Exhibit 10.7
[EXECUTION COPY]
SECOND AMENDED AND RESTATED
GOLD BULLION LOAN AGREEMENT,
dated as of February 11, 1999
(amending and restating the Amended and Restated
Gold Bullion Loan Agreement,
dated as of August 9, 1996),
among
ECHO BAY INC.,
as Borrower,
ECHO BAY MINES LTD.
and certain of its Subsidiaries,
as Guarantors,
CERTAIN FINANCIAL INSTITUTIONS
FROM TIME TO TIME
PARTIES HERETO,
as the Banks,
and
THE BANK OF NOVA SCOTIA,
as Agent.
TABLE OF CONTENTS
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Section Page
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ARTICLE 1.CERTAIN DEFINITIONS AND ACCOUNTING TERMS
1.1. Certain Defined Terms............................................... 2
ARTICLE 0.XXXX AND RETURN OF GOLD AND DOLLARS; FORWARD SALES OF GOLD
2.1. Term Advances of Gold or Dollars.................................... 17
2.2. Revolving Advances of Gold or Dollars............................... 18
2.3. Making the Advances................................................. 19
2.4. Delivery and Return of Dollars...................................... 20
2.5. Delivery and Return of Gold......................................... 20
2.6. Issuance Procedures................................................. 21
2.7. Other Banks' Participation.......................................... 21
2.8. Disbursements....................................................... 22
2.9. Reimbursement....................................................... 22
2.10. Deemed Disbursements................................................ 22
2.11. Nature of Reimbursement Obligations................................. 23
2.12. Interest............................................................ 24
2.13. Payment Dates....................................................... 26
2.14. Fees................................................................ 26
2.15. Reduction of the Revolving Commitment, Letter of Credit Commitment.. 27
2.16. Optional Prepayment................................................. 27
2.17. Mandatory Prepayment................................................ 27
2.18. Amount and Allocation of Partial Prepayments........................ 28
2.19. Conversion of Borrowings............................................ 29
2.20. Risk of Loss........................................................ 30
2.21. Inability to Provide Gold or Dollars at LIBOR....................... 30
2.22. Yield Protection.................................................... 32
2.23. Payments and Computations........................................... 33
2.24. Advance, Conversion, Renewal or Payment on Business Day............. 34
2.25. Sharing of Payments, Etc............................................ 34
2.26. Forward Sales....................................................... 35
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ARTICLE 3.CONDITIONS OF LENDING AND FORWARD SALES
3.1. Conditions Precedent to Borrowing or Forward Sale.................... 36
3.2. Conditions Precedent to All Advances, Forward Sales, Conversions
and Renewals......................................................... 37
ARTICLE 4.REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of the Borrower and the Guarantors..... 38
4.2. Warranties of the Banks With Respect to the Gold...................... 42
4.3. Warranties of the Borrower and the Guarantors With Respect to the Gold 42
ARTICLE 5.COVENANTS OF THE BORROWER AND THE GUARANTORS
5.1. Affirmative Covenants................................................. 42
5.2. Negative Covenants.................................................... 47
ARTICLE 6.ABSOLUTE CONTINUING GUARANTEE
6.1. Undertaking........................................................... 51
6.2. Unconditional Guarantee............................................... 52
ARTICLE 0.XXXXXX OF DEFAULT
7.1. Events of Default..................................................... 56
ARTICLE 8.THE AGENT
8.1. Authorization and Action.............................................. 60
8.2. Notification of Banks................................................. 60
8.3. Agent's Reliance, Etc................................................. 60
8.4. The Bank of Nova Scotia and Affiliates................................ 60
8.5. Bank Credit Decision.................................................. 61
8.6. Indemnification....................................................... 61
8.7. Successor Agent....................................................... 61
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ARTICLE 9.MISCELLANEOUS
9.1. Waivers, Amendments, Etc...................................... 62
9.2. Notices, Etc.................................................. 63
9.3. No Waiver; Remedies........................................... 63
9.4. Accounting Terms.............................................. 63
9.5. Costs, Expenses and Taxes..................................... 63
9.6. Right of Setoff............................................... 64
9.7. Successors and Assigns; Governing Law......................... 65
9.8. Consent to Jurisdiction....................................... 67
9.9. Waiver of Jury Trial.......................................... 67
9.10. Execution in Counterparts..................................... 67
9.11. Confidentiality............................................... 67
9.12. Severability.................................................. 68
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SECOND AMENDED AND RESTATED
GOLD BULLION LOAN AGREEMENT
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THIS SECOND AMENDED AND RESTATED GOLD BULLION LOAN AGREEMENT, dated as of
February 11, 1999 (as further amended, supplemented, amended and restated or
otherwise modified from time to time, this "Agreement"), made and entered into
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as of the Amendment Effective Date (such capitalized term and other terms used
in this Agreement to have the meanings set forth in Article 1), by and among
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ECHO BAY, INC., a Delaware corporation (the "Borrower"), ECHO BAY MINES LTD., a
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corporation incorporated under the laws of Canada (the "Parent"), ROUND MOUNTAIN
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GOLD CORPORATION, a Delaware corporation ("RMGC"), ECHO BAY MINERALS COMPANY, a
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Delaware corporation, (subject to Section 5.2(j)), ECHO BAY CAPITAL CORPORATION,
an Irish corporation ("EBCC") and ECHO BAY EXPLORATION INC., a Delaware
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corporation (together with the Parent, individually a "Guarantor" and
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collectively the "Guarantors"), each of the financial institutions named from
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time to time in Schedule 1 hereto, including any Assignee Bank (individually a
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"Bank" and collectively the "Banks") and THE BANK OF NOVA SCOTIA, a Canadian
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chartered bank ("Scotiabank"), as agent for the Banks (in such capacity, the
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"Agent").
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W I T N E S S E T H:
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WHEREAS, the Borrower (directly and through its Subsidiaries and others) is
engaged in the business of exploring for, developing, owning interests in and
operating precious metals properties, including gold mines, and requires funds
to finance, directly or indirectly, the acquisition of precious metals property
interests, for working capital needs and for other general corporate purposes;
WHEREAS, the Borrower, the Banks, signatories to this Agreement on the
Amendment Effective Date and the Agent are parties to the Amended and Restated
Gold Bullion Loan Agreement, dated as of August 9, 1996 (as amended or otherwise
modified prior to the Amendment Effective Date, the "Existing Agreement"),
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pursuant to which (i) the Banks agreed to lend to the Borrower, on a revolving
basis, an amount not to exceed $60,000,000 or Gold equivalent, (ii) the Banks
agreed to make available to the Borrower a facility relating to Forward Sales
forming part of the revolving credit contemplated under the Existing Agreement
and (iii) the Banks made the Term Advances to the Borrower in an amount of
approximately $50,000,000;
WHEREAS, the Borrower and the Guarantors have requested, and the Banks are
willing, on the terms and subject to the conditions hereinafter set forth, to
(i) amend and restate in its entirety the Existing Agreement in accordance with
the terms hereof, (ii) continue as Term Advances hereunder the Term Advances
outstanding under the Existing Agreement, (iii) continue as Revolving Advances
hereunder the Existing Revolving Advances and continue
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to lend to the Borrower on a revolving basis, subject to the terms and
conditions hereof, an aggregate amount (inclusive of Existing Revolving
Advances) not to exceed at any time outstanding $50,000,000, or Gold equivalent
for the corporate purposes described in the first recital, (iv) make available
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to the Borrower a facility relating to Forward Sales which facility would form
part of the Revolving Commitment and (v) issue the Letter of Credit in a Stated
Amount not to exceed $4,000,000 pursuant to the Letter of Credit Commitment;
WHEREAS, in order to induce the Banks and the Agent to enter into this
Agreement and as a condition precedent to the Banks agreeing to amend and
restate the Existing Agreement on the terms of this Agreement and continue to
make Borrowings under this Agreement, each Guarantor is required to execute and
deliver this Agreement and confirm its existing guaranty of the Obligations;
WHEREAS, it is in the best interests of each Guarantor to execute this
Agreement inasmuch as each Guarantor will derive substantial direct and indirect
benefits from the Borrowings made from time to time to the Borrower by the Banks
pursuant to this Agreement; and
WHEREAS, the Parent holds all of the voting equity securities of the
Borrower;
NOW, THEREFORE, the parties hereto agree as set forth above and as follows.
ARTICLE 1.
CERTAIN DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless
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otherwise expressly indicated, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined).
"Additional Costs" has the meaning assigned to it in Section 2.21(c).
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"Advance" means, collectively, a Term Advance, a Revolving Advance or
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Letter of Credit Outstandings, as the case may be.
"Advances" means all of the outstanding Term Advances or Revolving
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Advances, and the issued and outstanding Letter of Credit, as the case may be.
"Advance Date" means the date of making an Advance or issuance (or
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extension) of the Letter of Credit.
"Advance Date Value" means, as to any Advance of Gold, either the Dollar
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Value of the Gold advanced on the Advance Date or on the date of a conversion
from Dollars to Gold
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pursuant to Section 2.19(b) or, at the Borrower's option set forth in the
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relevant Notice of Borrowing, the sale price per Ounce under a forward sale
contract entered into after the Amendment Effective Date and prior to the
Maturity Date for the number of Ounces of Gold being advanced on a particular
Advance Date, which contract requires delivery of said number of Ounces by the
Borrower on said Advance Date, notice of which in form satisfactory to the Agent
shall have been provided by the Borrower to each Bank promptly after such
contract has been executed, with notification of the Borrower's intent to borrow
an equal number of Ounces of Gold on the delivery date under the contract.
"Affiliate" means any Person directly or indirectly controlling or
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controlled by or under common control with the Borrower; provided that, for
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purposes of this definition, "control," as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agent" has the meaning assigned to that term in the introduction to this
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Agreement, and also shall refer to each other Person appointed as the successor
Agent pursuant to Section 8.7.
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"Aggregate Term Commitment" means the maximum Dollar amount that may be
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outstanding as Term Advances, which shall not exceed $32,500,000 on the
Amendment Effective Date, as such amount may be reduced from time to time in
accordance with the terms of this Agreement.
"Amendment Effective Date" means February 11, 1999.
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"Applicable Commitment Fee Rate" means 0.5% per annum.
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"Applicable Rate" means (i) prior to the Amended Effective Date, the rate
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determined pursuant to the terms of the Existing Agreement (which shall be
deemed to be zero, in the case of Base Borrowings) and (ii) on and subsequent to
the Amendment Effective Date, 1.75% per annum (in the case of LIBOR Borrowings)
and .75% per annum (in the case of Base Borrowings).
"Assignee Bank" has the meaning assigned to that term in Section 9.7(b).
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"Assignment Agreement" has the meaning assigned to that term in Section
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9.7(b).
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"Authorized Officer or Agent" means, as to any Obligor, any of such
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Obligor's Chairman, President or any Vice President and each other officer or
agent of such Obligor authorized by the Board of Directors of such Obligor to
act on behalf of such Obligor under this Agreement or any Instrument executed
pursuant hereto.
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"Banks" has the meaning assigned to that term in the introduction to this
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Agreement (and shall include the Bank that is also acting in the capacity as the
Issuer).
"Base Borrowing" means any Advance of Dollars bearing interest at a rate
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based on the Base Rate.
"Base Rate" means a fluctuating interest rate per annum equal at all times
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to the greater of: (a) the rate of interest announced by the Agent in Atlanta,
Georgia from time to time in its sole discretion as the Agent's "base rate"
applicable to all loans by the Agent to its customers which bear interest at a
rate related to the Agent's "base rate"; and (b) the Federal Funds Effective
Rate plus 1/2 of 1% per annum. If the Agent shall have determined (which
determination shall be conclusive, absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including, without
limitation, the inability or failure of the Agent to obtain sufficient bids or
publications in accordance with the terms hereof, the rate announced by the
Agent as its base rate shall be the Base Rate until the circumstances giving
rise to such inability no longer exist. For purposes of this paragraph,
"Federal Funds Effective Rate" means, for any period, a fluctuating interest
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rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, for any day on which such rate is not so
published for such day by the Federal Reserve Bank of New York, the average of
the quotations for such day for such transactions received by the Agent from
three federal funds brokers of recognized standing selected by the Agent. Any
change in the Base Rate shall take effect on the day specified in the public
announcement of change to the Agent's base rate. The Agent's base rate is set
by the Agent based on various factors, including the Agent's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans. The Agent may price other loans at,
above or below the Agent's base rate.
"Borrower" has the meaning assigned to that term in the introduction to
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this Agreement.
"Borrowing" means, collectively, as the context may require, (i) the
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issuance of, or the continuation or extension of the Stated Expiry Date of, the
Letter of Credit, (ii) the continuation of Existing Revolving Advances as
Revolving Advances hereunder and the subsequent making of a Revolving Advance or
loaning of Gold hereunder and (iii) the continuation of Term Advances under the
Existing Agreement as Term Advances hereunder.
"Breakage Costs" means all costs and losses which a Bank may incur as a
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result of any repayment of Gold borrowed hereunder or principal on LIBOR
Advances hereunder on a date other than a scheduled maturity date for the
applicable Borrowing and all costs and losses which a Bank may incur as a result
of any failure of the Borrower to borrow Gold or Dollars hereunder after giving
written notice of its intent to borrow hereunder to the Agent pursuant to
Section 2.3, or any failure of the Borrower to deliver Gold hereunder as
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required by the terms of any Forward Sale, such Bank's good faith computation of
such costs and losses to be conclusive and binding
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in the absence of manifest error, and the amount thereof to be paid in same day
funds upon demand by such Bank or the Agent; provided, however, that a Bank
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shall not be deemed to have incurred a cost or loss by reason of fluctuations in
the price of Gold between the date of any repayment of Gold and any scheduled
maturity date for the applicable Advance.
"Business Day" means a day of the year on which banks are open for business
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in Xxx Xxxx, Xxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx and London,
England.
"Cash Flow Schedule" means a schedule projecting cash flow to be provided
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by the Parent to the Banks on the Amendment Effective Date and at least
quarterly thereafter on or before 60 days after the end of the Borrower's fiscal
quarter and annually on or before 90 days after the end of the Borrower's Fiscal
Year, in substantially the form of Schedule 4 hereto, or in such other form as
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the Parent and the Banks shall agree.
"Ceiling Dollar Value" means (a) as to any Bank, for Borrowings (other than
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Letter of Credit Outstandings) made under a Commitment (other than the Letter of
Credit Commitment), 150% of such Bank's then existing Commitment, (b) as to all
Banks' Revolving Commitments, 150% of the aggregate amount of the Banks'
Revolving Commitments as of the Amendment Effective Date, and (c) as to all
Banks' Term Commitments, 150% of the aggregate amount of the Banks' Term
Advances as of the Amendment Effective Date, in each case as such Revolving
Commitments or Term Advances may be permanently reduced from time to time
pursuant to this Agreement.
"Changes in Ownership or Management" shall be deemed to have occurred
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whenever (i) Parent shall cease to own directly or indirectly 100% of each
outstanding class of equity securities of the Borrower or a Guarantor; or (ii)
the management or operation of any significant portion of the Borrower's mining
properties is conducted by any Person other than full-time employees of the
Borrower or the Parent and other than qualified and competent contract operators
acting under the active supervision of the Borrower or the Parent and having no
interest in the equity or profits of the Borrower or in the gold or proceeds
thereof produced by the Borrower unless such Person is a Person in which an
investment is permitted under Section 5.2(d) hereof.
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"Code" means the Internal Revenue Code of 1986, and the regulations
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thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Commitment" of each Bank and the Issuer means either the Term Commitment,
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the Letter of Credit Commitment or the Revolving Commitment of such Bank or The
Issuer, as the case may be.
"Commitments" of each Bank and the Issuer means the Term Commitment, the
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Letter of Credit Commitment and the Revolving Commitment of such Bank or the
Issuer, as the case may be.
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"Commitment Termination Event" means
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(a) the occurrence of any Event of Default described in clause (e) of
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Section 7.1; or
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(b) the occurrence and continuance of any other Event of Default and
either (i) the declaration of all or any portion of the Advances to be due
and payable pursuant to Section 7.1, or (ii) the giving of notice by the
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Agent, acting at the direction of the Majority Banks, to the Borrower that
the Commitments have been terminated.
"Confirmation of Borrowing" means a confirmation of each Borrowing of Gold
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by the Borrower, on the Borrower's letterhead and in the form set forth in
Exhibit B hereto, signed by an Authorized Officer or Agent of the Borrower.
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"Consolidated Net Tangible Assets" means total assets (less depreciation
--------------------------------
and reserves) which would be included on the balance sheet, after deducting all
current liabilities other than the current portion of long-term debt and
deferred revenue and interest bearing short-term debt and after deducting all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expenses and other intangibles, which intangibles do not include deferred
exploration or development expenditures relating to properties owned by the
Parent or to which the Parent has any right, title or interest as set forth in
the most recent balance sheet of the Parent and its consolidated Subsidiaries
and computed in accordance with generally accepted accounting principles in
Canada as of August 9, 1996.
"Contango" means the excess of (a) the price that a Bank has agreed to pay
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to the Borrower on the delivery date of a Forward Sale over (b) the Forward Sale
Amount.
"Credit Extension Request" means, as the context may require, any Issuance
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Request or Notice of Borrowing.
"Debt" means (i) obligations under the Notes, Gold Receipts (calculated at
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the Dollar Value of the Gold outstanding on the day the obligation is
determined) and this Agreement, (ii) indebtedness for borrowed money or gold or
for the deferred purchase price of property or services where such purchase
price is deferred for more than 60 days, (iii) obligations as lessee under
leases which shall have been or should be, in accordance with GAAP, recorded as
capital leases, (iv) obligations under direct or indirect guarantees in respect
of, and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (ii) or (iii) above,
(v) liabilities in respect to unfunded vested benefits under plans covered by
Title IV of ERISA, and (vi) all obligations, contingent or otherwise, relative
to the face amount of the Letter of Credit.
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"Default" means any Event of Default or any condition, occurrence or event
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which, with the giving of notice or passage of time (or both) would constitute
an Event of Default.
"Delivered"; "Delivery"; or "Deliver" means that the party receiving Gold
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hereunder shall have received or shall receive confirmation from a bullion
depository that it is holding Gold for such party's account.
"Disbursement" is defined in Section 2.8.
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"Disbursement Date" is defined in Section 2.8.
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"Dollars" and the sign "$" each mean lawful money of the United States of
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America.
"Dollar Value", when used with reference to the value of any Gold, shall
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mean, as of the date of determination, the value, expressed in Dollars, of such
Gold determined at the London Price on such date or another price basis if
agreed in writing by the Borrower and the Banks.
"EBCC" is defined in the preamble.
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"EBCC Transaction" means the winding up of EBCC, the transfer of certain of
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its operating assets to certain other Guarantors and other aspects relating
thereto, as more fully described in the letter, dated September 23, 1998 (the
"September 23 Letter"), from the Borrower and certain Guarantors to the Banks, a
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copy of which was attached as Exhibit A to the First Amendment, dated December
24, 1998, to the Existing Agreement.
