on its business.
(w) INTELLECTUAL PROPERTY. The Corporation owns and has good and
marketable title, free and clear of all Liens except Existing
Encumbrances, to the Intellectual Property. The conduct of the business
of, and the use of the Intellectual Property by the Corporation does not
infringe, and the Corporation has not received any notice, complaint,
threat or claim alleging infringement of, any patent, trade xxxx, trade
name, copyright, industrial design, trade secret or other propriety
right of any other Person. To the Knowledge of the Corporation, the
Intellectual Property which is not owned by the Corporation is being
used with the consent of, and in accordance with the consent or licence
from, the rightful owner thereof. The Corporation has taken all
necessary steps to establish, preserve and protect its rights in the
Intellectual Property which is material to the Corporation.
(x) MATERIAL CONTRACTS. SCHEDULE R contains a complete list of all
agreements of the Corporation which are material to the Kemess Mine and
which have not yet been fully performed by the parties thereto,
including without limitation agreements which relate to construction
underway or proposed at the Kemess Mine and including, without
limitation, royalty, refining and shipping agreements (the "Material
Contracts"). Subject to the Materiality Threshold, and other than the
Disclosed Defaults (which Disclosed Defaults, other than amounts owed to
those holders of the Existing Encumbrances set out in Part I of SCHEDULE
C1 to the Debentures, will have been remedied on or before the Closing
Date), each of the Material Contracts is in full force and effect
without amendment, and there has been no default under any of them, or
under any other material commitment or obligation, by the Corporation
or, to the Knowledge of the Corporation, any other party, nor has any
event occurred that, with the giving of notice, lapse of time or any
other condition subsequent, would constitute a default under or would
25
otherwise allow the termination of any Material Contract.
(y) MINING CONCESSIONS. SCHEDULES B-1 AND B-2 contains a complete
and accurate list of all material mining claims, concessions and leases
in which the Corporation has an interest relating in any way to the
Kemess Mine, including, without limitation, all mining claims,
concessions and leases in respect of which the Corporation has any
obligation to contribute funds or make payments, other than fees or
taxes payable in the ordinary course under the regulations governing
such claims, concessions or leases. The Corporation is the absolute
beneficial owner of, and has good and marketable title to, such mining
claims, concessions and leases in accordance with governing laws and
regulations, free of all Liens except for such rights as may be held by
Kemess South Resources Limited Partnership as disclosed in item (a) of
Part II of SCHEDULE C1 to the Debenture, by the Lenders under the Senior
Secured Debenture Facility and by the holders of the Existing
Encumbrances.
(z) PRICING, HEDGING PROTECTION. Subject to the Materiality
Threshold, SCHEDULE S contains a complete and accurate list and
description of all hedging or related arrangements to which the
Corporation is a party or by which it is bound including, without
limitation, forward sale contracts, options, interest rate swap
agreements, currency swap agreements, derivative agreements and similar
arrangements. None of the hedging or related arrangements entered into
by the Corporation provides for the granting of (i) any Lien against the
property, assets and undertaking of the Corporation other than the
Permitted Encumbrances described in Section (b) of the definition
thereof, or (ii) production advances or any other disposition of any
property, assets or undertaking of the Corporation in consideration for
advance or accelerated payment or other manner of prepayment or payment
not contemporaneous with delivery other than for the sales of up to
U.S.$10,000,000 of copper concentrate pursuant to the Glencore
Agreement.
(aa) ENVIRONMENTAL MATTERS. Except as is disclosed in item 11 of
SCHEDULE H regarding the sediment concerns at the Kemess South Mine and
subject to the Materiality Threshold, the Corporation is not in
violation of any applicable federal, provincial, state, municipal or
local laws, regulations, orders, governmental decrees or ordinances with
respect to environmental, health or safety matters (collectively,
"Environmental Laws") and no actions, proceedings, investigations or
other steps of any kind are in process, pending, to its Knowledge
threatened, or reasonably foreseeable with respect to any such existing
or past violation or alleged violation or other liability whatsoever
26
on the part of the Corporation under Environmental Laws. For greater
certainty, subject to the same qualifications and without limiting the
generality of the foregoing:
(i) the Corporation has carried on its business and at all
times has received, handled, used, stored, treated, shipped and
disposed at all times of all contaminants in compliance with all
Environmental Laws;
(ii) there have been no releases, deposits or discharges, in
violation of Environmental Laws, of any hazardous or toxic
substances, materials, pollutants, contaminants or wastes into
the earth, air or into any river, stream, lake or other body of
water or into any municipal or other sewer or drain water
systems;
(iii) no orders, directions or notices have been issued
pursuant to any Environmental Laws relating to the business or
assets of the Corporation; and
(iv) the Corporation has not failed to report to the proper
Governmental Body the occurrence of any event which is required
to be so reported by any Environmental Laws.