"Environmental Laws" means any Governmental Requirement pertaining to land
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use, air, soil, surface water, groundwater (including the protection, cleanup,
removal, remediation or damage thereof), public or employee health or safety or
any other environmental matter, including, without limitation, the following
laws as the same may be amended from time to time: (1) Clean Air Act (42 U.S.C.
(S) 7401, et seq.); (2) Clean Water Act (33 U.S.C. (S) 1251, et seq.); (3)
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.); (4)
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
(S) 9601, et seq.); (5) Safe Drinking Water Act (42 U.S.C. (S) 300f, et seq.);
(6) Toxic Substances Control Act (15 U.S.C. (S) 2601, et seq.); (7) Rivers and
Harbors Act (33 U.S.C. (S) 401, et seq.); (8) Endangered Species Act (16 U.S.C.
(S) 1531, et seq.); and (9) Occupational Safety and Health Act (29 U.S.C. (S)
651, et seq.); together with any other foreign or domestic laws (federal, state,
provincial or local) relating to emissions, discharges, releases or threatened
releases of any Hazardous Substance into ambient air, land, surface water,
groundwater, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, discharge or handling of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in
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each case as in effect from time to time. References to sections of ERISA also
refer to any successor sections thereto.
"Event of Default" has the meaning assigned to that term in Section 7.1.
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"Existing Agreement" has the meaning assigned to it in the second recital.
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"Existing Revolving Advances" means Revolving Advances made under (and as
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defined in) the Existing Agreement outstanding on the Amendment Effective Date.
"Fiscal Year" means any period of twelve consecutive calendar months ending
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on December 31; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., the "1999 Fiscal Year") refer to the Fiscal Year ending on
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December 31 of such calendar year.
"Forward Sale" means a contract entered into pursuant to this Agreement
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relating to the sale of Gold by the Borrower to any Bank for delivery at a
specified future date.
"Forward Sale Amount" means the total number of Dollars equal to the number
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of Ounces subject to each Forward Sale multiplied by the Dollar Value per Ounce
on the date of quotation with respect to such sale.
"GAAP" means (i) in the case of the Parent, those generally accepted
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Canadian accounting principles applied in the preparation of the Parent's
audited financial statements for the year ending December 31, 1996, (ii) in the
case of the Borrower and each other U.S. Subsidiary, those generally accepted
U.S. accounting principles applied in the preparation of the financial
statements of the Borrower for the year ending December 31, 1996 and (iii) in
the case of EBCC, those generally accepted Irish accounting principles applied
in the preparation of the financial statements of EBCC for the year ending
December 31, 1996.
"Gold" means various amounts of Ounces of gold Delivery of which would be
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settlement conforming in all respects with the requirements of the London
bullion market.
"Gold Rate" has the meaning assigned to it in Section 2.12.
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"Gold Receipt" means either a Term Gold Receipt or a Revolving Gold
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Receipt, as the case may be.
"Gold Receipts" means either all of the Term Gold Receipts and Revolving
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Gold Receipts or with respect to a Bank that Bank's Term Gold Receipt and
Revolving Gold Receipt, as the case may be.
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"Governmental Agency" means the federal governments of the United States of
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America, Canada and any other country in which a Guarantor or the Borrower is
doing business, and the government of any state, province, territory, county,
municipality or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority) or any instrumentality or officer thereof (including, without
limitation, any court or tribunal) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
corporation, partnership or other entity directly or indirectly owned by or
controlled by the foregoing.
"Governmental Requirements" means all legal requirements in effect from
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time to time including all laws, statutes codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, and such other directions and requirements of all Governmental
Agencies and all instruments of record, foreseen or unforeseen and ordinary or
extraordinary, including but not limited to any change in any law, regulation or
the interpretation thereof by any Governmental Agency, relating at any time to
the business or operations of the Borrower or any Guarantor or to any of the
property owned, leased or used by the Borrower or any Guarantor, including,
without limitation, the development, design, construction, acquisition, start-
up, ownership and operation and maintenance of property.
"Guarantor" and "Guarantors" have the meanings assigned to them in the
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introduction to this Agreement and includes any other Affiliate of the Borrower
or a Guarantor which (i) may hereafter have an ownership interest in properties
included in the Mining Group, or (ii) enters into a sale and leaseback
transaction with the Borrower or a Guarantor (provided, that the Borrower and
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the Guarantors may effect one or more such transactions from and after August 9,
1996 in an aggregate amount of $5,000,000 without causing the purchaser to
become a Guarantor hereunder), and, in either case, except as provided in
Section 5.1(l), has become a party to this Agreement as a Guarantor through the
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execution and delivery of a Supplement to this Agreement in substantially the
form of Exhibit L hereto. The Parent is one of the Guarantors.
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"Hazardous Substance" means any pollutant, contaminant, toxic or hazardous
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substance, material constituent or waste as such terms are defined in or
pursuant to any Environmental Law.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
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this Agreement or any other Instrument refer to this Agreement or such other
Instrument, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Instrument.
"including" and "include" means including without limiting the generality
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of any description preceding such term.
"Instruments" means the Notes and the Gold Receipts.
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"Interest Period" means, with respect to any Borrowing, a period from the
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Advance Date or date of conversion or renewal with respect to such Borrowing to
a date which is (a) one, two, three or six months thereafter, in the case of a
LIBOR Borrowing, and (b) one month, two months, three months, six months or
twelve months thereafter, in the case of a Borrowing of Gold; provided that:
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(a) The Interest Period for any Borrowing shall commence on the
Advance Date or date of conversion or renewal with respect to such
Borrowing;
(b) If any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day (or, in the case of an Interest Period respecting a
Borrowing of Gold, the next succeeding Business Day that is followed by a
Business Day); provided, however, that if any Interest Period in respect of
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a LIBOR Borrowing would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(c) Any Interest Period in respect of a LIBOR Borrowing which begins
on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (d) below, end on the last
----------
Business Day of a calendar month;
(d) No Interest Period for any Borrowing shall extend beyond the
Maturity Date;
(e) There shall be no more than five Interest Periods respecting
Borrowings of Dollars at any one time under a Commitment and not more than
five Interest Periods respecting Borrowings of Gold outstanding at any one
time under a Commitment;
(f) If the Borrower shall fail to request an initial Interest Period
with respect to a LIBOR Borrowing or a Gold Borrowing pursuant to Section
-------
2.3, the Borrower shall be deemed to have selected an Interest Period of
---
one month; and
(g) If the aggregate amount of Advances other than Base Rate
Borrowings under a Commitment, valued as set forth in Section 2.1(a) or
--------------
Section 2.2(a), as applicable, during any period set forth in Section
-------------- -------
2.1(b) or Section 2.2(b), as applicable, would exceed such Commitment
------ --------------
during the next succeeding period, a sufficient number of Interest Periods
for the Borrowings under such Commitment shall be designated to expire at
the end of the current period so that the amounts involved, plus any Base
Borrowings with respect to such Commitment, will equal or exceed the
reduction in Commitment to occur at the commencement of the succeeding
period.
10
"Issuance Request" means an issuance or extension request and certificate
----------------
duly executed by an Authorized Officer or Agent of the Borrower, substantially
in the form of Exhibit A-2 hereto.
-----------
"Issuer" means Scotiabank in its capacity as issuer of the Letter of Credit
------
(or, if Scotiabank is not able to issue the Letter of Credit, another Lender
(with its consent)).
"Letter of Credit" means a standby letter of credit in a Stated Amount not
----------------
to exceed $4,000,000 substantially in the form of Exhibit A-3 hereto issued by
-----------
the Issuer pursuant to the terms of this Agreement.
"Letter of Credit Commitment" means, with respect to the Issuer, the
---------------------------
Issuer's obligation to issue the Letter of Credit pursuant to this Agreement
and, with respect to each Bank, the obligations of each such Bank to participate
in the Letter of Credit pursuant to Section 2.7.
-----------
"Letter of Credit Commitment Amount" means, on any date, a maximum amount
----------------------------------
of $4,000,000, as such amount may be permanently reduced from time to time
pursuant to the terms of this Agreement.
"Letter of Credit Outstandings" means, on any date, an amount equal to the
-----------------------------
sum of (i) the then aggregate amount which is undrawn and available under the
Letter of Credit, plus (ii) the then aggregate amount of all unpaid and
----
outstanding Reimbursement Obligations.
"LIBOR" means the rate (rounded upwards if necessary to the nearest whole
-----
one-sixteenth of one percent (1/16%)) equal to the product of Base LIBOR times
Statutory Reserves. "Base LIBOR" means the rate per annum determined by the
----------
Agent (which determination shall be conclusive in the absence of manifest error)
to be the average of the rate at which The Bank of Nova Scotia is offered
Dollars deposits in the interbank Eurodollar market at about 11:00 A.M. London
time, two Business Days prior to the beginning of the Interest Period for any
LIBOR Borrowing, for delivery on the first day thereof for the number of months
comprised therein and in an amount equal to the amount of such LIBOR Borrowing.
"LIBOR Borrowing" means any Borrowing bearing interest at a rate based on
---------------
LIBOR.
"Location Discount" means, at any time, the amount (in Dollars) per Ounce,
-----------------
if any, determined by the Agent in good faith, to be paid by the party
Delivering Gold to the party receiving Gold, if Delivery is to be made at a
location other than London, England, pursuant to Section 2.5.
-----------
"Location Premium" means, at any time, the amount (in Dollars) per Ounce,
----------------
if any, determined by the Agent in good faith, to be paid by the party receiving
Gold hereunder to the party delivering Gold hereunder, if such Delivery is to be
made at a location other than London, England, pursuant to Section 2.5.
-----------
11
"London Price" means, as of any date of determination, the afternoon fixing
------------
price per Ounce of Gold or Silver, as the case may be, in the London bullion
market on such date; provided, that if there shall have been no such price fixed
--------
in the London bullion market on such date, reference shall be made to the
publicly quoted price per Ounce of Gold or Silver, as the case may be, in such
other market allowing physical Delivery of gold or silver, as the case may be,
as may be reasonably selected by the Agent after consultation with the Borrower
and the Banks.
"Majority Banks" means, at any time when no Advance is outstanding
--------------
hereunder, Banks having at least 60% of the aggregate amounts of all of the
Banks' Revolving Commitments and, at any time while Advances are outstanding,
Banks holding at least 60% of the outstanding aggregate principal amount of the
Term Advances and the Revolving Advances.
"Maturity Date" means August 9, 2001.
-------------
"Mining Group" means (i) the producing mines owned by the Parent or any of
------------
its Subsidiaries on August 9, 1996, which mines are included in the form of Cash
Flow Schedule attached as Schedule 4 hereto, and (ii) properties owned on August
----------
9, 1996 by the Parent or any of its Subsidiaries (or thereafter acquired) that
were (on August 9, 1996) or subsequently became under development and for which
a feasibility study acceptable to the Banks has been prepared indicating the
economic feasibility of production from such properties, but excluding any
future mines that are the subject of financing whose sole recourse is to such
future mine and is otherwise nonrecourse to the Borrower and the Guarantors.
"Mining Group Cost of Future Production" means at any time the total
--------------------------------------
estimated cost of producing the Mining Group Production during the periods set
forth in the then applicable Cash Flow Schedule, the cost for each period to be
determined as the sum of:
(a) The total cash operating costs (before adjusting for deferred
mining costs), estimated by the Mining Group and approved by the Majority
Banks, of producing the Mining Group Production for the period in question;
plus
----
(b) Sustaining Capital Expenditures; plus
----
(c) Development costs associated with future mines; plus
----
(d) Taxes and royalties other than federal, provincial or state
income taxes, which taxes and royalties shall be calculated in accordance
with applicable tax regulations.
"Mining Group Future Cash Flow" means at any time the difference between
-----------------------------
the Mining Group Revenue and the Mining Group Cost of Future Production.
12
"Mining Group Net Present Value of the Mining Group Future Cash Flow" means
-------------------------------------------------------------------
at any time the Mining Group Future Cash Flow discounted at the rate of 8% (or
at such other rate as may be agreed to from time to time by the Parent and the
Majority Banks) over the estimated periods of production for the Mining Group as
set forth in the most recent Cash Flow Schedule delivered to the Banks.
"Mining Group Production" means for any period the number of Ounces of Gold
-----------------------
and Silver which it is estimated the Mining Group will produce during such
period (i) from then existing proven and probable minable reserves of the Mining
Group, and (ii) from such other reserves of the Mining Group as the Banks shall
approve.
"Mining Group Revenue" means at any time the sum of
--------------------
(a) The total revenue from Mining Group Production which has been
sold forward (provided that the Borrower shall have disclosed the buyer's
identity to the Banks and the buyer's creditworthiness is acceptable to the
Majority Banks); and
(b) For Mining Group Production which has not been sold forward, the
lesser of the following prices as at the date of calculation, in each case
multiplied by the unsold Mining Group Production;
(i) The average London Price for Gold (in the case of Gold
production) or Silver (in the case of Silver production) over the
previous 90 days;
(ii) The average London Price for Gold (in the case of Gold
production) or Silver (in the case of Silver production) over the
previous 36 months;
(iii) $400 in the case of Gold, and $5.00 in the case of Silver.
"Non-U.S. Bank" means any Bank (including each Assignee Bank) that is not
-------------
(i) a citizen or resident of the United States, (ii) a corporation, partnership
or other entity created or organized in or under the laws of the United States
or any state thereof, or (iii) any estate or trust that is subject to U.S.
federal income taxation regardless of the source of its income.
"Note" means either a Term Note or a Revolving Note, as the case may be.
----
"Notes" means either with respect to all Banks all of the Term Notes and
-----
Revolving Notes or with respect to a particular Bank such Bank's Term Note and
Revolving Note.
"Notice Date" has the meaning ascribed to it in Section 2.26(g).
----------- ---------------
"Notice of Borrowing" means a notice of each Borrowing by the Borrower, on
-------------------
the Borrower's letterhead and in the form set forth in Exhibit A-1 hereto,
-----------
signed by an Authorized Officer or Agent of the Borrower.
13
"Notice of Conversion of Gold or Dollars" means a notice by the Borrower,
---------------------------------------
on the Borrower's letterhead and in the form set forth in Exhibit G hereto,
---------
signed by an Authorized Officer or Agent of the Borrower.
"Notice of Conversion or Renewal of Interest" means a notice by the
-------------------------------------------
Borrower, on the Borrower's letterhead and in the form set forth in Exhibit H
---------
hereto, signed by an Authorized Officer or Agent of the Borrower.
"Obligations" means all obligations (monetary or otherwise), including
-----------
Reimbursement Obligations, of the Borrower and each other Obligor arising under
or in connection with this Agreement and each other Instrument.
"Obligor" means the Borrower and each Guarantor.
-------
"Operating Assets" means the Mining Group plus any and all equipment owned
----------------
by the Parent or any of its subsidiaries that is used in the operations of the
Mining Group.
"Organic Document" means, relative to any Obligor, as applicable, its
----------------
certificate of incorporation, by-laws or other constating documents.
"Ounces" means fine xxxx ounces of Gold or Silver, as the case may be.
------
"Parent" means Echo Bay Mines Ltd., a corporation organized under the laws
------
of Canada.
"Percentage" means, with respect to any Bank, the percentage set forth
----------
opposite the name of such Bank in Schedule 1 hereto, as modified from time to
----------
time by an Assignment Agreement.
"Person" means an individual, partnership, corporation (including a
------
business trust or bank), joint venture or other entity, or a foreign state or
political subdivision thereof or of any agency of such state or subdivision.
"Plan" means a pension plan providing benefits for employees of the
----
Borrower or any affiliate (as such term is defined in the definition of
"Termination Event" herein) and covered by Title IV of ERISA.
"Quarterly Payment Date" means the last day of each March, June, September
----------------------
and December, or, if such day is not a Business Day, the next succeeding
Business Day.
"Regulatory Change" shall mean, with respect to any Bank, any change after
-----------------
the date of this Agreement in United States federal or state, or any foreign,
laws or regulations (including Regulation D of the Federal Reserve Board) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including such Bank of or
14
under any United States federal or state, or any foreign, laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reimbursement Obligation" is defined in Section 2.9.
------------------------ -----------
"Revolving Advance" has the meaning assigned to it in Section 2.2(a).
----------------- --------------
"Revolving Borrowing" has the meaning assigned to it in Section 2.2(a).
------------------- --------------
"Revolving Commitment" of a Bank has the meaning assigned to it in Section
-------------------- -------
2.2(b).
------
"Revolving Commitment Amount" means, on the Amendment Effective Date, a
---------------------------
maximum amount equal to $50,000,000, as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"Revolving Commitment Termination Date" means the earliest of
-------------------------------------
(a) the Maturity Date;
(b) the date on which the Revolving Commitment Amount is terminated
in full or reduced to zero pursuant to Section 2.15; and
------------
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in the preceding clauses (b) or (c),
----------- ---
the Revolving Commitments shall terminate automatically and without any further
action.
"Revolving Gold Receipt" means a receipt in the form of Exhibit D hereto
---------------------- ---------
delivered by the Borrower to a Bank.
"Revolving Note" means a promissory note in the form of Exhibit F hereto
-------------- ---------
delivered by the Borrower to a Bank (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate Debt
of the Borrower to such Bank resulting from outstanding Revolving Advances, and
also means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"RMGC" is defined in the preamble.
---- --------
"Silver" means various amounts of Ounces of silver delivery of which would
------
be settlement conforming in all respects with the requirements of the London
bullion market.
15
"Stated Amount" means on any date, the total amount then available to be
-------------
drawn under the Letter of Credit.
"Stated Expiry Date" is defined in Section 2.6.
------------------ -----------
"Statutory Reserves" means a fraction (expressed as a decimal), the
------------------
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board for a member bank in the Federal
Reserve System, for Eurocurrency Liabilities (as defined in Regulation D of the
Federal Reserve Board). Such reserve percentages shall include those imposed
under such Regulation D. LIBOR Borrowings shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to each Bank under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Subsidiary" means, with respect to any Person, any corporation, limited
----------
liability company, partnership or other entity of which more than 50% of the
outstanding securities (or other ownership interest) having ordinary voting
power to elect the board of directors, managers or other voting members of the
governing body of such corporation, limited liability company, partnership or
other entity (irrespective of whether at the time securities (or other ownership
interest) of any other class or classes of such corporation, limited liability
company, partnership or other entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more other Subsidiaries of
such Person, or by one or more other Subsidiaries of such Person. Unless the
context otherwise specifically requires, the term "Subsidiary" shall be a
reference to a Subsidiary of the Parent.
"Sustaining Capital Expenditures" means those amounts required to maintain
-------------------------------
the current level of mine operations until the end of the then existing proven
and probable minable reserves of the Mining Group.
"Taxes" has the meaning assigned to it in Section 6.2(i).
----- --------------
"Term Advance" means the Term Advances made to the Borrower under (and as
------------
defined in) the Existing Agreement and outstanding under this Agreement on the
Amendment Effective Date.
"Term Commitment" means, as to any Bank on any date, such Bank's Percentage
---------------
of the Aggregate Term Commitment, as such amount may be reduced from time to
time in accordance with the terms of this Agreement.
16
"Term Gold Receipt" means a receipt in the form of Exhibit C hereto
----------------- ---------
delivered by the Borrower to a Bank.
"Term Note" means a promissory note in the form of Exhibit E hereto
--------- ---------
delivered by the Borrower to a Bank (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Bank resulting from outstanding Term
Advances, and also means all other promissory notes accepted from time to time
in substitution therefor or renewal thereof.
"Termination Event" means (i) a Reportable Event described in section 4043
-----------------
of ERISA and the regulations issued thereunder (other than a Reportable Event
not subject to the provision for thirty day notice to the Pension Benefit
Guaranty Corporation under such regulations), or (ii) the withdrawal of the
Borrower or any of its affiliates from a Plan during a plan year in which it was
a "substantial employer" as defined in section 4001(a)(2) of ERISA, or (iii) the
filing of a notice of intent to terminate a Plan in a distress termination or
the treatment of a Plan amendment as a distress termination under section
4041(c) of ERISA, or (iv) the institution of proceedings to terminate a Plan by
the Pension Benefit Guaranty Corporation under section 4042 of ERISA, or (v) any
other event or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
For purposes of this definition, the term "affiliate" means any member
(whether or not incorporated) of a group which is under common control (within
the meaning of the regulations under section 414 of the Code) and of which the
Borrower is a member.
ARTICLE 2.
LOAN AND RETURN OF GOLD AND DOLLARS; FORWARD SALES OF GOLD
SECTION 2.1. Term Advances of Gold or Dollars.
--------------------------------
(a) Term Advances. Each of the parties hereto acknowledges and agrees
-------------
that the Term Advances outstanding under (and as defined in) the Existing
Agreement (18,502.254 Ounces of Gold valued at the Advance Date Value of $349.40
per Ounce of Gold and $26,035,312.50 in Term Advances of Dollars) shall continue
as the Term Advances under this Agreement. Subject to Section 2.17(a), the
---------------
aggregate Dollar Value of each Bank's Percentage of Term Advances outstanding
may be in excess of such Bank's Term Commitment if such excess is solely
attributable to an increase in the spot market price of Gold above the Advance
Date Values of Advances of Gold. No additional borrowings of Term Advances
under this Agreement are permitted on or after the Amendment Effective Date.
(b) Repayment of Term Advances. The Term Advances shall be repaid on each
--------------------------
Quarterly Payment Date in four equal installments of Dollars per year (or the
equivalent number
17
of Ounces valued at their respective Advance Date Values)
which shall total the following aggregate annual principal repayment amounts for
each of the following periods:
Amortization Annual Principal
Period Amount
------------------------------------------- -------------------------
07/01/98 through (and including) 06/30/99 $10,000,000
07/01/99 through (and including) 06/30/00 $12,500,000
07/01/00 through (and including) 06/30/01 $15,000,000 (or, if
different, the then
outstanding principal
amount of all Term
Advances).
All repayments and prepayments of the Term Advances shall be permanent and may
not be reborrowed. Each repayment or prepayment of the Term Advances shall
reduce ratably (i) each Bank's Term Advances hereunder and (ii) each Bank's
Percentage of the maximum aggregate number of Ounces of Gold (85,000 on the
Amendment Effective Date) which may be outstanding under the Term Commitment.
(c) Term Notes and Term Gold Receipts. The Borrower acknowledges and
---------------------------------
agrees that each Term Note and Term Gold Receipts delivered under the terms of
the Existing Agreement shall continue to evidence that Bank's Term Advances of
Dollars and Term Advances of Gold, as applicable.
SECTION 2.2. Revolving Advances of Gold or Dollars.
-------------------------------------
(a) Revolving Advances. Each of the parties hereto acknowledges and
------------------
agrees that the Existing Revolving Advances ($18,000,000 principal amount
outstanding on the Amendment Effective Date) shall continue as Revolving
Advances under this Agreement. In addition, each Bank severally agrees, on the
terms and conditions set forth herein, to make advances ("Revolving Advances")
------------------
on a revolving basis to the Borrower of various amounts of Gold or Dollars from
time to time on any Business Day during the period from the Amendment Effective
Date to but not including the Revolving Commitment Termination Date; provided,
--------
that each Bank's Percentage of Revolving Advances shall be limited to an amount
which, when added to all such Bank's previous Revolving Advances outstanding
(valuing Revolving Advances in Ounces at their respective Advance Date Values
and valuing Revolving Advances of Dollars at
18
the principal amount thereof), shall not exceed such Bank's Percentage of the
then existing Revolving Commitment Amount. Subject to Section 2.17(a), the
---------------
aggregate Dollar Value of each Bank's Percentage of Revolving Advances
outstanding may be in excess of such Bank's Revolving Commitment if such excess
is solely attributable to an increase in the spot market price of Gold above the
Advance Date Values of Advances of Gold. Each borrowing under this Section (a
"Revolving Borrowing") that is a Revolving Borrowing of Dollars shall be in an
-------------------
aggregate amount of $2,000,000, or any greater integral multiple of $1,000,000.
Each Revolving Borrowing of Gold hereunder shall be in an aggregate amount of
10,000 Ounces, or any greater integral multiple of 1,000 Ounces. Each Revolving
Borrowing hereunder shall consist of Revolving Advances made on the same date by
the Banks ratably according to their respective Percentages. Subject to the
terms and conditions of this Agreement, Revolving Advances which are repaid or
prepaid pursuant to Section 2.16 or Section 2.17(a) may be reborrowed.
------------ --------------
(b) Revolving Commitment Limits. Subject to the paragraph below in this
---------------------------
clause, the sum of (i) the aggregate outstanding principal amount of Dollars and
(ii) number of Ounces (valued at their respective Advance Date Values) of
Revolving Advances which any Bank shall be committed to have outstanding
hereunder shall not at any one time exceed such Bank's Percentage of the then
existing Revolving Commitment Amount (each Bank's Percentage of such amounts in
effect from time to time, as such amounts may be reduced as provided in Section
-------
2.15, being herein referred to in respect of each Bank as its "Revolving
---- ---------
Commitment"). The Revolving Commitment shall terminate on the Revolving
----------
Commitment Termination Date and all outstanding Revolving Advances shall be
payable on the Maturity Date (unless such Revolving Advances are due and
repayable on an earlier date in accordance with the terms of this Agreement).
The aggregate number of Ounces which any Bank shall be committed to have
outstanding under its Revolving Commitment shall not at any one time exceed such
Bank's Percentage of 150,000 Ounces of Gold, as reduced by any cancellation or
reduction of the Revolving Commitment Amount pursuant to Section 2.15.
------------
(c) Revolving Notes and Revolving Gold Receipts. The Borrower
-------------------------------------------
acknowledges and agrees that each Revolving Note and Revolving Gold Receipt
delivered under the terms of the Existing Agreement shall continue to evidence
that Bank's Revolving Advances of Dollars and Revolving Advances of Gold, as
applicable.
SECTION 2.3. Making the Advances. Each Borrowing of Dollars shall be made
-------------------
upon three Business Days' notice and each Borrowing of Gold shall be made upon
fourteen days' notice, each by irrevocable written notice pursuant to a Notice
of Borrowing from the Borrower to the Agent (which shall give prompt notice
thereof, and of each other notice received from the Borrower hereunder, to each
Bank) setting forth (i) the Advance Date, which shall be a Business Day (or, in
the case of an Advance of Gold, a Business Day which is followed by a Business
Day), (ii) the requested number of Ounces or of Dollars, (iii) the form of the
settlement of the proposed Borrowing as described in Section 2.5 (if the
-----------
proposed Borrowing is in Gold), (iv)
19
whether the Borrowing is to be a Base Borrowing or a LIBOR Borrowing (if the
proposed Borrowing is in Dollars) and the applicable Interest Period (if the
proposed Borrowing is a LIBOR Borrowing or Borrowing of Gold), (v) whether the
Borrower intends to make interest payments in Gold or in Dollars (if the
proposed Borrowing is in Gold) and (vi) such additional information as is
required by the Notice of Borrowing. In the event that the Borrower fails to
borrow Gold or Dollars after delivering a Notice of Borrowing hereunder to the
Agent, the Borrower shall pay any resulting Breakage Costs to the Banks, and
provided such Breakage Costs are promptly paid upon the request of the Banks,
such failure to borrow shall not be a default hereunder.
SECTION 2.4. Delivery and Return of Dollars. Not later than 11:00 A.M.
------------------------------
(Atlanta time) on the day of a Borrowing of Dollars, each Bank shall provide the
Agent, to an account the Agent shall specify from time to time by notice to each
Bank, with immediately available Dollars covering such Bank's Percentage of the
Advance, and upon the satisfaction of the conditions set forth in Article 3 with
---------
respect to such Borrowing, the Agent shall pay over such Dollars by wire
transfer to the account of the Borrower specified in its Notice of Borrowing.
No Bank, including, the Agent, shall have any liability to any Person whatsoever
for the failure of any other Bank to fund properly under this Agreement.
Repayments of Dollars and cash payments of interest shall be made to the Agent
at an account located in the United States to be specified by the Agent.
SECTION 2.5. Delivery and Return of Gold. Not later than 11:00 A.M.
---------------------------
(London time) on the date of a Borrowing of Gold, each Bank shall provide the
Agent, at its designated account in London, England (or elsewhere, if so agreed
between the Agent and such Bank), with Gold covering such Bank's Percentage of
the Advance, and upon satisfaction of the conditions set forth in Article 3 with
---------
respect to such Borrowing, the Agent shall Deliver such Gold to the Borrower.
No Bank, including the Agent, shall have any liability to any Person whatsoever
for the failure of any other Bank to Deliver Gold properly under this Agreement.
Each Borrowing of Gold shall be Delivered to the Borrower at its then designated
account in London, England, unless the Borrower's Notice of Borrowing designates
an alternate Delivery location, in which case not less than seven Business Days
prior to the Advance Date, the Agent shall notify the Borrower of the Location
Premium or Location Discount assessable in respect of such proposed alternate
location, and unless the Borrower shall notify the Agent not less than five
Business Days prior to such Advance Date of its election to receive Delivery in
London, England, the Delivery shall be made to the account designated in such
Notice, and the Location Premium or Location Discount, if any, shall be due and
payable on the Advance Date; each such Borrowing to be confirmed by a
Confirmation of Borrowing. Gold shall be returned by the Borrower on a Business
Day at the Borrower's expense by Delivery to the Agent's then designated account
in London, England, except that with the consent of the Agent (which consent
shall not be unreasonably withheld), the Borrower or the Guarantors may elect to
make any payment of principal or interest payable in Gold at a location other
than the Agent's then designated account in London, England, by notifying the
Agent, not less than ten Business Days prior to the date on which such payment
is due, of a proposed alternate payment location which such obligor desires to
use. Not less than seven Business Days prior to such due date, the Agent shall
notify the
20
Borrower or the Guarantors, as the case may be, whether or not it consents to
such payment at such proposed alternate location, and, if it so consents, of the
Location Premium or Location Discount assessable in respect of such proposed
alternate location. Unless the Borrower or the Guarantors, as the case may be,
shall notify the Agent not less than five Business Days prior to such due date
of its or their election not to make payment at such proposed alternate
location, payment shall be made on such due date at such alternate location by
Delivery to an account which the Agent shall have designated in its prior
notice, and the Location Premium or Location Discount, if any, shall be due and
payable on such date. Any difference (not to exceed 100 Ounces) between the
aggregate number of Ounces so returned and the number of Ounces due shall be
settled by the parties in cash at the Dollar Value of such difference on the
date a Delivery is made.
SECTION 2.6. Issuance Procedures. By delivering to the Agent an Issuance
-------------------
Request on or before 10:00 A.M., Atlanta time, on a Business Day occurring from
and after the Amendment Effective Date but prior to the Revolving Commitment
Termination Date, the Borrower may from time to time irrevocably request on not
less than three nor more than ten Business Days' notice that the Issuer issue,
or extend the Stated Expiry Date of, the Letter of Credit, solely for the
purposes described in Section 5.2(i). The Letter of Credit shall by its terms
--------------
be stated to expire on a date (its "Stated Expiry Date") no later than the
------------------
Maturity Date; provided, that the initial term and the initial extension of the
--------
Letter of Credit shall not exceed one year, and the Stated Amount of the Letter
of Credit shall not exceed $4,000,000. Upon receipt of an Issuance Request, the
Issuer shall issue the Letter of Credit for the account of the Borrower or any
Guarantor on the date specified in the Issuance Request (but in no event shall
the Issuer be required to issue the Letter of Credit earlier than three Business
Days after its receipt of the Issuance Request) by issuing to the beneficiary
thereof the original of the Letter of Credit. The Issuer shall furnish a copy
of the Letter of Credit to the Borrower promptly after the issuance date.
Notwithstanding the foregoing, the Issuer shall not be permitted or required to
issue (or extend the Stated Expiry Date of) the Letter of Credit if, after
giving effect thereto, the Letter of Credit Outstandings would exceed the Letter
of Credit Commitment Amount.
SECTION 2.7. Other Banks' Participation'. Upon the issuance of the Letter
---------------------------
of Credit, and without further action, each Bank (other than the Issuer) shall
be deemed to have irrevocably purchased, to the extent of its Percentage, a
participation interest in the Letter of Credit (including the contingent
liability and any Reimbursement Obligation with respect thereto), and such Bank
shall, to the extent of its Percentage, be responsible for reimbursing promptly
(and in any event within one Business Day) the Issuer for Reimbursement
Obligations which have not been reimbursed by the Obligors in accordance with
Section 2.8. In addition, each Bank shall, to the extent of its Percentage, be
-----------
entitled to receive a ratable portion of the Letter of Credit fees payable
pursuant to Section 2.14(b) (other than the issuance fees payable to the Issuer
---------------
pursuant to the last sentence of such clause) and of interest payable pursuant
to Section 2.12(b) with respect to any Reimbursement Obligation. To the extent
---------------
that any Bank has reimbursed the Issuer for a Disbursement, such Bank shall be
entitled to receive its ratable portion of any amounts subsequently received
(from an Obligor or otherwise) in respect of such Disbursement.
21
SECTION 2.8. Disbursements. The Issuer will notify the Borrower and the
-------------
Agent promptly of the presentment for payment of the Letter of Credit, together
with notice of the date (the "Disbursement Date") such payment will be made
-----------------
(each such payment, a "Disbursement"). Subject to the terms and provisions of
------------
the Letter of Credit and this Agreement, the Issuer shall make such Disbursement
to the beneficiary (or its designee) of the Letter of Credit. Prior to 11:00
A.M., Atlanta time, on the first Business Day following the Disbursement Date,
the Borrower will reimburse the Agent, for the account of the Issuer, for all
amounts which the Issuer has disbursed under the Letter of Credit, together with
interest thereon at a rate per annum equal to the rate then in effect for Base
Borrowings (with the then existing Applicable Rate for Base Borrowings accruing
on such amount) for the period from the Disbursement Date through the date of
such reimbursement. Without limiting in any way the foregoing and
notwithstanding anything to the contrary contained herein or in any separate
application for the Letter of Credit, the Borrower and each other Obligor
hereby acknowledges and agrees that each Obligor is jointly and severally
obligated to reimburse the Issuer upon each Disbursement, and it shall be deemed
to be an obligor for purposes of the Letter of Credit (whether the account party
on the Letter of Credit is the Borrower, the Parent or a Subsidiary of the
Parent).
SECTION 2.9. Reimbursement. The obligation (a "Reimbursement
------------- -------------
Obligation") of the Obligors under Section 2.8 to reimburse the Issuer with
---------- -----------
respect to each Disbursement (including interest thereon), and, upon the failure
of the Obligors to reimburse the Issuer, each Bank's obligation under Section
-------
2.7 to reimburse the Issuer, shall be absolute and unconditional under any and
---
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Obligors or such Bank, as the case may be, may have or have
had against the Issuer or any Bank, including any defense based upon the failure
of any Disbursement to conform to the terms of the Letter of Credit (if, in the
Issuer's good faith opinion, such Disbursement is determined to be appropriate)
or any non-application or misapplication by the beneficiary of the proceeds of
the Letter of Credit; provided, however, that after paying in full its
-------- -------
Reimbursement Obligation hereunder, nothing herein shall adversely affect the
right of the Obligors or such Bank, as the case may be, to commence any
proceeding against the Issuer for any wrongful Disbursement made by the Issuer
under the Letter of Credit as a result of acts or omissions constituting gross
negligence or wilful misconduct on the part of the Issuer.
SECTION 2.10. Deemed Disbursements. Upon (i) the occurrence of the
--------------------
Maturity Date, (ii) the occurrence and during the continuation of any Default
under Section 7.1(e) or (iii) notification by the Agent (acting at the direction
--------------
of the Majority Banks) to the Obligors of their obligations under this Section,
following the occurrence and during the continuation of any other Event of
Default,
(a) the Stated Amount of the Letter of Credit shall, without demand
upon or notice to the Borrower or any other Person, be deemed to have been
paid or disbursed by the Issuer (notwithstanding that such amount may not
in fact have been paid or disbursed); and
22
(b) the Obligors shall be jointly and severally immediately obligated
to reimburse the Issuer for the amount deemed to have been so paid or
disbursed by the Issuer.
Amounts payable by the Obligors pursuant to this Section shall be deposited in
immediately available funds with the Agent and held as collateral security for
the Reimbursement Obligations. When all Defaults giving rise to the deemed
disbursements under this Section have been cured or waived or, if applicable,
when the originally executed Letter of Credit has terminated or been cancelled
by the beneficiary thereof and returned to the Issuer, the Agent shall return to
the Borrower all amounts then on deposit with the Agent pursuant to this Section
which have not been applied to the satisfaction of the Obligations.
SECTION 2.11. Nature of Reimbursement Obligations. The Borrower, each
-----------------------------------
other Obligor and, to the extent set forth in Section 2.7, each Bank shall
-----------
assume all risks of the acts, omissions or misuse of the Letter of Credit by the
beneficiary thereof. The Issuer shall not (except to the extent of its own
gross negligence or wilful misconduct) be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of the Letter of Credit or any document submitted by any party in
connection with the application for and issuance of the Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign the Letter of Credit or the rights or benefits
thereunder or the proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under the Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under the Letter
of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Bank hereunder. In furtherance
and not in limitation or derogation of any of the foregoing, any action taken or
omitted to be taken by the Issuer in good faith (and not constituting gross
negligence or willful misconduct) shall be binding upon each Obligor and each
such Bank, and shall not put the Issuer under any resulting liability to any
Obligor or any Bank, as the case may be. Notwithstanding anything to the
contrary contained in this Agreement, neither the Issuer nor any of the Banks
shall be relieved of responsibility for any gross
23
negligence or any wilful misconduct by the Issuer or such Bank in connection
with a Deemed Disbursement.