(bb) PLACES OF BUSINESS. The registered office of the Corporation is
situated at BCE Place, X.X. Xxx 000, Xxxxx 0000, 000 Xxx Xxxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, and the chief executive office of the
Corporation is situated at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx,
X.X.X. 00000.
27
(cc) ALL MATERIAL INFORMATION SUPPLIED. The Corporation has provided
to the Agent all material information relating to the financial
condition, business and prospects of the Corporation and all information
provided to the Agent is true, accurate and complete in all material
respects and omits no material fact necessary to make such information
not misleading provided, however, that the Corporation is not
representing and warranting that the financial and operating projections
made by it will accurately correspond to actual future results
notwithstanding that they are based on the best information currently
available to the Corporation. For greater certainty, all documents
provided to the Agent in the course of investigating, negotiating and
preparing the Documents and the property, assets and affairs of the
Corporation are complete and, subject to the proviso in the immediately
preceding sentence, accurate in every respect and copies of all such
documents provided to the Agent conform in every respect to the
originals thereof.
(dd) DEBENTURE COVENANTS. No event or circumstance has occurred or
exists which is inconsistent with the covenants and agreements of the
Corporation set out in the Debentures or which would, immediately or
with the passage of time or giving of notice or taking of any other
prerequisite step, constitute a Default or Event of Default thereunder.
(ee) SUBORDINATED NOTES. Other than the Disclosed Defaults, the
Corporation is in compliance with all terms and conditions and
agreements applicable to the Subordinated Notes, and the Corporation
will after giving effect to the transactions contemplated by this
Agreement and the other Documents, be in compliance with all terms and
conditions and agreements applicable to the Subordinated Notes. The
indebtedness under the Debentures, the Royalty Agreement and the Royalty
Debenture will fully constitute "Permitted Indebtedness" and the
Security and the Royalty Debenture will in each and every respect
constitute "Permitted Liens" under the Subordinated Note Trust
Indenture. The Corporation has delivered to the Agent complete and
accurate copies of all agreements and documents relating to the
Subordinated Notes including, without limitation, the Subordinated Note
Trust Indenture. The Subordinated Notes will be at the Closing Date and
thereafter remain in accordance with their terms, fully subordinated and
postponed to the obligations of the Corporation to the Agent and the
Lenders under the Documents, which obligations constitute "Senior
Indebtedness" under the Subordinated Note Trust Indenture.
28
(ff) SUBSIDIARIES OF THE CORPORATION. SCHEDULE E contains a list of
all of the Subsidiaries of the Corporation, including the jurisdiction
of incorporation, continuance and amalgamation for each such Subsidiary.
(gg) PROVINCIAL ECONOMIC ASSISTANCE. The Province of British Columbia
has unconditionally and irrevocably advanced to the Corporation
approximately, Can.$154,000,000 of the previously committed economic
assistance, compensation and investment. All such economic assistance,
compensation and investment is completely and accurately described in
SCHEDULE T and the Agent has been provided with true, complete and
accurate copies of all agreements and other documents relating thereto.
Except for annual payments of Can.$1,000,000 for each of the 12
successive years commencing in 1999, as identified in SCHEDULE T, there
are no further outstanding commitments of economic assistance,
compensation or investment which remain to be completed and there are no
commitments, agreements or arrangements with any Governmental Body which
would be breached or otherwise adversely impacted by the transactions
contemplated by the Documents or which could in any way preclude,
hinder, prejudice or delay the exercise of the Lenders's or Agent's
rights and remedies hereunder and thereunder.
(hh) WINDY CRAGGY PROPERTY. The inability of the Corporation to incur
expenditures on and maintain in good standing the Windy Craggy Property
will not result in: (i) any diminution in the amounts of payments from
the government of British Columbia pursuant to the agreement of June 27,
1997; (ii) revocation of any permits issued by the government of British
Columbia in connection with the Kemess Mine; or (iii) any material
adverse effect on the ability of the Corporation to conduct mining
operations at, and to maintain good title to, the Kemess Mine; and the
Windy Craggy Property does not include or in any way comprise to the
property and assets comprising the Kemess Mine.