SECTION 2.12. Interest.
--------
(a) Borrowings of Gold. The interest rate per annum payable on each
------------------
Borrowing of Gold shall be equal to the gold rate per annum (based on a three
hundred sixty day year) quoted as set forth in Schedule 2 (the "Gold Rate") by
---------- ---------
each Bank to the Borrower in respect of an Interest Period three Business Days
prior to the Advance, conversion or renewal of a Borrowing as its rate for a
loan of an Ounce of Gold in the amount requested, which quote shall be confirmed
by written notice from each Bank to the other Banks and the Borrower, plus the
Applicable Rate; provided, however, that any interest rate for Borrowings of
-------- -------
Gold hereunder shall be in no event more than the maximum allowed under
applicable law. The foregoing interest rate shall be applied to the average of
the daily Dollar Values of each Borrowing of Gold outstanding during the period
for which interest is payable. At the Borrower's option, prior to the
commencement of such Interest Period, the parties may agree upon a fixed value
to which the foregoing interest rate shall be applied during the period for
which interest is payable on any Borrowing of Gold, provided that if the
Borrower and the Banks are unable so to agree, such option shall terminate.
The Gold Rate per annum shall be quoted by each Bank consistent with the
criteria set forth in Schedule 2 hereto. If the Gold Rate per annum quoted by
----------
any Bank is for two successive Interest Periods more than 120% of the average of
the Gold Rates quoted by the other Banks, the Borrower shall afford such Bank
the opportunity to reduce its rates. If such Bank fails to reduce its rates,
the Borrower shall have the right upon thirty days' notice to each of the Banks
and upon consent by the Banks other than the Bank with the consistently higher
rates (the "Selling Bank"), such consent not to be unreasonably withheld, to
------------
terminate the Commitment of the Selling Bank and to substitute another bank of
the Borrower's choice (the "Substituting Bank") as a participant hereunder. In
-----------------
the event that the Borrower elects to select a Substituting Bank, the Selling
Bank shall sell its Advances, Notes, Gold Receipts and rights under this
Agreement to the Substituting Bank for the amount due on prepayment pursuant to
Section 2.16 and all other accrued interest and fees owing to the Selling Bank,
------------
which amount shall include principal, interest and Breakage Costs. Such sale
shall be without recourse or warranty except as to amount due, and the Selling
Bank thereafter shall be relieved of all further obligations hereunder. The
Substituting Bank shall be required to join in this Agreement and to assume the
obligations of the Selling Bank hereunder. The remaining Banks shall, however,
have a right of first refusal, exercisable by notice to the Borrower given
promptly after receipt of the Borrower's notice, to take the place of a
Substituting Bank by increasing their Commitments and purchasing the Notes,
participating interests under the Letter of Credit, Gold Receipts and rights
under this Agreement held by the Selling Bank on the same terms; if more than
one Bank chooses to exercise such right, they shall share in the Commitment of
the Selling Bank and in such purchases equally, unless otherwise agreed among
them.
24
Interest payments on each Borrowing of Gold may be made either in Gold
(valued at the Dollar Value on the second Business Day prior to the date of
payment) or in Dollars at the option of the Borrower, provided that the Borrower
--------
shall inform the appropriate Bank of its election to make interest payments in
Gold on or before the third Business Day prior to the Borrowing, conversion or
renewal and such Bank shall have the right to designate the place of return of
interest payments made in Gold and, provided, further, that such Bank shall have
-------- -------
the right to insist that interest payments shall be made in Dollars (in which
case interest shall be paid in Dollars). From and after the date any principal
amount of any Borrowing of Gold shall become due and payable (whether at stated
maturity, upon acceleration or otherwise), the unpaid balance of principal on
Borrowings of Gold shall bear interest payable on demand from maturity, whether
scheduled or accelerated, until paid in full, at a rate per annum equal to two
times the Gold Rate per annum applicable to the Borrowing as established by the
Banks on the date of maturity, whether scheduled or accelerated, for the
applicable Borrowing, together with any Breakage Costs.
(b) Borrowings of Dollars. Borrowing of Dollars may, at the option of the
---------------------
Borrower, be Base Borrowings or LIBOR Borrowings. Borrowings of Dollars shall
bear interest from the Advance Date on the unpaid principal amount thereof from
time to time outstanding until due and payable (whether at the stated maturity,
by acceleration or otherwise) (i) in the case of Base Borrowings, at a
fluctuating rate per annum equal to the Base Rate, as from time to time in
effect plus the Applicable Rate, and (ii) in the case of LIBOR Borrowings, at a
rate per annum equal to the sum of LIBOR for the applicable Interest Period plus
the Applicable Rate; provided, however, that any interest rate for Borrowings of
-------- -------
Dollars hereunder shall be in no event more than the maximum allowed under
applicable law. From and after the date any principal amount of or interest or
fees on any Borrowing of Dollars or Borrowing of Gold or any Reimbursement
Obligation shall become due and payable or after any other monetary Obligation
is due and payable (in each case, whether at stated maturity, upon acceleration
or otherwise), the unpaid balance of Reimbursement Obligations and/or principal
and any accrued interest on Base Borrowings, Letter of Credit Outstandings and
LIBOR Borrowings and any unpaid interest on Borrowings of Gold shall bear
interest payable on demand from maturity, whether scheduled or accelerated,
until paid in full (after as well as before judgment), at a rate per annum equal
to (in the case of LIBOR Borrowings) 2% above the interest rate otherwise
applicable to such LIBOR Borrowing until the end of the applicable Interest
Period and thereafter at a rate per annum equal to the Base Rate plus the
Applicable Rate for Base Borrowings plus 2%, which rate shall change as the Base
Rate changes, or (in the case of the unpaid amount of any Reimbursement
Obligations (and interest thereon), Base Borrowings, unpaid interest on
Borrowings of Gold and other unpaid Obligations), the Base Rate plus the
Applicable Rate for Base Borrowings plus 2%, which rate shall change as the Base
Rate changes.
(c) Forward Sale Contango. A Bank that has agreed to purchase Gold as
---------------------
provided in of Section 2.26(b) shall pay the Contango to the Borrower on the
---------------
delivery date relating to the Forward Sale.
25
SECTION 2.13. Payment Dates. The Borrower shall pay interest on each
-------------
outstanding Borrowing of Gold quarterly in arrears on each Quarterly Payment
Date, and on such other date as the Borrowing of Gold is paid in full. The
Borrower shall pay interest on each outstanding Base Borrowing quarterly in
arrears on each Quarterly Payment Date, and on such other date as the Base
Borrowing is paid in full. The Borrower shall pay interest on each outstanding
LIBOR Borrowing on the last day of the Interest Period applicable to such
Borrowing but not less frequently than every three months following the date of
such Borrowing, and on such date as the LIBOR Borrowing is paid in full. The
entire balance of Gold and Dollars to be returned or repaid hereunder shall be
returned or repaid, and all Letter of Credit Outstandings shall be repaid, in
each case not later than the Maturity Date. All payments of cash (and returns
of Gold in respect of interest on Gold Borrowings) hereunder shall be applied
first to interest on past due interest and overdue Letter of Credit fees, if
any, second to interest and Letter of Credit fees due on the outstanding
principal balance of the Notes or the Gold Receipts and the Letter of Credit as
designated by the Borrower (or, if the Borrower makes no designation, as
designated by the Agent), and then to principal on Base Borrowings or on LIBOR
Borrowings with Interest Periods expiring on the date of payment as designated
by the Borrower (or, if the Borrower makes no designation, as designated by the
Agent).
SECTION 2.14. Fees.
----
(a) Commitment Fee. The Borrower agrees to pay in Dollars to the Agent,
--------------
for the account of each Bank, commencing on the Amendment Effective Date and on
each Quarterly Payment Date thereafter, up to and including the Revolving
Commitment Termination Date, a commitment fee for each Bank's Revolving
Commitment and Letter of Credit Commitment, in each case at the Applicable
Commitment Fee Rate per annum of the daily average of the unused amount of (i)
in the case of the Revolving Commitment, the Revolving Commitment Amount
(determined by subtracting from the Revolving Commitment Amount the principal
amount of all outstanding Revolving Advances of Dollars and the principal amount
of all outstanding Advances of Ounces under the Revolving Commitment (valued at
their respective Advance Date Values) during the preceding calendar quarter or
portion thereof and (ii) in the case of the Letter of Credit, the Letter of
Credit Commitment Amount (which shall be deemed to be "used" upon the issuance
of the Letter of Credit in the Stated Amount of the Letter of Credit).
(b) Letter of Credit Fee. The Borrower agrees to pay to the Agent, for
--------------------
the pro rata account of the Issuer and each Bank, a Letter of Credit fee in an
--- ----
amount equal to 1.75% multiplied by the Stated Amount of the Letter of Credit on
the payment date, such fees being payable quarterly in advance on each Quarterly
Payment Date. The Borrower further agrees to pay to the Issuer an issuance fee
in such amount and on the dates agreed to by the Borrower and the Issuer.
(c) Other Fees. The Borrower agrees to pay in Dollars to the Agent, on
----------
the Amendment Effective Date, all fees accrued under the Existing Agreement
through the Amendment Effective Date, which fees shall not be refundable in
whole or in part for any reason whatsoever, including
26
the failure to consummate any transaction contemplated hereby. The Borrower
shall pay in Dollars to the Agent on the Amendment Effective Date, and on each
anniversary of the Amendment Effective Date, a fee in an amount previously
agreed to by the Borrower and the Agent for its administration of this
Agreement.
SECTION 2.15. Reduction of the Revolving Commitment, Letter of Credit
-------------------------------------------------------
Commitment. The Borrower shall have the right, upon at least thirty days'
----------
written notice to the Agent, to terminate in whole or reduce in part the unused
portion of the Revolving Commitment Amount or the Letter of Credit Commitment,
provided that each partial reduction thereof shall be in the aggregate amount of
--------
$2,000,000 or any greater integral multiple of $1,000,000. In addition, the
Letter of Credit Commitment shall terminate automatically upon the earlier of
(i) the Revolving Commitment Termination Date, (ii) the date the Letter of
Credit is cancelled by the beneficiary or expires in accordance with its terms
(after giving effect to any extensions (pursuant to the terms hereof) of the
Letter of Credit following its issuance) and (iii) the Disbursement Date.
SECTION 2.16. Optional Prepayment. The Borrower may, upon at least five
-------------------
days' written notice to the Agent, return ratably to the Banks Gold or Dollars
borrowed hereunder before the Maturity Date, together with interest accrued
thereon to the date of such return and any Breakage Costs, provided that any
--------
prepayment hereunder must be made on a Business Day (or, in the case of a return
of Gold, a Business Day that is followed by a Business Day). The amount of Gold
or Dollars so returned on any date shall be not less than $2,000,000 (or Ounces
with an equivalent Dollar Value) or any greater integral multiple of $1,000,000
(or Ounces with an equivalent Dollar Value). Any prepayment of Term Advances
shall permanently reduce the Aggregate Term Commitment by the amount of such
prepayment.
SECTION 2.17. Mandatory Prepayment.
--------------------
(a) Exposure Exceeds Ceiling Dollar Value. If at any time the aggregate
-------------------------------------
Dollar Value of Advances of Gold and the principal of Advances of Dollars
outstanding exceeds the Ceiling Dollar Value for the Commitment under which such
Advances were made, the Borrower will, at its option, either (i) post with the
Agent security reasonably acceptable to the Banks in such amounts (valued on the
date of posting) as will equal or exceed the excess, or (ii) promptly prepay to
the Banks such amounts of Gold and/or Dollars as will equal or exceed the
excess, in either case together with interest accrued thereon to the date of
such posting or prepayment, as the case may be, and any Breakage Costs. The
Agent agrees that (i) as soon as practicable after the amount by which the
aggregate Dollar Value of Advances of Gold and the principal of Advances of
Dollars outstanding exceeds the Ceiling Dollar Value for the Commitment under
which such Advances were made is reduced by $100,000 or more, the Agent shall
return to the Borrower the corresponding amount of collateral, and (ii) the
Agent will return remaining collateral to the Borrower, in increments of
$100,000 (or such lesser amount equal to the remaining excess), as soon as
practicable after the remaining excess of the aggregate Dollar Value of Advances
of Gold and the principal of Advances of Dollars outstanding over the
27
Ceiling Dollar Value for the Commitment under which such Advances were made is
further reduced by such amount.
(b) Advances in Excess of Revolving Commitment Amount. If on any date,
-------------------------------------------------
including the dates for reduction in the Banks' Revolving Commitments as set
forth in Section 2.15, the number of Dollars and Ounces (valued at their
------------
respective Advance Date Values) of Revolving Advances outstanding under the
Revolving Commitment exceeds the then existing Revolving Commitment Amount in
effect on such date, the Borrower will on such date return to the Banks such
amounts of Gold and/or Dollars, together with interest accrued thereon to the
date of such return and any Breakage Costs, as will cause the number of Dollars
and Ounces of Revolving Advances outstanding after such return to be equal to or
less than the then existing Revolving Commitment Amount.
(c) Acquisition or Merger of the Parent. If (i) a "person" or a "group"
-----------------------------------
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of more than 35% of the then outstanding voting
stock of the Parent, or (ii) the Parent shall merge or consolidate with any
Person, in each case otherwise than through a transaction consummated with the
prior approval of the Board of Directors of the Parent a majority of whose
members are Continuing Directors, then, as soon as practicable after the
occurrence of such event and in any event within five Business Days thereafter,
all Term Advances and Revolving Advances of Gold and/or Dollars shall be
returned to the Banks, together with interest accrued thereon to the date of
such return and any Breakage Costs, the Obligors shall deliver cash collateral
in Dollars to the Agent in the Stated Amount of the Letter of Credit (to be held
in an account under the sole dominion and control of, and pursuant to
documentation satisfactory to, the Agent), and all Forward Sales shall be closed
out and Breakage Costs related thereto paid by the Borrower, and the Banks'
Commitments shall be terminated. "Continuing Directors" means, as of the date
--------------------
of any such approval, (x) individuals who on the date two years prior to such
approval date were members of the Parent's Board of Directors and (y) any new
director whose nomination for election by the Parent's shareholders was approved
by a vote of at least 75% of the Directors then still in office who either were
Directors on the date two years prior to such approval date or whose nomination
for election was previously so approved.
SECTION 2.18. Amount and Allocation of Partial Prepayments. In the case
--------------------------------------------
of any partial prepayments of Gold or Dollars pursuant to Section 2.16 or
------------
Section 2.17, (a) the aggregate amount of Gold returned by the Borrower and the
------------
aggregate amount of Dollars returned by the Borrower shall be allocated by the
Agent among all of the Borrowings at the time outstanding under the Commitment
with respect to which such prepayment was made in such manner as shall minimize
to the greatest extent reasonably possible the amount of any Breakage Costs; (b)
the aggregate amount of each such Borrowing so prepaid shall be allocated
ratably among the respective Banks' Advances constituting such Borrowing; and
(c) subject to the provisions of clause (a) of this Section, all prepayments of
----------
Gold under Section 2.17 shall be applied first to the
------------
28
outstanding Borrowing of Gold with the greatest increase in the Dollar Value
thereof as of the date of prepayment over the Advance Date Value thereof.
SECTION 2.19. Conversion of Borrowings.
------------------------
(a) Interest Rate Conversion or Renewal. Unless an Event of Default shall
-----------------------------------
have occurred and be continuing and subject to the terms and conditions of this
Agreement, the Borrower shall have the right at any time or from time to time
prior to the Maturity Date to convert Base Borrowings to LIBOR Borrowings and
LIBOR Borrowings to Base Borrowings in the same aggregate principal amount, or
to select a new Interest Period for an outstanding LIBOR Borrowing or Borrowing
of Gold, provided that: (i) the Borrower shall give the Agent notice of each
--------
such conversion or renewal as provided below; (ii) LIBOR Borrowings may be
converted or renewed (upon at least five Business Days' notice to the Agent
pursuant to a Notice of Conversion or Renewal of Interest) only on the last day
of an Interest Period for such Borrowings; (iii) Borrowings of Gold may be
renewed (on at least three Business Days' notice pursuant to a Notice of
Conversion or Renewal of Interest from the Borrower to the Agent, which shall
give at least two Business Days' notice thereof to each Bank) only on the last
day of an Interest Period for such Borrowings; and (iv) Base Borrowings may be
converted at any time upon two Business Days' notice to the Agent pursuant to a
Notice of Conversion or Renewal of Interest in a minimum aggregate principal
amount of $2,000,000. The renewal of an Interest Period for an outstanding
Borrowing of Gold shall not affect the Advance Date Value for such Borrowing of
Gold. Each Notice of Conversion or Renewal of Interest shall specify the
Borrowings to be converted or renewed, whether such Borrowings are being
converted or renewed, the duration of the Interest Period selected and the date
of conversion or renewal (which shall be a Business Day or, in the case of a
renewal of an Interest Period for a Borrowing of Gold, a Business Day that is
followed by a Business Day). In the event that the Borrower fails to renew any
Interest Period for any LIBOR Borrowing or any Gold Borrowing before the
expiration of such Interest Period, such Borrowings (if LIBOR Borrowings) will
be automatically converted into Base Borrowings on the last day of the then
current Interest Period for such Borrowings or (if Gold Borrowings) will be
automatically renewed for an Interest Period of one month.
(b) Conversion Between Gold and Dollars. Unless an Event of Default
-----------------------------------
shall have occurred and be continuing and subject to the terms and conditions of
this Agreement, the Borrower shall have the right at any time or from time to
time prior to the Maturity Date to convert Borrowings of Gold to Borrowings of
Dollars and Borrowings of Dollars to Borrowings of Gold; provided, that: (i) the
--------
Borrower shall give the Agent at least four Business Days' notice of each such
conversion from Gold to Dollars and at least fourteen days' notice of each such
conversion from Dollars to Gold pursuant to a Notice of Conversion of Gold or
Dollars; (ii) LIBOR Borrowings and Gold Borrowings may be converted only on the
last day of an Interest Period for such Borrowings; and (iii) the amount of Gold
or Dollars to be converted on any date shall be not less than $2,000,000 or any
greater integral multiple of $1,000,000 (or Ounces with an equivalent Dollar
Value (in the case of conversions from Dollars to Gold) or
29
with an equivalent Advance Date Value (in the case of conversions from Gold to
Dollars)). Each Notice of Conversion of Gold or Dollars shall specify the
Borrowings to be converted, whether the Borrowing shall be converted into a
Base, LIBOR or Gold Borrowing and the duration of the Interest Period selected
(if the Borrowing is to be converted into a LIBOR or Gold Borrowing), the form
of the settlement of the Borrowing) and the date of conversion (which shall be a
Business Day, or, in the case of a conversion from Dollars to Gold, a Business
Day that is followed by a Business Day). In the event the Borrower is converting
a Borrowing of Gold into a Borrowing of Dollars pursuant to a Notice of
Conversion of Gold or Dollars, on the date of conversion, (aa) the Borrower
shall return the Gold to be converted at the Borrower's expense in accordance
with Section 2.5, together with interest accrued thereon to the date of such
-----------
return, and, (bb) the Agent shall Advance Dollars to the Borrower at the rate
and for the Interest Period designated in the Notice of Conversion of Gold or
Dollars in an amount equal to the Advance Date Value of the Gold returned. In
the event that the Borrower is converting a Borrowing of Dollars into a
Borrowing of Gold pursuant to a Notice of Conversion of Gold or Dollars, on the
date of conversion, (xx) the Borrower shall repay the principal amount of the
Borrowing to be converted, together with interest accrued thereon to the date of
such repayment, and (yy) the number of ounces of Gold with equivalent Advance
Date Value (i.e., Dollar Value on the date of conversion) to the principal of
the Dollars repaid for the Interest Period designated in the Notice of
Conversion of Gold or Dollars shall be Delivered by the Banks to the Borrower in
accordance with Section 2.5. If the Borrower converts a Borrowing of Dollars
-----------
into a Borrowing of Gold hereunder, the Borrower shall provide a Confirmation of
Borrowing in accordance with Section 2.20. Subject to the provisions of Section
------------ -------
2.18(a), all returns of Gold hereunder shall be applied first to the outstanding
-------
Borrowing of Gold with the greatest increase in the Dollar Value thereof as of
the date of return over the Advance Date Value thereof.
SECTION 2.20. Risk of Loss. Each Bank will assume all risk of loss of, or
------------
damage to, any Gold to be Delivered by it to the Borrower until it has been
Delivered to the Agent at the agreed location. Unless the Banks receive notice
of error within seven Business Days of the Borrower's receipt of any Gold, the
Borrower's receipt of the quantity and quality of the Gold will be conclusively
deemed to be as set out in the Banks' delivery orders. The Borrower shall also
provide a Confirmation of Borrowing for each Borrowing of Gold, as soon as
practicable and in any event within seven Business Days after receipt of the
Banks' delivery orders, which Confirmation of Borrowing shall be sent to: The
Bank of Nova Scotia, at the address for notices set forth on the signature page
hereof, Attention: Vice President, with a copy to: The Bank of Nova Scotia,
ScotiaMocatta, 68th Floor, Scotia Plaza, 00 Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx
X0X 0X0 XXXXXX, Attention: Director.
From the time any Gold is Delivered to the Borrower until such Gold is
returned to Agent, no Bank will assume any risk of loss, theft, detention of or
damage to such Gold. During such period, the Borrower assumes all risk of loss,
theft, detention of or damage to such Gold.
SECTION 2.21. Inability to Provide Gold or Dollars at LIBOR.
---------------------------------------------
30
(a) Gold. Notwithstanding anything to the contrary in this Agreement, no
----
Bank or the Agent shall be liable for any failure to comply with its obligations
under or pursuant to this Article, and the Banks or the Agent shall be entitled
to terminate any arrangements respecting Advances of, conversions into or
renewals of Interest Periods respecting Gold entered into under this Article
without liability, if such failure is caused directly or indirectly, wholly or
partly, by act or omission of any government or competent authority, lack of
availability of Gold, or other contingency, circumstance or event of any nature
beyond the control of such Bank or the Agent. If any Bank is unable to make any
Advance of Gold by reason of lack of availability of Gold, and if the conditions
set forth in Sections 3.1 and 3.2 hereof are satisfied, then the Banks will,
------------ ---
upon the Borrower's request, make such an Advance to the Borrower, for a term to
be mutually agreed among the Borrower and the Banks, in an amount in Dollars
equal to the Dollar Value on the second Business Day prior to the Advance Date
of the Gold which would have been borrowed from the Banks but for their
inability, calculated on the date upon which the Banks notify the Borrower of
such inability; the interest rates on the loans shall be calculated pursuant to
Section 2.12(b). In the event that any one Bank is required to make an Advance
---------------
in Dollars pursuant to the foregoing sentence, all of the Banks will make their
Advances in Dollars rather than Ounces. If any Bank is unable to convert a
Borrowing of Dollars into a Borrowing of Gold by reason of lack of availability
of Gold, then the Borrowing will remain a Borrowing of Dollars. If any Bank is
unable to renew the Interest Period respecting a Borrowing of Gold by reason of
lack of availability of Gold, then the Borrower will return such Gold in the
same form and at the same place as such Gold was Delivered and the Banks shall
Advance Dollars to the Borrower at the rate and for the Interest Period agreed
between the Borrower and the Banks in an amount equal to the Advance Date Value
of the Gold returned.
(b) Dollars at LIBOR. Notwithstanding anything to the contrary in this
----------------
Agreement, no Bank or the Agent shall be liable for any failure to comply with
its obligations under or pursuant to this Article, and the Banks or the Agent
shall be entitled to terminate any arrangements respecting LIBOR Borrowings
entered into under this Article without liability, if such failure is caused
directly or indirectly, wholly or partly, by:
(i) Lack of availability in the interbank Eurodollar market of
Dollar deposits in the principal amount and for a period equal to the
relevant Interest period; or
(ii) Failure of LIBOR to accurately reflect the cost of such Bank or
the Agent of making, funding or maintaining the LIBOR Borrowing; or
(iii) Any change in financial, political or economic conditions or
currency exchange rates making it impractical for such Bank or the Agent to
make, fund or maintain the LIBOR Borrowing; or
(iv) Any change in applicable law or regulation or in the
interpretation thereof making it unlawful or impractical for such Bank or
the Agent to make, fund or maintain the LIBOR Borrowing.
31
The Agent shall give notice of the foregoing to the Borrower promptly upon
receipt by the Agent of notice thereof from such Bank, and upon the sending of
such notice, any obligation of such Bank or the Agent to make, fund or maintain
the LIBOR Borrowing shall terminate and such Bank or the Agent shall make, fund
or maintain such Borrowing as a Base Borrowing.
(c) Commercial Impracticability. Without limiting the effect of the
---------------------------
provisions of clause (a) of this Section, in the event that, by reason of any
----------
Regulatory Change, a Bank either (i) incurs any incremental costs which such
Bank determines are attributable to its making or maintaining any Advances, or
its obligation to make any Advances hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any of, such Advances or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs") based on or measured by the excess above a
----------------
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
LIBOR Borrowings or Base Borrowings is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Bank which
includes LIBOR Borrowings or Base Borrowings or (ii) becomes subject to
restrictions on the amount of such category of liabilities or assets which it
may hold, then, if such Bank so elects by notice to the Borrower, the obligation
of such Bank to make additional Advances of such type hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in which case the
provisions of clause (b) of this Section shall be applicable).
----------
SECTION 2.22. Yield Protection.
----------------
(a) Increased Costs. If due to (i) the imposition or increase of the
---------------
taxes (other than income taxes) on amounts payable by the Borrower hereunder or
(ii) the introduction of, or any Regulatory Change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
or (iii) the compliance by any Bank with any guideline or request from any
central bank or other governmental authority respecting capital requirements or
any other matter (whether or not having the force of law), there shall be any
increase in the cost to such Bank of agreeing to make or making, funding or
maintaining Advances or resulting in a reduction of the amounts which the Banks
are entitled to receive and retain hereunder, then the Borrower shall from time
to time, upon demand by such Bank, pay to such Bank additional amounts
sufficient to indemnify such Bank against such cost.
(b) Capital Requirements. In the event that at any time after August 9,
--------------------
1996 any Regulatory Change shall, in the opinion of any Bank, require that its
Commitment (or any portion thereof) be treated as an asset or otherwise be
included, for purposes of calculating the appropriate amount of capital or
equity to be maintained by such Bank or any corporation controlling such Bank
and such Regulatory Change shall have the effect of reducing the rate of return
on such Bank's or such corporation's capital or equity, as the case may be, as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such corporation, as the case may be, could have achieved but for
such Regulatory Change (taking
32
into account such Bank's or such corporation's policies, as the case may be,
with respect to capital adequacy and any payments made to such Bank pursuant to
clause (a) of this Section which relate to capital adequacy) by an amount
---------- -------
deemed by such Bank to be material, then from time to time following written
notice by such Bank to Borrower through the Agent of such Regulatory Change,
within five days after demand by such Bank through the Agent, the Borrower shall
pay to the Agent for the account of such Bank such additional amount or amounts
as will compensate such Bank or such corporation, as the case may be, for such
reduction.
(c) Payment of Compensation. If any Bank becomes entitled to claim any
-----------------------
additional amounts pursuant to this Section, it shall promptly notify the
Borrower through the Agent of the event by reason of which it has become so
entitled. A certificate setting forth in reasonable detail the method of
computation of any additional amounts payable pursuant to this Section,
submitted by such Bank to the Borrower through the Agent, shall be delivered to
the Borrower promptly after the initial incurrence of such additional amounts
and shall be conclusive in the absence of manifest error. The entitlement of
any Bank to claim additional compensation pursuant to this Section shall be
computed without regard to any sale by such Bank of participating interests in
any or any part of its Advances, its Commitments or any other interests
hereunder in accordance with Section 9.7(b) hereof. The covenants in this
--------------
Section shall survive the termination of this Agreement and the payment of the
Notes.
(d) Each Assignee Bank that is a Non-U.S. Bank shall, on or prior to the
date it becomes an Assignee Bank, execute and deliver to the Borrower and the
Agent, two or more (as the Borrower or the Agent may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or, solely if such Bank
or Assignee Bank is claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", United States Internal Revenue Service Forms W-8 and a certificate
signed by a duly authorized officer of such Bank or Assignee Bank representing
that such Bank or Assignee Bank is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, or such other forms or documents (or successor forms
or documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Bank or Assignee Bank is exempt from
withholding or deduction of Taxes; and (ii) deliver to the Borrower and the
Agent two further copies of any such form or documents on or before the date
that any such form or document expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent such form or
document previously delivered by it to the Borrower.
SECTION 2.23. Payments and Computations. The Borrower shall return each
-------------------------
Advance of Gold hereunder and under the Gold Receipts in accordance with Section
-------
2.5. The Borrower shall make each payment of Reimbursement Obligations and
---
money hereunder and under the Notes without setoff, deduction or counterclaim
not later than 11:00 A.M. (Atlanta time) on the day when due in Dollars to the
Agent at its address set forth after its signature to this Agreement in
immediately available funds. Funds received after that time shall be deemed to
have been received by the Agent on the next succeeding Business Day. The Agent
will promptly thereafter
33
distribute to each Bank its ratable share of each such payment received by the
Agent for the account of the Banks. The Borrower hereby authorizes each Bank, if
and to the extent payment of money or return of Gold owed to such Bank is not
made when due hereunder or under a Note or Gold Receipt held by such Bank, to
charge from time to time against the Borrower's account with such Bank any
amount so due. All computations of interest under the Notes and the Gold
Receipts and the commitment fee and Letter of Credit fees payable hereunder
shall be made by the Agent on the basis of a year of three hundred sixty days
for the actual number of days (including the first day but excluding the last
day) elapsed. Whenever any payment to be made shall otherwise be due on a day
which is not a Business Day, such payment shall (except as otherwise required by
clause (b) of the definition of the term "Interest Period") be made on the next
---------- ---------------
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 2.24. Advance, Conversion, Renewal or Payment on Business Day.
-------------------------------------------------------
All Advances or returns of Gold to be made hereunder or under any Instrument and
all renewals of Interest Periods for Gold Borrowings and conversions from
Dollars to Gold hereunder shall be made on a Business Day that is followed by a
Business Day. All Advances or payments of Dollars to be made hereunder or under
any Instrument and all renewals of Interest Periods for LIBOR Borrowings and
conversions from Gold to Dollars hereunder shall be made on a Business Day.
Whenever any Advance, conversion, renewal or return in respect of Gold, or
Advance, conversion or payment of Dollars in respect of a Base Borrowing to be
made hereunder or under any Instrument shall be stated to be due on a day which
is not a Business Day (or, in the case of an Advance, conversion, renewal or
return in respect of Gold, a Business Day that is followed by a Business Day),
such Advance, return, conversion, renewal or payment may be made on the next
succeeding Business Day (or, in the case of an Advance, conversion, renewal or
return in respect of Gold, a Business Day that is followed by a Business Day),
and such extension of time shall in such case be included in the computation of
payment of interest or commitment fee, as the case may be. Whenever any payment
of Dollars, conversion or renewal in respect of a LIBOR Borrowing to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, such payment, conversion or renewal shall be made on the next
preceding Business Day.
SECTION 2.25. Sharing of Payments, Etc. If any Bank shall obtain any
------------------------
payment of Dollars or return of Gold (whether voluntary, involuntary, through
the exercise of any right of setoff, or otherwise) on account of a Note or Gold
Receipt held by it or the pro rata share of any Reimbursement Obligation owing
to it in excess of its ratable share of payments on account of the Instruments
obtained by all the Banks, such Bank shall purchase from the other Banks such
participations in the Instruments held by them as shall be necessary to cause
such purchasing Bank to share the excess payment or receipt of (including in
respect of Reimbursement Obligation) or return of Gold ratably with each of the
other Banks; provided, however, that each Bank in its discretion shall be
-------- -------
entitled to determine whether such payment or return was obtained on account of
another obligation of the Borrower or the Guarantors to the Bank; and provided
--------
further, that if all or any portion of such excess payment or return of Gold is
-------
thereafter recovered
34
by the selling Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. The Borrower
agrees that any Bank so purchasing a participation from another Bank pursuant to
this Section may exercise all its rights of payment (including the right of
setoff) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation.
SECTION 2.26. Forward Sales. To the extent any Bank's Revolving Advances
-------------
(valued at Advance Date Values) are less than its Revolving Commitment at any
time, the Borrower shall have the right to require such Bank to quote on and, if
accepted, agree to a Forward Sale on the following terms:
(a) Subject to Section 2.2(b) and clauses (c) and (e) of this
-------------- ----------- ---
Section, the Borrower shall have the right to designate the number of
Ounces of Gold to be sold and the date for delivery and payment of the
price, which shall be not later than the earlier of twelve months from the
date of quotation or the Maturity Date unless otherwise agreed by the Bank;
(b) The Bank shall agree to purchase such Gold at the price quoted
by such Bank (which price shall consist of the Dollar Value of such Gold on
the date of quotation plus the Contango) and accepted by the Borrower;
(c) The total of such Bank's Revolving Advances of Gold (valuing
such Advances in Ounces at their respective Advance Date Values) plus the
total of its Forward Sale Amounts plus the total of all outstanding Dollars
(under this Agreement and the Instruments) shall not exceed such Bank's
Revolving Commitment at any time. If such Revolving Commitment is
exceeded, the Borrower shall comply with Section 2.17(b) and when the
---------------
Borrower is in compliance with Section 2.17(b), the Borrower shall close
---------------
out such Forward Sales with said Bank as may be required to comply with
this provision, and pay any associated Breakage Costs;
(d) If the Borrower desires to obtain a Revolving Advance which
would cause such Bank's Revolving Commitment to be exceeded, but which
would be available if such Forward Sales were terminated or the number of
Ounces subject thereto reduced, the Revolving Advance shall be made, but
the excess amount of Gold shall be predelivered under outstanding Forward
Sales with such Bank, and Borrower shall pay any associated Breakage Costs;
(e) If the Borrower is in compliance with Section 2.17(a), but the
---------------
total of (i) the current Dollar Value of Gold subject to its Forward Sales
to such Bank, minus (ii) the Forward Sale Amount thereof, plus (iii) the
outstanding principal amounts of Revolving Advances in Dollars made by such
Bank, plus (iv) the current Dollar Value of Revolving Advances of Gold made
by such Bank, exceeds said Bank's Ceiling Dollar Value for Revolving
Advances, the Borrower shall forthwith, at its option either repay
sufficient
35
Revolving Advances in Dollars or close out sufficient Forward Sales to
bring said total down to or below said Bank's Ceiling Dollar Value for
Revolving Advances. The Borrower shall pay all Breakage Costs associated
with such repayments or closeouts;
(f) The Dollar Value of Gold subject to Forward Sales shall not be
included in calculations of the unused amount of the aggregate amount of
the Banks' Revolving Commitments for purposes of determining the Borrower's
quarterly commitment fee; and
(g) Two Business Days prior to the date on which a Forward Sale is
due to be settled (the "Notice Date") the Borrower will give notice to the
-----------
Bank of its intention either to deliver the Gold subject to the Forward
Sale at the agreed location or, subject to the conditions of this Section,
settle the Forward Sale and enter into a new Forward Sale with any Bank.
In the latter case, to effect the settlement of the Forward Sale on the
delivery date (i) the Bank will pay to the Borrower the Contango in
accordance with Section 2.12(c) and either (ii) the Borrower will pay to
---------------
the Bank the excess, if any, of the Dollar Value of the Gold subject to the
Forward Sales on the Notice Date over the Forward Sale Amount or (iii) the
Bank will pay to the Borrower the excess, if any, of the Forward Sale
Amount over the Dollar Value of the Gold subject to the Forward Sale on the
Notice Date. Any amounts owed by the Bank to the Borrower and by the
Borrower to the Bank in respect of a Forward Sale pursuant to the preceding
sentence shall be set off against one another.
(h) Other provisions of each Forward Sale shall be as agreed between
the Borrower and said Bank. Each Bank shall furnish copies of each Forward
Sale agreement entered into.
ARTICLE 3.
CONDITIONS OF LENDING AND FORWARD SALES
SECTION 3.1. Conditions Precedent to Borrowing or Forward Sale. The
-------------------------------------------------
obligation of each Bank to continue its Existing Advances as Advances under this
Agreement and to make additional Revolving Advances or enter into Forward Sales
on the Amendment Effective Date, and the obligation of the Issuer to issue the
Letter of Credit, is (in each case) subject to the conditions precedent that
such Bank shall have received the following on or before the Advance or Forward
Sale, each dated the Amendment Effective Date, in form and substance
satisfactory to the Agent and each Bank:
(a) Copies of this Agreement, duly executed and delivered by the
Borrower, each Guarantor, each Bank and the Agent;
(b) Evidence that the amounts described in Section 2.14 have been
------------
disbursed to the Agent; and
36
(c) A Cash Flow Schedule which evidences to the satisfaction of the
Agent and the Banks that the Mining Group Net Present Value of the Mining
Group Future Cash Flow is more than 1.4 times the total consolidated Debt
of the Parent on December 31, 1998; provided, however, that for purposes of
-------- -------
this clause, the "total consolidated Debt of the Parent" shall not include
Debt whose sole recourse is to a future mine and is otherwise nonrecourse
to the Borrower and the Guarantors.