3.2 SURVIVAL REPRESENTATIONS AND WARRANTIES BY THE CORPORATION
The representations and warranties made by the Corporation pursuant to
Section 3.1 hereof will survive the closing of the issuance of the Debentures
and the other transactions provided for herein and, notwithstanding such closing
or any investigation made by or on behalf of the Agent or the Lenders or any
other person or any knowledge of the Agent or the Lenders or any other person,
shall continue in full force and effect for the benefit of the Agent and the
Lenders.
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ARTICLE 4 - CONDITIONS
4.1 CONDITIONS TO THE OBLIGATIONS OF THE AGENT RE: THE INITIAL PURCHASE
PRICE
Notwithstanding anything herein contained, the obligation of the Agent
to complete the transactions provided for herein and to cause the Lenders to pay
the Initial Purchase Price will be subject to the fulfilment of the following
conditions at or prior to the Closing Time, and the Corporation covenants to use
its best efforts to ensure that such conditions are fulfilled.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES AND PERFORMANCE OF
COVENANTS. The representations and warranties of the Corporation
contained herein or in any other Document shall be true and accurate at
the Closing Time. In addition, the Corporation shall have complied with
all covenants and agreements herein agreed to be performed or caused to
be performed by it at or prior to the Closing Time. At the Closing
Time, the Corporation shall have delivered to each of the Agent and the
Lenders certificates in form acceptable to each of the Agent and the
Lenders confirming the facts with respect to each of the representations
and warranties, confirming that all such covenants and agreements have
been performed and confirming that all conditions set forth in this
Section 4.1 have been satisfied or waived.
(b) DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing nor shall there be any Default or
Event of Default which will or will likely occur as a result of the
transactions contemplated by this Agreement or the Documents.
(c) CONSENTS. The Consents and all other consents, permits,
agreements, confirmations and acknowledgements, determined by the Agent
to be required or necessary to be obtained in order to effectively
complete the transactions contemplated herein, shall have been obtained.
(d) LEGAL OPINIONS. The Agent and the Lenders shall have received
such legal opinions all in the form and content, and from counsel
satisfactory to the Agent and the Lenders regarding the validity,
enforceability and priority of the Documents and the Liens created
thereby and regarding such other matters as the Agent and the Lenders
may require to evidence compliance with the terms of the Documents and
shall have also received any other legal opinions
30
contemplated by the Debentures.
(e) SECURITY DOCUMENTS. The Lenders shall have received duly
executed and delivered originals of the Security Documents and evidence
satisfactory to the Agent and the Lenders of the Corporation's
compliance with the provisions of Article 3 of the Debentures.
(f) PAYMENT OF FEES. The Corporation shall have executed and
delivered to the Agent the Royalty Agreement and the Royalty Debenture
which shall have been registered against the Kemess South Mine and in
all public registries where such registration is necessary or desirable
to perfect the security interest granted in favour of the Agent, senior
in priority to all Liens except for such Liens as may be held by holders
of those Existing Encumbrances set out in Part 1 of SCHEDULE C1 to the
Debenture, and the Corporation shall have paid to the Agent and the
Lenders all fees and expenses referred to in Section 2.3, and shall have
unconditionally waived and released, in form and content satisfactory to
the Agent, any right to contest the reasonableness of such agreement,
fees and expenses or otherwise challenge the entitlement of the Agent
thereto. Notwithstanding such payment, the Corporation will remain
liable for any other fees and expenses referred to in Section 2.3 hereof
which relate to the transactions hereunder but which have not been
invoiced to, paid or incurred by the Agent or the Lenders as of the
Closing Date.
(g) SUBORDINATED NOTES. The Corporation shall have delivered to the
Agent and the Lenders complete and accurate copies of all documents
relating to the Subordinated Notes. The Agent and the Lenders shall
each have received evidence satisfactory to it that the Corporation is
in compliance with all terms and conditions of the Subordinated Notes
and that all necessary actions, steps and documents have been taken and
obtained to ensure that all transactions contemplated by this Agreement
and the other Documents (including, without limitation, the Royalty
Agreement and the Reorganization Undertaking) do not breach or
contravene any such terms or conditions, and have been consented to by
the holders of the Subordinated Notes. Each of the Agent and the
Lenders shall also have received evidence satisfactory to it that the
obligations of the Corporation in respect of the Subordinated Notes are
fully subordinated and postponed to its obligations to the Agent and the
Lenders under the Documents.