SECTION 3.2. Conditions Precedent to All Advances, Forward Sales,
----------------------------------------------------
Conversions and Renewals. The obligation of each Bank or the Issuer to make
------------------------
each Advance or Forward Sale (including any Advance or Forward Sale on the
Amendment Effective Date), and, with respect to clause (a)(iii) below, the
---------------
obligation of each Bank to make each conversion or renewal in respect of an
outstanding Advance, shall be subject to the further conditions precedent that
on the date of such Advance or Forward Sale (and, with respect to clause
------
(a)(iii) below, such conversion or renewal):
--------
(a) The following statements shall be true:
(i) since the date of the balance sheet referred to in Section
4.1(j), there has been no material adverse change in the financial
------
condition or operations of the Borrower or any Guarantor (provided,
--------
that before a change will be deemed to be materially adverse by reason
of a fluctuation in the price of Gold, account will be taken of the
all-in production costs of the Borrower and such Guarantor),
(ii) there is no pending or threatened action or proceeding
affecting the Borrower or any Guarantor before any court, Governmental
Agency or arbitrator which could be reasonably expected to have a
material adverse effect upon the financial position of the Borrower or
such Guarantor,
(iii) no Default shall have occurred and be continuing, or
would result from such Advance or the application of the proceeds
thereof, and
(iv) all representations and warranties in this Agreement and
each other Instrument shall be true and correct in all material
respects;
and the delivery to the Agent of a Credit Extension Request, or agreement to a
Forward Sale (and, with respect to clause (a)(iii) only, the giving of the
---------------
Notice of Conversion or Renewal of Interest or the Notice of Conversion of Gold
or Dollars) by the Borrower shall be deemed to constitute a representation and
warranty by the Borrower that at the date of such Borrowing or agreement the
foregoing statements are true; and
37
(b) The Agent shall have received for such Advance or Forward Sale
the Credit Extension Request or the Notice of Conversion or Renewal of
Interest or the Notice of Conversion of Gold or Dollars, as appropriate.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Borrower and the
------------------------------------------------------
Guarantors. In order to induce the Banks to enter into this Agreement and to
----------
make Advances hereunder, the Borrower and each Guarantor represents and warrants
to each Bank as set forth in this Article.
(a) Organization, Good Standing. The Borrower is a corporation duly
---------------------------
incorporated, validly existing and in good standing under the laws of
Delaware and each Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The Borrower, its Subsidiaries and the Guarantors are and
at all times will be duly qualified or otherwise authorized to do business
whenever and wherever necessary to carry on their present businesses and
operations under this Agreement and each other Instrument to which it is a
party.
(b) Authorization, No Conflict. The execution, delivery and
--------------------------
performance by the Borrower and each Guarantor of this Agreement and the
Instruments to which they are party have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent
or approval of the stockholders of the Borrower or such Guarantor, (ii)
contravene the Borrower's or any Guarantor's Organic Documents, (iii)
violate any provision of any law, rule, regulation (including Regulation X
of the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award presently in effect
having applicability to the Borrower or any Guarantor, (iv) result in a
breach of or constitute a default under or require the consent of any party
pursuant to any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower or any Guarantor is
party or by which they or their properties may be bound or affected, or (v)
result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of
any nature upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or any Guarantor; and neither the
Borrower nor any Guarantor is in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, agreement, lease or instrument.
(c) No Other Action Required. No authorization or approval or other
------------------------
action by, and no notice to or filing with, any Governmental Agency or
regulatory body is required for the due execution, delivery and performance
by the Borrower or any Guarantor of this Agreement and the Instruments to
which they are (or will become) a party.
38
(d) Validity and Binding Nature of Agreement and Instruments. This
--------------------------------------------------------
Agreement is, and the other Instruments to which it is a party when
delivered will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
and this Agreement is, and the other Instruments to which they are a party
when delivered will be, legal, valid and binding obligations of each
Guarantor enforceable against such Guarantor in accordance with its terms,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally.
(e) Litigation, Contingent Liabilities. There is no pending or, to
----------------------------------
Borrower's or any Guarantor's knowledge, threatened action or proceeding
affecting the Borrower or any Guarantor or any of their respective
properties before any court, Governmental Agency or arbitrator, which may
have a materially adverse effect on the respective financial condition or
operations of the Borrower or any Guarantor. None of the Borrower or the
Guarantors has any material contingent liabilities not provided for or
disclosed in the financial statements referred to in Section 4.1(j) or
--------------
otherwise permitted by this Agreement.
(f) Condition of Business and Properties. Neither the business nor
------------------------------------
the properties of the Borrower or any of the Guarantors is affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), materially and
adversely affecting such business or properties or the operations of the
Borrower or any of the Guarantors.
(g) Other Agreements. None of the Borrower or the Guarantors is a
----------------
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction
which would reasonably be expected to have a material adverse effect on the
business, properties, assets, operations or condition, financial or
otherwise, of the Borrower or such Guarantor, or on the ability of the
Borrower to carry out its obligations under this Agreement or the
Instruments or on the ability of any of the Guarantors to carry out its
obligations under this Agreement.
(h) No Misstatements of Fact. No information, exhibit or report
------------------------
furnished by the Borrower or any Guarantor to any Bank in connection with
the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not misleading.
(i) Regulation U. None of the Borrower or the Guarantors is engaged
------------
in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry
39
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
(j) Financial Statements. The balance sheet of the Borrower and the
--------------------
consolidated balance sheet of the Parent as at December 31, 1995, and the
related statements of income, retained earnings and cash flows of the
Borrower and the Guarantors for the twelve months then ended, copies of
which have been furnished to each Bank, fairly present the financial
condition of the Borrower and the Guarantors as at such date and the
results of the operations of the Borrower and the Guarantors for the period
ended on such date, all in accordance with GAAP, in all cases consistently
applied, and since December 31, 1995 there has been no material adverse
change in such condition or operation.
(k) Liens. None of the assets of the Borrower or any Guarantor is
-----
subject to any mortgage, pledge, title retention lien or other lien,
encumbrance or security interest, except (i) for current taxes not
delinquent or taxes being contested in good faith and by appropriate
proceedings, (ii) liens arising in the ordinary course of business for sums
not due or sums being contested in good faith and by appropriate
proceedings, but not involving any deposits or advances or borrowed money
or the deferred purchase price of property or services, and (iii) to the
extent shown in the financial statements referred to in Section 4.1(j) or
--------------
in Schedule 3 or as otherwise permitted by this Agreement.
----------
(l) Employee Benefit Plans. Each Plan complies in all material
----------------------
respects with all applicable requirements of law and regulations and no
Termination Event with respect to a Plan has occurred.
(m) Investment Company Act. None of the Borrower or the Guarantors
----------------------
is an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(n) Public Utility Holding Company Act. None of the Borrower or the
----------------------------------
Guarantors is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(o) Compliance With Applicable Laws. All work performed and other
-------------------------------
actions or omissions to act at the properties of the Borrower and any
Guarantor and the current condition of the properties of the Borrower and
any Guarantor comply in all material respects with all applicable laws,
ordinances, rules and regulations of any Governmental Agency and with all
directions, rules and regulations of officers of every Governmental Agency
having jurisdiction over the properties of the Borrower and any Guarantor
and
40
there are no existing material violations of any such applicable laws,
ordinances, directions, rules or regulations.
(p) Environmental Matters. To the best knowledge of the Borrower
---------------------
and Guarantors, and except for normal or anticipated circumstances incurred
in the regular course of the business of the Borrower and its Subsidiaries
and the Guarantors, which circumstances do not have a materially adverse
effect on the respective financial condition or operations of the Borrower
or any Guarantor, (i) the properties and operations of the Borrower and its
subsidiaries and the Guarantors comply in all material respects with all
applicable Environmental Laws; (ii) none of the properties or operations of
the Borrower or any of its Subsidiaries or the Guarantors is subject to any
judicial or administrative proceeding alleging the material violation of
any Environmental Laws; (iii) none of the properties or operations of the
Borrower or any of its Subsidiaries or the Guarantors is the subject of any
investigation concerning any use or release of any Hazardous Substance;
(iv) none of the Borrower, any of its Subsidiaries, the Guarantors or any
predecessor of any such Persons has filed any notice under any
Environmental Laws indicating past or present material treatment, storage
or disposal of a hazardous waste or reporting a material spill or release
of a Hazardous Substance into the environment; (v) except as disclosed in
writing to the Banks, none of the Borrower, its Subsidiaries or the
Guarantors has any material contingent liability in connection with any
release of any Hazardous Substance into the environment, including any
material liability arising in connection with the acts or omissions of any
past owner or operator of any of the premises owned, leased or used by the
Borrower, any of its Subsidiaries or the Guarantors; (vi) none of the
Borrower's, any of its Subsidiaries' or the Guarantors' operations involve
the generation, transportation, treatment, storage or disposal of Hazardous
Substances (other than in the normal course of and incidental to their
business operation); (vii) none of the Borrower, its Subsidiaries or the
Guarantors has improperly disposed of any material amount of any Hazardous
Substance in, on or about any premises owned, leased or used by it or them;
(viii) each surface impoundments or underground storage tanks located in,
on or about any of the premises owned, leased or used by the Borrower, any
of its Subsidiaries or the Guarantors complies in all material respects
with applicable Environmental Laws; and (ix) (A) no Lien in favor of any
Governmental Agency for any liability under Environmental Laws exists, and
(B) no claim for damages arising from or costs incurred by such
Governmental Agency in response to a release of any Hazardous Substance
into the environment is pending or attached to any of the premises owned,
leased or used by the Borrower, any of its Subsidiaries or the Guarantors.
(q) Brokers. The Borrower and the Guarantors have not agreed to pay
-------
any brokerage fees, finder's fees or other similar fees or commissions with
respect to any of the transactions contemplated by this Agreement and, to
the best knowledge of the Borrower and the Guarantors, no person is
entitled, or intends to claim that it is entitled, to receive any such fees
or commissions in connection with any of such transactions.
41
(r) No Default. No Event of Default has occurred and is continuing.
----------
SECTION 4.2. Warranties of the Banks With Respect to the Gold. Each Bank
------------------------------------------------
warrants that the Gold Delivered by it hereunder will conform to the description
of Gold herein. THERE ARE NO EXPRESS WARRANTIES WITH RESPECT TO SUCH GOLD OTHER
THAN THOSE HEREIN SPECIFIED. THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE
DESCRIPTION OF THE GOLD DESCRIBED IN THIS AGREEMENT. NO WARRANTY OF
MERCHANTABILITY, FITNESS FOR PURPOSE, OR ANY WARRANTY OF ANY OTHER NATURE SHALL
BE IMPLIED.
SECTION 4.3. Warranties of the Borrower and the Guarantors With Respect to
-------------------------------------------------------------
the Gold. The Borrower and the Guarantors warrant that the Gold returned by the
--------
Borrower hereunder will conform to the description of the Gold herein. THERE
ARE NO EXPRESS WARRANTIES WITH RESPECT TO SUCH GOLD OTHER THAN THOSE HEREIN
SPECIFIED. THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION OF THE
GOLD DESCRIBED IN THIS AGREEMENT. NO WARRANTY OF MERCHANTABILITY, FITNESS FOR
PURPOSE, OR ANY WARRANTY OF ANY OTHER NATURE SHALL BE IMPLIED.
ARTICLE 5.
COVENANTS OF THE BORROWER AND THE GUARANTORS
SECTION 5.1. Affirmative Covenants. The Parent, the Borrower and each
---------------------
Guarantor agrees with each Bank that until all Commitments have expired or
terminated, all Obligations have been paid and performed in full and the Letter
of Credit has expired or terminated (or the Agent shall have received cash (in a
cash collateral account on terms satisfactory to the Agent) in the Stated Amount
of the Letter of Credit), the Parent and the Borrower will, and will cause their
Subsidiaries to, perform or cause to be performed the obligations set forth
below.
(a) Compliance With Laws, Etc. The Borrower and the Guarantors
-------------------------
shall comply in all material respects with all Governmental Requirements
now in force or that may be enacted hereafter and with all directions,
rules and regulations of the fire marshal, health officer, building
inspector or other officers of every Governmental Agency now having or
hereafter acquiring jurisdiction over the properties of the Borrower or the
Guarantors.
(b) Reporting Requirements.
----------------------
(i) Monthly Reports. The Borrower and the Guarantors shall
---------------
furnish to the Agent as soon as available and in any event within
twenty-one days after the end of each month, the monthly management
report of the Parent, such report to include a report as to the
quantity and quality of ore mined and Gold and Silver
42
production for each mine in the Mining Group and the costs thereof in
a form acceptable to the Agent.
(ii) Quarterly Reports. The Borrower and the Guarantors shall
-----------------
furnish to the Agent and each Bank as soon as available and in any
event within sixty days after the end of each of the first three
quarters of each Fiscal Year of each of the Borrower and the
Guarantors, (x) a balance sheet of the Borrower and a consolidated
balance sheet of the Parent as of the end of such quarter, (y) a
statement of income and retained earnings of the Borrower and a
consolidated statement of income and retained earnings of the Parent
for such quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such quarter, and (z)
a statement of cash flows of the Borrower and a consolidated statement
of cash flows of the Parent for such quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the
end of such quarter, all certified by the respective president or vice
president and treasurer of the Borrower and the Parent, together with
a Cash Flow Schedule, a production report for all mines in the Mining
Group respecting the quarter then ended and a statement setting forth
the calculation of the Mining Group Net Present Value of the Mining
Group Future Cash Flow all certified by the Borrower and the
Guarantors prepared in accordance with generally accepted industry
practices and in a manner reasonably acceptable to the Agent, and a
certificate signed by a duly authorized officer of the Borrower
stating whether or not as of the end of such quarter the statements
contained in Section 3.2(a) are true, and a certificate signed by a
--------------
duly authorized officer of the Parent stating whether or not as of the
end of such quarter the Parent is in compliance with the financial
criteria set forth in Section 7.1(k).
--------------
(iii) Annual Reports. The Borrower, the Guarantors and the
--------------
Parent shall furnish to the Agent and each Bank as soon as available
and in any event within ninety days after the end of each Fiscal Year
of each of the Borrower, the Guarantors and the Parent, (x) a balance
sheet of the Borrower and each of the Guarantors (other than the
Parent) and a consolidated balance sheet of the Parent as of the end
of such Fiscal Year, (y) a statement of income and retained earnings
of the Borrower and each of the Guarantors (other than the Parent) and
a consolidated statement of income and retained earnings of the Parent
for such Fiscal Year, and (z) a statement of cash flows of the
Borrower and each of the Guarantors (other than the Parent) and a
consolidated statement of cash flows of the Parent, certified (as to
the financial statements of the Parent) in a manner reasonably
acceptable to the Agent by independent public accountants acceptable
to the Agent, and certified by the respective president or vice
president and treasurer of the Borrower, the Guarantor and the Parent,
together with (A) a Cash Flow Schedule and a calculation of Mining
Group Net Present Value of the Mining Group Future Cash Flow, together
with the underlying statements as to the latest published ore
reserves, with year to year changes for each mine of the
43
Mining Group, and statements of the estimated life of each mine
belonging to the Mining Group, projected production volumes and grades
for each such year of such life and the estimated operating costs and
capital costs anticipated to be incurred with respect to each such
mine, such life of mine plans to have been approved by both mine site
personnel and management, all of which such schedules, calculations,
statements, projections and estimates shall be subject to the review
and reasonable approval of the Agent and Majority Banks, within thirty
Business Days after the delivery thereof, it being agreed that if the
Agent or any Bank shall have questions or comments with respect to
such submissions, the Borrower shall promptly respond thereto and
provide such additional or revised data as may be reasonably required
by the Agent or such Bank; (B) a report setting forth for each mine
belonging to the Mining Group, each written summons, citation,
directive, notice, complaint, letter or other written communication
from any Governmental Agency concerning the alleged violation with
respect to such mine of any Environmental Laws, or investigation of
the Borrower or a Guarantor relating to the handling of any Hazardous
Substance, or the release thereof into the environment, or any request
for remediation, cleanup or removal of any Hazardous Substance
wherever located, by the Borrower or such Guarantor, which
investigation or request is other than routine; (C) a production
report for such year certified by the Borrower and the Parent in a
manner acceptable to the Agent, and a certificate signed by a duly
authorized officer of the Borrower stating whether or not as of the
end of such Fiscal Year the statements contained in Section 3.2(a) are
--------------
true, and a certificate signed by a duly authorized officer of the
Parent stating whether or not as of the end of such Fiscal Year, the
Parent is in compliance with the financial criteria set forth in
Section 7.1(k); (D) a detailed ore reserve report from each member of
--------------
the Mining Group in a form previously provided to the Agent; and (E)
updated five year projections for the Parent in a form acceptable to
the Agent showing cost and production summaries for each operation,
and consolidated summaries of income, sources and uses of funds
(including development capital expenditures for each operation) and
capitalization for the Parent.
(iv) Other Reports. The Borrower and the Guarantors shall
-------------
furnish to the Agent and each Bank: (A) promptly upon becoming aware
of any circumstance that could result in a material change in the
statements provided pursuant to clauses (b)(iii)(A), (b)(iii)(B) or
------------------- -----------
(b)(iii)(C) of this Section, notice setting forth the particulars
-----------
thereof and a new Cash Flow Schedule and new statements pursuant to
such clauses, which submission shall be subject to the approval of the
Agent and the Majority Banks as provided in clause (b)(iii) of this
---------------
Section; (B) promptly after the filing or receiving thereof, copies of
all reports and notices under ERISA which the Borrower or the Parent
files with or receives from the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor; (C)
promptly after the filing or receiving thereof, copies of all notices
44
which the Borrower receives from any Governmental Agency alleging its
material noncompliance with Environmental Laws or actual or potential
liability for cleanup, remediation or removal of any Hazardous
Substance wherever located and any replies of the Borrower filed in
response thereto; (D) promptly upon becoming aware of any actual or
proposed Change in Ownership or Management, notice setting forth the
particulars thereof; (E) any reports from independent third parties
relating to environmental or ore reserve audits; and (F) such other
information respecting the condition of operations, financial or
otherwise, of the Borrower or the Guarantors as the Agent or any Bank
may from time to time reasonably request.
(c) Visitation Rights. The Borrower shall at any reasonable time
-----------------
during normal business hours and from time to time, on reasonable notice,
permit any Bank or any agents or representatives thereof (i) to examine and
make copies of and abstracts from the records and books of account of the
Borrower; (ii) to discuss the affairs, finances and accounts of the
Borrower with any of its officers or directors; and (iii) to visit and
inspect any mine in the Mining Group.
(d) Maintenance of Insurance. The Borrower and the Guarantors shall
------------------------
maintain such insurance with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is satisfactory
to the Banks and as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
the Borrower and the Guarantors operate.
(e) Maintenance of Properties, Etc. The Borrower and the Guarantors
------------------------------
shall maintain and preserve all of their properties and equipment which are
material to the proper conduct of their businesses in good working order
and condition, ordinary wear and tear excepted.
(f) Keeping of Records and Books of Account. The Borrower and the
---------------------------------------
Guarantors shall keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrower and the Guarantors.