(h) SENIOR SECURED DEBENTURE FACILITY. The Corporation shall have
delivered to the Agent and the Lenders complete and unconditional
releases,
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reconveyances and discharges from the lenders pursuant to the
Senior Secured Debenture Facility of all indebtedness, liabilities and
obligations owed by the Corporation or any Subsidiaries to such lenders
and any and all Liens granted by the Corporation or any of its
Subsidiaries to secure any such indebtedness, liabilities or obligations
in exchange for payment to such lenders of an amount not to exceed the
aggregate of the principal sum of Can.$19,500,000 and U.S.$30,700,000,
interest thereon pursuant to and in accordance with the Senior Secured
Debenture Facility and a prepayment amount not to exceed 1% of the
principal amount being repaid to such lenders.
(i) PERFECTION OF SECURITY. All steps necessary or desirable
(including without limitation, the registration of the security
interests created by the Security Documents in all public registries
where such registration is necessary or desirable to perfect the
security interest granted in favour of the Agent and the Lenders) shall
have been taken to constitute the Liens under the Security as valid,
enforceable and prior ranking to all other Liens, claims and interests
in the Mortgaged Property except for such Liens relating to or securing
Debt of the Corporation not in excess of Can.$10,000,000 as may be held
by holders of those Existing Encumbrances set out in Part 1 of SCHEDULE
C1 to the Debentures.
(j) GOVERNMENT CONSENTS. The Agent and the Lenders shall have
received consents and acknowledgements of various agencies and
departments of the governments of British Columbia and Canada
substantially in the form attached as SCHEDULE V.
(k) RECEIPT OF CLOSING DOCUMENTATION. All documentation relating to
the due authorization and completion of the issuance of the Debentures
provided for herein and the due execution and delivery of all the
Documents, and all actions and proceedings taken on or prior to Closing
Time in connection with the performance by the Corporation of its
obligations hereunder shall be satisfactory to the Agent and the
Lenders, and the Agent and the Lenders shall have each received copies
of all such documentation or other evidence as it may reasonably request
in order to establish the consummation of the transactions contemplated
hereby and the taking of all corporate proceedings in connection
therewith in compliance with these conditions, in form and substance
satisfactory to the Agent and the Lenders.
(l) UNDERTAKING. The Corporation shall have executed and delivered
to each
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of the Agent and the Lenders:
(i) an undertaking (the "Reorganization Undertaking") in form
and substance satisfactory to the Agent and the Lenders to
forthwith, following receipt of written notice from the Agent,
cause the Kemess Mine and all Material Contracts to be
transferred to and assumed by a newly incorporated wholly-owned
Subsidiary of the Corporation ("Kemess Newco"), cause Kemess
Newco to assume and guarantee to the Lenders and the Agent all of
the Corporation's obligations, liabilities and indebtedness under
or pursuant to the Documents, pledge to the Lenders all of the
Corporation's shares in the capital of Kemess Newco, provide to
the Lenders and the Agent such additional security, agreements
and assurances as each may reasonably request to ensure that the
Liens in favour of the Lenders and the Agent on such assets are
valid, enforceable and prior ranking to all other Liens, claims
and interests in such assets except for such Liens relating to or
securing Debt of the Corporation not in excess of Can.$10,000,000
as may be held by holders of those Existing Encumbrances set out
in Part I of SCHEDULE C1 to the Debentures, and obtain and
deliver all legal opinions, consents and authorizations required
in connection with the foregoing. Such undertaking shall include
a covenant that, for so long as any Event of Default exists under
any of the Debentures, no payments or distributions will be made
from Kemess Newco to the Corporation or any of its Associates
except with the consent of the Lenders; and
(ii) such other undertakings as it may reasonably request
regarding the taking of actions and delivery of documents
following the Closing Time necessary or desirable to give effect
to the terms and conditions of this Agreement and the other
Documents.
(m) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition, business and prospects of the
Corporation and of the Kemess Mine.
(n) DUE DILIGENCE. The Agent shall have been satisfied in its
absolute discretion with its due diligence review of the Corporation and
its prospects including, without limitation, in connection with the
Kemess Mine.
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(o) TIME FRAME. All of the conditions set out in this Section 4.1
shall have been satisfied, each in accordance with the provisions of
this Agreement, on or prior to April 30, 1998.
(p) LENDERS INTER-CREDITOR AGREEMENT. The Lenders, the Corporation
and APM shall have entered into an inter-creditor agreement in form and
substance satisfactory to the Lenders.
(q) PERMITTED HEDGING CREDITOR AGREEMENTS. The Lenders, the Agent
and the Corporation shall have entered into (i) an inter-creditor
agreement with each of the holders of Permitted Hedging Indebtedness if
and to the extent such holder has been granted the Permitted
Encumbrances described in Section (b) of the definition thereof at or
prior to the Closing Time, in form and substance satisfactory to the
Lenders; and (ii) an agreement with each of the holders of Permitted
Hedging Indebtedness pursuant to which such holders will agree to deal
with such indebtedness and with any defaults of the Corporation in form
and substance satisfactory to the Lenders.
4.2 CONDITIONS TO THE OBLIGATIONS OF THE AGENT RE: ADDITIONAL PURCHASE PRICE
PAYMENTS
Notwithstanding anything herein contained, the obligation of the Agent
to cause the Lenders to make Additional Purchase Price Payments to the
Corporation will be subject to the fulfilment of the following conditions at or
prior to the Payment Date applicable thereto and the Corporation covenants to
use its best efforts to ensure that such conditions are fulfilled.
(a) SATISFACTION OF CONDITIONS SET OUT IN SECTION 4.1. All of the
conditions set out in Section 4.1 (other than the conditions set out in
Section 4.1(n) and (o)) shall have been satisfied and shall remain
satisfied, provided that the defined terms "Closing Time" or "Closing
Date" used in any such conditions in Section 4.1 shall for the purposes
of this Section 4.2(a) be amended to read "Payment Date".
(b) DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing nor shall there be any Default or
Event of Default which will or will likely occur as a result of the
transactions contemplated by this Agreement or the Documents or the
payment of the Additional Purchase Price Payments.
34
(c) PAYMENT CERTIFICATE. The Agent and the Lenders shall have
received two Business Days prior to the Payment Date a certificate (a
"Payment Certificate") dated as of the applicable Payment Date, in form
and substance satisfactory to the Agent and the Lenders:
(i) certifying either: (1) that there have been no amendments
or changes to the articles and by-laws of the Corporation since
the later of the Closing Date and the date of the last Payment
Certificate, or (2) that attached thereto are true and correct
copies of all amendments and/or changes to the articles and
by-laws of the Corporation;
(ii) certifying either: (1) that the most recently delivered
certificate setting forth the names of the directors and officers
of the Corporation, including sample signatures of such directors
and officers of the Corporation who have executed any of the
Documents, is in full force and effect, unamended, or (2) that
attached thereto is an amended certificate setting forth the
names of the directors and officers of the Corporation including
sample signatures of such directors and officers who are
authorized to execute any Documents;
(iii) confirming the truth, accuracy and compliance of and with
Sections 4.2(a) and 4.2(b) hereof and, to the extent there is any
non-compliance and/or untruth, specifying such non-compliance
and/or untruth;
(iv) setting forth the proposed use of the proceeds of the
Additional Purchase Price Payment and specifically tying such
payment to the cash flow statements delivered to the Lenders
pursuant to the Debentures; and
(v) certifying that the Initial Purchase Price and any
previous Additional Purchase Price Payments were used in
accordance with and for the purposes set forth in this Agreement,
the Debentures and any previously delivered Payment Certificates.
35
(d) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition, business and prospects of the
Corporation and of the Kemess Mine.
(e) USE OF ADDITIONAL PURCHASE PRICE PAYMENT. The proposed use of
the Additional Purchase Price Payment is in accordance with the
provisions of this Agreement, the Debentures and the cash flow statement
delivered to the Lenders pursuant to the Debentures.
(f) SECURITY. The Lenders shall be satisfied that upon and after
making the Additional Purchase Price Payment the Liens under the
Security are and will remain valid and enforceable and will rank senior
in priority to all other Liens, claims and interests in the Mortgaged
Property securing repayment of the Purchase Price for the Debentures,
except for such Liens relating to or securing Debt of the Corporation
not in excess of Can.$10,000,000 as may be held by holders of those
Existing Encumbrances set out in Part 1 of SCHEDULE C1 to the
Debentures;
(g) TIME FRAME. All of the conditions set out in this Section 4.2
shall have been satisfied, each in accordance with the provisions of
this Agreement, on or prior to August 15, 1998.