(g) Preservation of Corporate Existence, Etc. The Borrower and the
----------------------------------------
Guarantors shall preserve and maintain their corporate existence, rights,
franchises and privileges in the jurisdictions of their incorporation, and
qualify and remain qualified as foreign corporations in each jurisdiction
in which such qualification is necessary or desirable in view of their
businesses and operations or the ownership of their properties.
(h) Conduct of Business. The Borrower shall engage solely in the
-------------------
business of exploring for, developing, owning interests in and operating
precious metals properties,
45
including gold mines, and in activities incidental thereto, in accordance
with generally accepted industry practices.
(i) Notice of Default and ERISA Matters. The Borrower and the
-----------------------------------
Guarantors shall furnish to the Agent and each Bank as soon as possible,
and in any event within five Business Days after the occurrence of each
Default continuing on the date of such statement, a statement of the
respective vice president and treasurer of the Borrower and the Guarantors
setting forth the details of such Default and the action which the Borrower
proposes to take with respect thereto. The Borrower shall furnish to the
Agent and each Bank as soon as possible, and in any event within five
Business Days after the occurrence thereof, written notice of the
occurrence of any Termination Event.
(j) Payment of Taxes and Other Claims. The Borrower and the
---------------------------------
Guarantors shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon them or upon their income,
profits or property, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon their respective
property; provided, however that the Borrower and the Guarantors shall not
-------- -------
be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings if the Borrower
and such Guarantor shall have set aside on their books adequate reserves
with respect thereto in accordance with GAAP.
(k) Forward Sale Contracts. In the event that the Borrower intends
----------------------
to use the sale price per ounce under any forward sale contract (other than
a Forward Sale) as the Advance Date Value for the Ounces of Gold to be
borrowed from the Banks on the appropriate Advance Date, upon notice to the
Banks prior to entering into the contract, the Borrower shall provide the
Banks with the opportunity to quote the price of gold to be payable under
the contract, and shall enter into such contract with the Bank or Banks
whose quotations it accepts, if any, on such terms as may otherwise be
mutually agreeable.
(l) Additional Guarantors. The Borrower and the Parent shall
---------------------
promptly cause any Person required by the provisions of this Agreement to
become a Guarantor hereunder to duly execute and deliver to the Agent and
each Bank a Supplement to this Agreement in substantially the form of
Exhibit L hereto. Without limiting the generality of the foregoing, with
---------
the written consent of the Banks, a Person that acquires from the Borrower
or a Guarantor in one or more sale and leaseback transactions Operating
Assets in an aggregate amount of $50,000 or less shall not be required to
become a Guarantor hereunder.
(m) Further Assurances. The Borrower and the Guarantors shall
------------------
promptly and duly execute and deliver to the Agent and each Bank such
documents and assurances and
46
take such further action as the Banks may from time to time reasonably
request in order to carry out more effectively the intent and purpose of
this Agreement and the documents delivered pursuant hereto and to establish
and protect the rights and remedies created or intended to be created in
favor of the Agent and the Banks.
SECTION 5.2. Negative Covenants. So long as any obligation under the
------------------
Instruments shall remain outstanding or any Bank shall have any Commitment
hereunder or the Letter of Credit remains issued and outstanding (unless the
Agent shall have received as cash collateral Dollars in the Stated Amount of the
Letter of Credit in an account maintained with (and under the sole dominion and
control of) the Agent, pursuant to documentation satisfactory to the Agent, the
Borrower will not (and each Guarantor will not as to Sections 5.2(a), 5.2(b),
--------------- ------
5.2(c), 5.2(d), 5.2(e), 5.2(g) and 5.2(h)), without the written consent of the
------ ------ ------ ------ ------
Banks (or, in connection with Section 5.2(b), the Majority Banks):
--------------
(a) Debt. Create, incur, assume or suffer to exist, directly or
----
indirectly, any Debt except:
(i) Debt hereunder or under the Instruments, or
(ii) Debt reflected in Schedule 5 hereto, and extensions,
----------
modifications, or refinancing of such Debt; provided, however, that
-------- -------
such extensions, modifications or refinancings shall not render such
Debt senior in priority or right of payment to the Debt hereunder;
provided, further, that such Debt may not be subject to early
-------- -------
redemption or defeasance (either by sinking fund or otherwise) and may
not be prepaid or repaid in any manner prior to the Maturity Date, or
(iii) Debt under revolving credit facilities to a maximum of
$50,000,000, or
(iv) Debt which may exist for a period of up to 90 days as a
result of drawings under the letters of credit (other than the Letter
of Credit) issued in the normal course of business of developing and
operating precious metals mines; provided that the sum of (A) such
--------
Debt and (B) the undrawn face amount of all such letters of credit
(other than the Letter of Credit) shall not exceed $75,000,000 in the
aggregate, or
(v) any Debt owed by the Borrower to a Guarantor or by a
Guarantor to the Borrower, or
(vi) as to the Parent, the Borrower and EBCC, any Debt, the
proceeds of which are used directly or indirectly, and exclusively,
for the acquisition, development or construction of a mine of precious
metals, and extensions, modifications, or refinancing of such Debt;
provided, however, that such Debt or
-------- -------
47
extensions, modifications or refinancings of such Debt shall not be
senior in priority or right of payment to the Obligations hereunder;
provided further, that such Debt may not be subject to early
-------- -------
redemption or defeasance (either by sinking fund or otherwise) and may
not be prepaid or repaid in any manner prior to the Maturity Date.
(b) Liens, Etc. Create, incur, assume or suffer to exist, directly
----------
or indirectly, any mortgage, deed of trust, pledge, lien, security interest
or other charge or encumbrance whether or not determined (including the
lien or retained security title of a conditional vendor) of any nature upon
or with respect to any of its properties, now owned or hereafter acquired,
or assign or otherwise convey any right to receive the production, proceeds
or income therefrom, except that the foregoing restrictions shall not apply
to mortgages, deeds of trust, pledges, liens, security interests or other
charges or encumbrances:
(i) for taxes, assessments or governmental charges or levies if
the same shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings;
(ii) imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business in an amount which at no time exceeds $5,000,000;
(iii) arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(iv) arising out of pledges or deposits to secure performance in
connection with bids, tenders, contracts (other than contracts for the
payment of money) or leases made in the ordinary course of business to
which the Borrower or such Guarantor is a party as lessee in an amount
which at no time exceeds $1,000,000;
(v) arising out of deposits to secure public or statutory
obligations of the Borrower or such Guarantor in an amount which at no
time exceeds $2,000,000;
(vi) arising out of deposits to secure, or in lieu of, surety,
appeal or customs bonds in proceedings to which the Borrower or such
Guarantor is a party in an amount which at no time exceeds $1,000,000;
(vii) arising out of operating leases entered into in the
ordinary course of business and under which the aggregate annual
rentals do not exceed $5,000,000;
48
(viii) of purchase money mortgages and other security interests
on equipment acquired, leased or held by the Borrower or the
Guarantors (including equipment held by the Borrower or such
Guarantors as lessee under leveraged leases other than those described
in clause (b)(ix) below) in the ordinary course of business to secure
--------------
the purchase price of such equipment or to secure indebtedness
incurred solely for the purpose of financing the acquisition
(including acquisition as lessee under leveraged leases), construction
or improvement of any such equipment to be subject to such mortgages
or security interests, or mortgages or other security interests
existing on any such equipment at the time of such acquisition, or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount, provided that no such mortgage or other
security interest shall extend to or cover any equipment other than
the equipment being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the mortgage or security interest
being extended, renewed or replaced, and provided, further, that, as
-------- -------
to the Borrower but not as to such Guarantor, the aggregate principal
amount of the Debt of the Borrower at any one time outstanding and
secured by mortgages and other security interests permitted by this
clause shall not exceed $5,000,000 and that any such Debt shall not
otherwise be prohibited by the terms of this Agreement;
(ix) liens and security interests outstanding on August 9, 1996
and described in Schedule 3 hereto; and
----------
(x) arising without the consent of the Borrower or such
Guarantor, including, without limitation, zoning restrictions,
easements, licenses, restrictions on the use of properties or minor
irregularities in title thereto, which do not materially impair the
use of such properties in the operations of the Borrower or such
Guarantor in the ordinary course of business or the value of such
properties for the purpose of such business;
provided, however, that, at no time shall the sum of the amounts permitted
-------- -------
pursuant to clauses (b)(ii), (b)(iv), (b)(v), (b)(vi) and (b)(vii) exceed
------- ------- ------- ------ ------- --------
$10,000,000 in the aggregate for the Borrower and the Guarantors.
(c) Assumptions, Guarantees, Etc. of Indebtedness of Other Persons.
--------------------------------------------------------------
Assume, guarantee, endorse or otherwise become directly or contingently
liable (including, without limitation, liable by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to
supply funds to or otherwise invest in the debtor or otherwise to assure
the creditor against loss) in connection with any Debt or indebtedness of
any other Person, except guarantees by endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business. This provision shall not apply to the Parent.
49
(d) Investments in Other Persons. Make any loan or advance to any
----------------------------
Person exceeding at any one time an aggregate of $250,000, or purchase or
otherwise acquire the capital stock, assets, or obligations of, or any
interest in, any Person (other than a Person engaged in the business of
exploration for or mining for precious metals and other than readily
marketable direct obligations of the United States of America and
certificates of time deposit issued by commercial banks of recognized
standing operating in the United States of America). Notwithstanding the
foregoing, the Borrower may (i) make loans to Affiliates which are not
Guarantors, provided such loans are guaranteed by the Parent, (ii) purchase
and hold any debt securities issued or guaranteed by the United States
government, (iii) purchase and hold commercial paper, maturing not more
than nine months from the date of issue, which is issued by a corporation
organized under the laws of any state of the United States and rated at
least A-2 by Standard & Poor's Ratings Group or P-2 by Xxxxx'x Investors
Service, Inc. or (iv) purchase and hold any certificate of deposit or
bankers acceptance, maturing not more than one year from the date of issue,
which is issued by either (x) a commercial banking institution that is a
member of the Federal Reserve System and has (A) a combined capital and
surplus and undivided profits of not less than $3,000,000,000 and (B)
commercial paper rated at least A-2 or the equivalent thereof by Standard &
Poor's Ratings Group or at least P-2 by Xxxxx'x Investors Service, Inc. or
(y) any Bank.
(e) Mergers, Etc. Merge or consolidate with any Person (provided,
------------
that the Borrower or a Guarantor, as the case may be, shall be the
surviving corporation in any merger or consolidation involving such party
consented to by the Banks), or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired)
to any Person (other than an Affiliate of Borrower with the consent of the
Banks, which consent shall not be unreasonably withheld or delayed), or
acquire (whether in one transaction or in any series of transactions) all
or substantially all of the shares or assets of any Person (other than with
the consent of the Banks, which consent shall not be unreasonably withheld
or delayed).
(f) Investments of Certain Types. Use any Advances to acquire
----------------------------
(whether in one transaction or in a series of transactions) all or
substantially all the shares of, or shares representing a controlling
interest in, any Person otherwise than through a transaction consummated
with the prior approval of the Board of Directors of such Person a majority
of whose members are Continuing Directors. For the purposes hereof
"Continuing Directors" means, as of the date of any such approval, (x)
---------------------
individuals who on the date two years prior to such approval date were
members of such Person's Board of Directors and (y) any new Director whose
nomination for election by such Person's shareholders was approved by a
vote of at least seventy-five percent (75%) of the Directors then still in
office who either were Directors on the date two years prior to such
approval date or whose nomination for election was previously so approved.
50
(g) Transfers of Assets. (x) Transfer, sell or dispose of any
-------------------
Operating Assets, if the aggregate amount of all such transfers, sales and
disposal within any 12-month period exceeds $10,000,000 in the aggregate
for the Borrower and the Guarantors (exclusive of sales and leasebacks of
Operating Assets from time to time after August 9, 1996 in an aggregate
amount not in excess of $5,000,000, which shall be permitted without
condition or limitation under this clause) or (y) distribute any property
other than (i) securities of the Parent or (ii) cash to any shareholder of
the Parent.
(h) Change in Ownership or Management. Permit a Change in Ownership
---------------------------------
or Management to occur.
(i) Use of Proceeds. Use any proceeds of any Advance to acquire any
---------------
security in any transaction which is subject to sections 13 and 14 of the
Securities Exchange Act of 1934. In addition, the Letter of Credit will be
issued only for the benefit of any one or more of United States Fidelity
and Guaranty Company, Fidelity and Guaranty Insurance Company, Fidelity and
Guaranty Insurance Underwriters, Inc. or Van-American Insurance Agency,
Inc. or any of their respective Subsidiaries or successors or assigns in
support of its $8,300,000 reclamation bond delivered by any one or more of
those parties in connection with statutory obligations of reclamation of
the Lamefoot deposit at the Kettle River Mine.
(j) Notwithstanding any other provision of this Agreement to the
contrary, Sections 5.2(a), 5.2(e), 5.2(g) and 7.1(j) shall be deemed to
permit the EBCC Transaction; provided, that the steps set forth in the
--------
September 23 Letter shall be required to occur contemporaneously with the
incurrence of Debt described in such letter, and provided, further, that
-------- -------
the Debt to be incurred in connection with EBCC Transaction shall only be
permitted to be outstanding on the date the EBCC Transaction is
consummated. Furthermore, the Banks agree that the value of assets
transferred pursuant to the EBCC Transaction shall not cause a reduction in
the basket amount permitted by Section 5.2(g). Each Bank agrees that
contemporaneously with the consummation of the EBCC Transaction, EBCC shall
cease to be a party to this Agreement and shall be released from its
obligations as a Guarantor under this Agreement, and all references to EBCC
in this Agreement shall be deemed to have been automatically deleted.
ARTICLE 6.
ABSOLUTE CONTINUING GUARANTEE
SECTION 6.1. Undertaking. For and in consideration of the entering into
-----------
by the Banks of this Agreement, and in order to induce the Banks to execute and
deliver this Agreement and to provide the Banks with further assurance of each
Obligor's payment of any and all Obligations under this Agreement, the
Instruments or any Forward Sale, the Guarantors hereby confirm their existing
joint and several guaranty, originally delivered under the terms of the Gold
Bullion Loan
51
Agreement, dated as of January 3, 1992 (the "Original Agreement"), among the
------------------
Borrower, the Guarantors and the Banks (as subsequently amended and restated),
of all Obligations and without limiting the foregoing jointly and severally
absolutely, unconditionally and irrevocably guarantee the full and punctual
payment when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all Obligations now or
hereafter existing, whether for principal, interest, fees, expenses or otherwise
(including all such amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy Code, 11
U.S.C. (S)362(a), and the operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 U.S.C. (S)502(b) and (S)506(b)) or any similar
provision under other applicable bankruptcy, insolvency or similar law.
Notwithstanding the foregoing, each Guarantor shall only be liable under this
guarantee for the maximum amount of such liability that can be hereby incurred
without rendering this guarantee, as it relates to such Guarantor, voidable
under applicable fraudulent conveyance or fraudulent transfer law, and not for
any greater amount. This guarantee constitutes a guaranty of payment when due
and not of collection, and each Guarantor specifically agrees that it shall not
be necessary or required that any Bank exercise any right, assert any claim or
demand or enforce any remedy whatsoever against the Borrower, any other Obligor
or any other Person before or as a condition to the obligations of such
Guarantor hereunder. The word "Obligations" is used herein in its most
comprehensive sense and includes any and all advances, debts, Reimbursement
Obligations, interest, obligations and liabilities of the Borrower under this
Agreement or the Instruments. Without limiting the generality of the foregoing
sentence, to the extent enforceable by an action at law or in equity, this
guarantee shall include the Guarantors' guarantee to redeliver to the Banks when
due any Advance of Gold by the Banks to the Borrower under this Agreement or the
Instruments or any Forward Sale.
SECTION 6.2. Unconditional Guarantee. The Guarantors hereby agree that
-----------------------
this guarantee is an absolute, unconditional, continuing guarantee subject to
the following terms and conditions:
(a) Authorization. The Guarantors authorize the Banks, without
-------------
notice to, demand of, or consent from the Guarantors, and without affecting
its liability to the Banks hereunder, from time to time, to (i) renew,
extend, accelerate or otherwise change the time or place for payment of, or
otherwise change the terms of, the Obligations (or the Obligations of the
other Guarantors) or any part thereof, including an increase or decrease of
any rate of interest thereon; (ii) take and hold security (including other
guarantees) for the payment of the Obligations or this guarantee, and
exchange, enforce, waive, surrender, modify, impair, change, alter, renew,
continue, compromise or release in whole or in part any such security, or
fail to perfect their interest in any such security, or to establish their
priority with respect thereof; (iii) apply such security and direct the
order or manner of sale thereof as the Banks in their sole discretion may
determine; (iv) release or substitute, in whole or in part, the Borrower or
any one or more endorsers or guarantors of any of all of the Obligations;
(v) settle or compromise any or all of the Obligations with the Borrower or
any endorser or guarantor of the Obligations; and
52
(vi) subordinate any or all of the Obligations to any other indebtedness of or
claim against the Borrower or any other Obligor, whether owing to or
existing in favor of the Banks or any other party. The Guarantors shall be
and remain bound hereunder notwithstanding any such renewal, extension,
acceleration, change, taking, holding, exchange, enforcement, waiver,
surrender, modification, impairment, alteration, renewal, continuation,
compromise, release, failure, application, direction, substitution,
settlement or subordination. The Banks may without notice assign this
guarantee in whole or in part.
(b) Continuing Guarantee. This is a continuing guarantee of the
--------------------
guarantee previously existing in favor of the Banks under the Original
Agreement; as amended and restated by the Existing Agreement and shall
remain effective until the transactions contemplated by this Agreement have
been completed and all Obligations have been fully and finally paid in
cash, all Commitments have been terminated and the Letter of Credit has
expired or been terminated. In the event that the Borrower becomes
insolvent or may be adjudicated bankrupt or files a petition for
reorganization, arrangement, composition or similar relief under any
present or future provision of any bankruptcy or insolvency law, or if such
a petition be filed against the Borrower, or the Borrower becomes the
subject of any proceedings under any laws or regulations of any
jurisdiction relating to the relief of debtors, and in any such proceedings
some or all of the Obligations shall be terminated or rejected or any
obligation of the Borrower thereunder modified or abrogated, the Guarantors
agree that their liability hereunder shall not thereby be affected or
modified, and such liability shall continue in full force and effect as if
no such action or proceeding had occurred. This guarantee shall continue
to be effective or reinstated, as the case may be, if any payment of any
Obligations must be returned by the Banks upon the insolvency, bankruptcy
or reorganization of the Borrower or any Obligor, or otherwise, as though
such payment had not been made.