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4.3 WAIVER OR TERMINATION BY THE AGENT
Each of the conditions contained in Section 4.1 and Section 4.2 hereof
are inserted for the exclusive benefit of the Agent and may be waived in whole
or in part by the Agent at any time. The Corporation acknowledges that the
waiver by the Agent of any condition or any part of any condition shall
constitute a waiver only of such condition or such part of such condition, as
the case may be, and shall not constitute a waiver of any covenant, agreement,
representation or warranty made by the Corporation herein that corresponds or is
related to such condition or such part of such condition, as the case may be.
If any of the conditions contained in Section 4.1 hereof are not fulfilled or
complied with as herein provided, the Agent may, at or prior to the Closing Time
at its option, be released from any and all of its obligations, covenants,
agreements and liabilities pursuant to this Agreement by notice in writing to
the Corporation and in such event the Agent shall be released from all of its
obligations, covenants, agreements and liabilities hereunder and, unless the
condition or conditions which have not been fulfilled are reasonably capable of
being fulfilled or caused to be fulfilled by the Corporation, then the
Corporation shall also be released from all obligations hereunder, except that
the Corporation will remain liable for the payment of all fees and expenses
referred to in Sections 2.3(a) and (c) hereof. If any of the conditions
contained in Section 4.2 hereof are not fulfilled or complied with as herein
provided, the Agent and the Lenders shall be released from any and all of their
obligations, covenants, agreements and liabilities pursuant to this Agreement
including the obligation of the Agent to cause the Lenders to make any
Additional Purchase Price Payments.
ARTICLE 5 - CLOSING
5.1 CLOSING ARRANGEMENTS
Subject to the terms and conditions hereof, the transactions
contemplated herein shall be closed at the Closing Time at the offices of
Xxxxxxx and Xxxx or at such other place or places as may be mutually agreed upon
by the Corporation and the Agent.
37
5.2 DOCUMENTS TO BE DELIVERED
At or before the Closing Time, the Corporation shall execute, or cause
to be executed, and shall deliver, or cause to be delivered, to the Agent and
the Lenders all payments, documents, instruments and things which are to be
delivered by the Corporation pursuant to the provisions of this Agreement,
including the Debentures, and the Agent shall execute, or cause to be executed,
and shall deliver, or cause to be delivered, to the Corporation all payments and
all documents, instruments and things which the Agent is to deliver or to cause
to be delivered pursuant to the provisions of this Agreement.
ARTICLE 6 - GENERAL PROVISIONS
6.1 FURTHER ASSURANCES
Each of the Corporation and the Agent hereby covenants and agrees that
at any time and from time to time after the Closing Date it will, upon the
request of the other, do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered all such further acts, deeds, assignments,
transfers, conveyances and assurances as may be required for the better carrying
out and performance of all the terms of this Agreement including, without
limitation, such further and other security interests as the Agent or the
Lenders may request.
6.2 REMEDIES CUMULATIVE
The rights and remedies of the parties under this Agreement are
cumulative and in addition to and not in substitution for any rights or remedies
provided by law. Any single or partial exercise by any party hereto of any
right or remedy for default or breach of any term, covenant or condition of this
Agreement does not waive, alter, affect or prejudice any other right or remedy
to which such party may be lawfully entitled for the same default or breach.
38
6.3 INDEMNIFICATION
The Corporation covenants and agrees that it will indemnify and hold
harmless each of the Agent and the Lenders and its members, managers,
shareholders, partners, officers, directors, employees, affiliates, consultants
and agents and their respective successors and assigns, from and after the date
of this Agreement, against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable legal fees and
expenses and expenditures) with respect to any misrepresentation, breach of
warranty, or nonfulfillment of any agreement or covenant on the part of the
Corporation pursuant to the terms of this Agreement or any other Document or any
misrepresentation in or omission from any schedule, list, certificate, or other
instrument furnished or to be furnished by the Corporation to the Agent or the
Lenders pursuant to the terms of this Agreement or any other Document or with
respect to all actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses incident to any of the foregoing or in connection with the
enforcement of rights hereunder or thereunder, regardless of whether, in the
case of a breach of a representation or a warranty, the Agent or the Lenders
relied on the truth of such representation or warranty or had any knowledge of
any breach thereof.
6.4 NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by delivery as hereafter provided. Any such notice
or other communication, if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the Business Day
following the sending, or, if delivered by hand, shall be deemed to have been
received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at such address
having apparent authority to accept deliveries on behalf of the addressee.
Notice of change of address shall also be governed by this section. Notices and
other communications shall be addressed as follows:
39
(a) if to the Corporation:
Royal Oak Mines Inc.
c/o Arctic Precious Metals, Inc.
Royal Oak Mines (U.S.A.) Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx
X.X.X. 00000
Attention: President
Facsimile Number: (000) 000-0000
with a copy to:
Lang Xxxxxxxx
BCE Place, Box 747
2500 - 000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
Attention: Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxx
Facsimile Number: (000) 000-0000
(b) if to the Agent:
Trilon Financial Corporation
BCE Place
000 Xxx Xxxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx
Facsimile Number: (000) 000-0000
40
with a copy to:
Xxxxxxx and Xxxx
Suite 2300
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxx and Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
6.5 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts together shall
constitute but one and the same instrument.
6.6 ANNOUNCEMENTS
No announcement with respect to this Agreement, including any disclosure
of the identity of the Agent or the Lenders, will be made by any party hereto
without the prior approval of the other party. The foregoing will not apply to
any announcement by any party required in order to comply with laws pertaining
to timely disclosure, provided that such party consults with the other parties
before making any such announcement. The Corporation acknowledges and confirms
its rights and obligations under the Confidentiality Agreement entered into
between it and an affiliate of the Agent on February 19, 1998. The Agent
confirms that it is bound by and is subject to all of the obligations and
entitled to all of the rights of such affiliate under such Confidentiality
Agreement provided that such Confidentiality Agreement is hereby amended to the
extent necessary to enable and permit the Agent to use and disclose any and all
information and documentation in its possession regarding the property, assets
and affairs of the Corporation and the Subsidiaries (i) to any of the Lenders
and (ii) for the purpose of assessing, receiving advice on, exercising,
enforcing or prosecuting its rights and remedies under the Documents or
representing in any proceedings its interests in respect thereof except that,
prior to the occurrence of a Default, the Agent may not publicly disclose
material non-public information and documentation provided to it by the
Corporation regarding hedging arrangements.
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6.7 ASSIGNMENT
The rights and obligations of the Corporation hereunder shall not be
assignable. Each of the Agent and the Lenders may, at its discretion, assign
its rights and obligations hereunder or under any of the Documents at any time
(including, without limitation, by the grant or conveyance of participation in
its interests hereunder). For greater certainty and without limitation, each of
the Lenders may assign its rights in respect of any portion of the Corporation's
obligations under the Debentures, and corresponding rights under the other
Documents and/or the Agent may assign its rights in respect of any portion of
the Corporation's obligations under this Agreement, the Royalty Agreement, and
corresponding rights under the other Documents, and in such event the
Corporation will at the assignor's request execute new documentation, including
new Documents, to and in favour of the assignee substantially in the same form
and content as the assigned documentation, including the Documents. Each of the
Agent and the Lenders may provide to any proposed assignee or participant such
information concerning the financial position and the operations of the
Corporation and its Subsidiaries as, in its opinion, may be relevant or useful
in connection with this Agreement or any other Document or any portion thereof
proposed to be acquired by such assignee or participant. Notwithstanding
anything else in this section 6.7, if no Default or Event of Default has
occurred, neither the Agent nor the Lenders may assign this Agreement or the
Documents to any corporation whose principal business is the exploration for or
mining of precious and base metals (other than such Persons in which the Agent
or the Lenders or their respective Associates or affiliates has a direct or
indirect interest which Persons may be an assignee of this Agreement or the
Documents). Following a Default or an Event of Default, there shall be no
restrictions on the Agent's or the Lenders' ability to assign this Agreement or
any of the Documents.
6.8 RIGHT OF FIRST OPPORTUNITY TO REFINANCE
If the Corporation determines, at any time within a period of three
years from the date hereof, to refinance the principal amount outstanding
pursuant to the Debentures through the issuance or incurring of any indebtedness
in any manner (other than the issuance or incurring of any indebtedness that is
convertible to or exchangeable for equity of the Corporation), the Corporation
shall offer to the Agent the first right of opportunity to arrange such
financing as is required to refinance the principal amount outstanding pursuant
to the Debentures, on market terms.
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6.9 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns. Subject
to the last sentence of Section 6.10, nothing herein, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.10 RELIANCE AND NON-MERGER
All covenants, agreements, representations and warranties of the
Corporation made herein or in any other Document or in any certificate or other
document signed by any of its directors or officers and delivered by or on
behalf of any of them pursuant hereto or thereto are material, shall be deemed
to have been relied upon by the Agent and the Lenders notwithstanding any
investigation heretofore or hereafter made by the Agent or the Lenders, or their
respective counsel or any employee or other representative of the Agent or the
Lenders and shall survive the execution and delivery of this Agreement and the
other Documents until the Corporation shall have satisfied and performed all of
its obligations hereunder and thereunder. Notwithstanding anything to the
contrary herein contained, the Lenders may rely upon all of the representations,
warranties, agreements, covenants and indemnities given by or on behalf of the
Corporation pursuant to this Agreement and upon all of the conditions in favour
of the Agent in this Agreement and may pursue and enforce any and all remedies
resulting from any non-compliance therewith or breach thereof notwithstanding
that the Lenders are not a party to this Agreement. Nothing contained in this
Agreement shall operate to subordinate the Security provided in favour of the
Lenders or the Agent to or in favour of any Permitted Encumbrances or other
Liens, or to postpone any of the obligations owing by the Corporation to the
Lenders or the Agent to any of the obligations, indebtedness or liabilities owed
by the Corporation to the holders of the Permitted Encumbrances or other Liens.
6.11 JUDGMENT CURRENCY
If for the purpose of obtaining judgment in any court, it is necessary
to convert an amount due under this Agreement or any other of the Documents or
under any instrument delivered thereunder from a currency in which it is due
(the "Original Currency") into another currency (the "Second Currency") the
parties hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which, in accordance with normal banking
procedures, the Agent could purchase the
43
Original Currency with the Second Currency on the date two Business Days
preceding that on which judgment is given. The obligation of the Corporation
in respect of any Original Currency due from it to the Agent or the Lenders
under this Agreement or any other Documents or under any instrument delivered
thereunder shall, notwithstanding any judgment in the Second Currency, be
discharged by a payment made to the Agent or the Lenders entitled thereto on
account thereof in the Second Currency only to the extent that, on the
Business Day following receipt of such payment in the Second Currency, the
Agent may, in accordance with normal banking procedures, purchase the
Original Currency with the amount of the Second Currency so paid; and if the
amount of the Original Currency which may be so purchased is less than the
amount originally due in the Original Currency, the Corporation agrees as a
separate and independent obligation and notwithstanding any such payment or
judgment to indemnify the Agent and the Lenders against such deficiency.
6.12 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
6.13 ENTIRE AGREEMENT
This Agreement, the schedules referred to herein, and the other
Documents constitute the entire agreement between the parties hereto pertaining
to the matters therein set forth and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter thereof. Neither party hereto shall be bound or charged with any
oral or written agreements, representations, warranties, statements, promises,
information, arrangements or understandings not specifically set forth in this
Agreement or the schedules or the other Documents. The parties hereto further
acknowledge and agree that, in entering into this Agreement and in delivering
the schedules and the other Documents, they have not in any way relied, and will
not in any way rely, upon any oral or written agreements, representations,
warranties, statements, promises, information, arrangements or understandings,
express or implied, not specifically referenced or set forth in this Agreement
or in such schedules or other Documents.
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6.14 WAIVER
Any party hereto which is entitled to the benefits of this Agreement
may, and has the right to, waive any term or condition hereof at any time on or
prior to the Closing Time; provided, however, that such waiver shall be
evidenced by written instrument duly executed on behalf of such party and that
no waiver of any provision shall constitute a waiver of any other provision and
that no waiver will constitute a continuing waiver unless otherwise expressly
provided.
6.15 AMENDMENTS
No modification or amendment to this Agreement may be made unless agreed
to by the parties hereto in writing.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
under seal as of the day and year first above written.
ROYAL OAK MINES INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Chief Financial Officer
TRILON FINANCIAL CORPORATION
By: /s/ Xxx Xxxxxxx
-------------------------------
Name: Xxx Xxxxxxx
Managing Partner
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxx
Vice President
45