(c) Waiver of Notice, Etc. The Guarantors waive all presentments,
---------------------
demands, notices of nonperformance, protests, notices of protest, notices
of dishonor, notices of default, and notices of acceptance of this
guarantee and of the existence, creation or incurring of new or additional
Obligations. At the option of the Banks, the Guarantors or any of them may
be joined in any action or proceeding commenced by the Banks against the
Borrower in connection with or based upon the indebtedness or any security
therefor and recovery may be had against the Guarantors in such action or
proceeding against the Guarantors, without any requirement that the Banks
first assert, prosecute or exhaust any remedy or claim against the Borrower
or any other Person. Without limiting the foregoing, the Guarantors
acknowledge that repeated and successive demands may be made and payments
made hereunder in response to such demands as and when, from time to time,
the Borrower may default in payment of the Obligations. Notwithstanding
any such payments hereunder, this guarantee shall remain in full force and
effect and shall apply to any and all subsequent defaults by the Borrower
in payment of the Obligations.
53
All settlements, compromises, compositions, accounts stated and agreed
balances made in good faith between the Banks and the Borrower shall be
binding upon the Guarantors.
(d) Additional Waivers. The Guarantors waive any and all rights to
------------------
require the Banks to (i) proceed against the Borrower or the other
Guarantors, (ii) proceed against or exhaust any rights against the Borrower
or any other Person or exhaust security held from the Borrower or the other
Guarantors, or (iii) pursue any other remedy in the Banks' power
whatsoever. The Banks may, at their election, exercise any right or remedy
they may have against the Borrower or any security now or hereafter held by
the Banks, including the right to foreclose upon any such security by
judicial or nonjudicial sale and regardless of whether such sale is deemed
to be commercially reasonable, without affecting or impairing in any way
the liability of the Guarantors hereunder except to the extent the
Obligations may thereby be paid. Only the net proceeds from any such
foreclosure, after deduction of all costs and expenses authorized to be
deducted pursuant to the documents under which such security is held or by
law, shall be applied against the Obligations. The Banks may at their
discretion purchase all or any part of such security so sold or offered for
sale for their own account and may apply against the amount bid therefor
all or any part of the Obligations for which such security is held. The
Guarantors waive any defense arising out of the absence, impairment or loss
of any right of reimbursement or subrogation or other right or remedy of
the Guarantors against the Borrower or any other Obligor or any such
security, whether resulting from such election by the Banks, any defect in,
failure of or loss or absence of priority with respect to the Banks'
interest in such security, or otherwise. The Banks shall not be required
to institute or prosecute proceedings to recover any deficiency as a
condition of payment hereunder or enforcement hereof. The Guarantors waive
any defense arising by reason of any disability or other defense of the
Borrower or by reason of the cessation from any cause whatsoever of the
liability of the Borrower. The Guarantors shall have no right of
subrogation, and waive any right to enforce any remedy which the Banks now
have or may hereafter have against the Borrower, and waive any and all
benefit of or right to participate in any security now or hereafter held by
the Banks. Furthermore, the liability of each Guarantor under its
guarantee shall be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability of this
Agreement or any other Instrument;
(ii) any reduction, limitation, impairment or termination of any
Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
each Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Obligations or otherwise; and
54
(iii) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable by such Bank in
enforcing its rights under this guarantee.
(e) Independent Obligations. The obligations hereunder are
-----------------------
independent of the obligations of the Borrower, and a separate action or
actions may be brought and prosecuted against the Guarantors, whether
action is brought against the Borrower or whether the Borrower is joined in
any such action or actions. The Guarantors waive the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof.
(f) Subordination. If an Event of Default has occurred and is
-------------
continuing, then any indebtedness of the Borrower now or hereafter held by
any of the Guarantors shall be subordinated and postponed to the
Obligations of the Borrower to the Banks, and the Guarantors agree that
they will not accelerate the maturity of such indebtedness; and such
indebtedness of the Borrower to any of the Guarantors, if the Banks so
request, shall be collected, enforced and received by a Guarantor as
trustee for the Banks and be paid over to the Banks, but without reducing
or affecting in any manner the liability of any of the Guarantors under the
other provisions of this guarantee. This subordination and postponement is
independent of this guarantee.
(g) Inquiry into Powers, Etc. It is not necessary for the Banks to
------------------------
inquire into the powers of the Borrower or its officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed hereunder. Any sum which may not be
recoverable from the Guarantors on the basis of a guarantee shall be
recoverable from the Guarantors as the principal debtor and shall be paid
to the Banks on demand with interest. The Guarantors assume the
responsibility for being and keeping themselves informed of the financial
condition of the Borrower and of all other circumstances bearing upon the
risk of nonpayment of the indebtedness which diligent inquiry would reveal,
and agree that the Banks shall have no duty to advise the Guarantors of
information known to them regarding such condition of any such
circumstances.
(h) Assignment. The Guarantors may not assign their rights or
----------
delegate their obligations hereunder voluntarily or by operation of law
without in each case obtaining the Banks' prior written consent, and any
purported assignment or delegation without such consent shall be null and
void. Consent by the Banks to any such assignment or delegation shall not
relieve the Guarantors of any obligations or liabilities hereunder, unless
such consent so states. No such consent shall constitute consent to any
other or subsequent such assignment or delegation.
55
(i) Taxes. The Guarantors will (i) pay all principal, interest, fees
-----
and all other amounts payable hereunder to the Banks free and clear and
without deduction for any and all present and future taxes, duties, levies,
compulsory loans, imposts, deductions, fees, charges, restrictions,
conditions and withholdings, of whatsoever nature, if any, and all
liabilities with respect thereto, excluding as to each Bank those which are
imposed by the United States of America, or any other country in which such
Bank's principal office or its lending branch is or may become organized or
established, or any political subdivision or taxing authority in such
respective countries and are imposed on or measured by the net income of
such Bank of its lending branch or are imposed on or measured by the gross
income, or gross receipts of, such Bank or its lending branch and are in
lieu of taxes on or measured by the net income ("Taxes"); and (ii) pay and
-----
indemnify the Banks against any liability for any United States of America
or Canada interest equalization and similar taxes, stamp or any other
transfer taxes with respect to this Agreement, and taxes (net of applicable
deduction and credits actually taken) of all jurisdictions with respect to
any amounts paid under this provision. If any Taxes or amounts to be paid
under subsection (ii) of the preceding sentence are paid by any Bank, the
Guarantors are required by applicable law to make any deduction or
withholding as aforesaid from any payment of the principal or interest
(including interest on any overdue principal) due hereunder or any other
fees or amounts due hereunder in respect of any such Taxes, and the
Guarantors shall pay such amount that after payment of any such Taxes to
the appropriate taxing authority there shall be paid to each Bank the net
amount otherwise payable hereunder in the absence of such Taxes.
(j) Agreement To Pay. All payments by or on behalf of the Guarantors
----------------
hereunder shall be in lawful money of the United States of America. The
Guarantors agree to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred by the Banks in the enforcement of this
guarantee.
(k) Enforcement by Individual Bank. The Guarantors agree that each
------------------------------
Bank, acting alone, shall be entitled to enforce this guarantee.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. Events of Default. If any of the following events ("Events
----------------- ------
of Default") shall occur and be continuing:
----------
(a) Nonpayment of Notes, Etc. The Borrower shall fail to pay
------------------------
principal of any Note or to return any Gold when due (whether at stated
maturity or by prepayment or otherwise), or shall fail to pay interest
hereunder or on any Instrument, or any fees payable hereunder, when due; or
56
(b) Representations and Warranties. Any representation or warranty
------------------------------
made by the Borrower or a Guarantor (or any of its officers) under or in
connection with this Agreement or any Instrument shall prove to have been
incorrect in any material respect when made, or any schedule, certificate,
financial statement, report, notice or other writing furnished by the
Borrower or a Guarantor to the Agent or any Bank shall prove to have been
incorrect in any material respect when made; or
(c) Noncompliance With this Agreement. The Borrower or a Guarantor
---------------------------------
shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed or observed and any
such failure shall remain unremedied for ten days after written notice
thereof shall have been given to such person by the Agent; or
(d) Nonpayment of Other Indebtedness for Borrowed Money. The
---------------------------------------------------
Borrower or a Guarantor shall fail to pay any Debt in excess of $500,000 in
principal amount (but excluding Debt evidenced by the Instruments) of the
Borrower (or a Guarantor), or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise); or any other default under any agreement or instrument
relating to any such Debt, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt,
unless such default or event shall be waived by the holders or trustees for
such Debt or unless such default or event of default is being contested in
good faith and for which adequate reserves have been provided; or any such
Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(e) Bankruptcy, Insolvency, Etc. The Borrower or a Guarantor shall
---------------------------
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower or a Guarantor seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, if instituted
against the Borrower or a Guarantor, shall remain undismissed for a period
of sixty days; or the Borrower or a Guarantor shall take any corporate
action to authorize any of the actions set forth in this subsection (e); or
(f) Judgment. A final judgment or order for the payment of money in
--------
excess of $500,000 shall be rendered against the Borrower or a Guarantor
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) a stay of enforcement of such
judgment or order, by reason of a
57
pending appeal or otherwise, shall not be in effect for any period of ten
consecutive days; or
(g) Termination Event. Any Termination Event with respect to a Plan
-----------------
shall have occurred and be continuing thirty days after notice thereof
shall have been given by the Borrower or a Guarantor to the Agent and such
Plan's aggregate Amount of Unfunded Benefit Commitments (as defined in
section 4001(a)(18) of ERISA) exceeds $500,000 (or in the case of a
Termination Event involving the withdrawal of a substantial employer, the
withdrawing employer's proportionate share of such aggregate Amount of
Unfunded Benefit Commitments exceeds such amount); or
(h) Material Adverse Change. In the reasonable opinion of the
-----------------------
Majority Banks, there shall occur any event or any condition shall exist
which materially adversely affects (i) the ability of the Borrower or a
Guarantor to perform its obligations under this Agreement, or (ii) the
business or financial condition of the Borrower or a Guarantor; provided,
--------
that before a change will be deemed to be materially adverse by reason of a
fluctuation in the price of Gold, account will be taken of the all-in
product costs of the Borrower and such Guarantor; or
(i) Change in Ownership. There shall occur any transfer, assignment
-------------------
or other event causing:
(i) The Parent to cease to own directly or indirectly one
hundred percent (100%) of each outstanding class of equity securities
of the Borrower; or
(ii) A Change in Ownership or Management; or
(j) Repudiation or Termination of the Guarantee. Any Guarantor shall
-------------------------------------------
have terminated or repudiated all or any part of its liability under
Article 6 before the transactions contemplated by this Agreement have been
---------
completed and all indebtedness hereunder has been fully and finally paid;
or
(k) Failure of the Parent to Meet Certain Financial Criteria. The
--------------------------------------------------------
Parent shall fail to, on a consolidated basis:
(i) Maintain at all times (but tested at the end of each fiscal
quarter) a ratio of Consolidated Net Tangible Assets to consolidated
liabilities of at least 2:1. For the purposes hereof, (aa)
consolidated liabilities shall exclude current liabilities other than
the current portion of (x) long-term debt and (y) deferred revenue and
(z) interest bearing short-term debt; deferred income taxes; deferred
revenue in respect of gold purchase warrants or any securities or
options similar thereto; and deferred income to the extent it
represents a nonfinancial obligation, and (bb) consolidated
liabilities shall include the Stated Amount of the Letter of Credit
and
58
also preferred shares having a maturity, or which are retractable
at the option of the holder, prior to the Maturity Date; or
(ii) Ensure at all times (but tested at the end of each fiscal
quarter) the Mining Group Net Present Value of the Mining Group Future
Cash Flow is equal to, or in excess of, 1.4 times the aggregate of the
consolidated total Debt of the Parent and any such other Debt of the
Borrower or Guarantors which is not reflected in the consolidated
financial statements of the Parent. For the purposes of this clause
------
(k)(ii), (aa) all obligations in the form of Gold or Silver loans and
-------
all revenues from the repayment of Gold or Silver loans shall be
valued at the respective Advance Date Values of each such loan, and
(bb) the "consolidated total Debt of the Parent" shall include the
Stated Amount of the Letter of Credit and not include Debt whose sole
recourse is to a future mine and is otherwise nonrecourse to the
Borrower and the Guarantors; or
(l) Forward Sale. The Borrower shall be in default under any Forward
------------
Sale;
then, upon the occurrence of an event under clause (e) above, automatically,
----------
without notice of any kind, the obligation of each Bank or the Issuer to make an
Advance and enter into a Forward Sale shall terminate and the unpaid balance of
the Instruments, all interest thereon and all other amounts payable under this
Agreement and the other Instruments, shall become immediately due and payable
and at the option of each Bank, the delivery date of any one or more outstanding
Forward Sales held by such Bank shall become the date of such event; and, upon
the occurrence of an event under any other clause above, the Agent shall at the
request of the Majority Banks by notice to the Borrower, (i) declare the
obligation of each Bank or the Issuer to make an Advance and enter into a
Forward Sale to be terminated, whereupon the same shall forthwith terminate, and
(ii) declare the Instruments, all interest thereon and all other amounts payable
under this Agreement and the other Instruments to be forthwith due and payable
and at the option of each Bank, the delivery date under any one or more
outstanding Forward Sales held by such Bank to be the day of such notice;
whereupon, in any case, all Gold and Dollars borrowed hereunder shall be
returned forthwith and all such interest and all such amounts shall become and
be forthwith due and payable, together with any Breakage Costs and any other
transaction and other costs, and the Borrower shall have deposited Dollars in a
cash collateral account maintained with (and under the sole dominion and control
of) the Agent in the Stated Amount of the Letter of Credit and at the option of
each Bank, Gold subject to any one or more Forward Sales held by such Bank shall
be delivered forthwith to such Bank, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower.
ARTICLE 8.
THE AGENT
59
SECTION 8.1. Authorization and Action. Each Bank hereby appoints and
------------------------
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Instruments as are delegated to
the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Instruments (including, without limitation,
enforcement or collection of the Instruments), the Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks and such instructions
shall be binding upon all Banks and all holders of Instruments; provided,
--------
however, that the Agent shall not be required to take any action which exposes
-------
the Agent to personal liability or which is contrary to this Agreement or any
other Instrument or applicable law.
SECTION 8.2. Notification of Banks. Upon receipt by the Agent from the
---------------------
Borrower of any communication calling for an action on the part of the Banks or
upon notice to or actual knowledge by the Agent of any Event of Default, it will
in turn promptly inform the other Banks in writing or by telex or electronic
facsimile transmission of the nature of such communication or of such Event of
Default, as the case may be.
SECTION 8.3. Agent's Reliance, Etc.' Neither the Agent nor any of its
--------------------- -
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
any other Instrument, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the payee of any Instrument as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance by
the Borrower of any of the terms, covenants or conditions of this Agreement or
to inspect the property (including the books and records) of the Borrower; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any
Instrument or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telex or electronic facsimile transmission) believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION 8.4. The Bank of Nova Scotia and Affiliates. With respect to its
--------------------------------------
Commitments, the Term Advances and the Revolving Advances made by it and the
Letter of Credit and other Instruments issued to it, The Bank of Nova Scotia
shall have the same rights and
60
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include The Bank of Nova Scotia in its individual
capacity. The Bank of Nova Scotia and its affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower, any of its Affiliates and any person or
entity who may do business with or own securities of the Borrower or any
Affiliate, all as if The Bank of Nova Scotia were not the Agent and without any
duty to account therefor to the Banks.
SECTION 8.5. Bank Credit Decision. Each Bank acknowledges that it has,
--------------------
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to herein and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement or any other Instrument. Each Bank further acknowledges
that it has not, nor is it entitled to, rely on information (if any) provided to
it by agents, officers, or employees of the Agent (including any mining engineer
employed by the Agent).
SECTION 8.6. Indemnification. The Banks agree to indemnify the Agent (to
---------------
the extent not reimbursed by the Borrower), ratably according to their
respective Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement, any other Instrument, including reasonable attorneys' fees, or any
action taken or omitted by the Agent under this Agreement or any other
Instrument, provided that no Bank shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct or from the Borrower's failure to pay any principal, interest
or fees hereunder when due. Without limitation of the foregoing, each Bank
agrees to reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, administration, or enforcement of,
or legal advice in respect of rights and responsibilities under, this Agreement
or any other Instrument to the extent the Agent shall not have been reimbursed
for such expenses by the Borrower.
SECTION 8.7. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Banks and the Borrower and may be removed at any
time with or without cause by the Banks other than the Agent. Upon any such
resignation or removal, the Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Banks, and
shall have accepted such appointment, within thirty days after the retiring
Agent's giving of notice of resignation or the Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a
61
commercial bank organized under the laws of the United States of America or of
any state hereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement, and Section 9.5 shall continue to inure to its benefit.
-----------
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1. Waivers, Amendments, Etc. The provisions of this Agreement
------------------------
and of each other Instrument may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Majority Banks; provided, however, that no such
-------- -------
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Banks or by the Majority Banks shall be effective unless
consented to by each Bank;
(b) modify this Section, modify Article 6, release any Guarantor,
---------
change the definition of "Majority Banks", increase the Commitment or the
--------------
Percentage of any Bank, modify any fees described in Section 2.14 or extend
------------
the Maturity Date shall be made without the consent of each Bank;
(c) extend the due date for, or modify the amount of, any scheduled
repayment or prepayment of principal of or interest on any Advance (or
modify the principal amount of or interest on any Advance) shall be made
without the consent of the holder of the Note or Gold Receipt evidencing
such Advance;
(d) increase the Stated Amount of the Letter of Credit shall be made
without the consent of the Issuer; or
(e) affect adversely the interests, rights or obligations of (i) the
Agent (in its capacity as the Agent), or the Issuer (in its capacity as the
Issuer), shall be made without the consent of the Agent or the Issuer, as
the case may be.
No failure or delay on the part of the Agent, any Bank or the holder of any Note
or Gold Receipt in exercising any power or right under this Agreement or any
other Instrument shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
62
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Agent, any Bank or
the holder of any Note or Gold Receipt under this Agreement or any other
Instrument shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 9.2. Notices, Etc. All notices and other communications provided
------------
for hereunder shall be in writing (including telex and electronic facsimile
communication) and mailed, sent by facsimile or delivered, if to the Borrower or
a Guarantor, c/o Echo Bay Inc., 0000 Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: Vice President and Treasurer (facsimile
(000) 000-0000); if to any Bank or the Agent, at its address set forth under its
name on the signature pages hereof; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall, when mailed or sent by facsimile, be
addressed as aforesaid, except that notices to the Agent pursuant to the
provisions of Article 2 shall not be effective until received by the Agent.
---------
SECTION 9.3. No Waiver; Remedies. No failure on the part of the Agent or
-------------------
any Bank to exercise, and no delay in exercising, any right hereunder or under
any Instrument shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder or under any Instrument preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.4. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with Canadian GAAP consistently
applied, except as otherwise stated herein. The principal amount of all
Borrowings of Gold shall be the Dollar Value of such Gold at the date of
determination of such principal amount.
SECTION 9.5. Costs, Expenses and Taxes. The Borrower agrees to pay on
-------------------------
demand all reasonable, out-of-pocket costs and expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
Instruments, and the other documents to be delivered hereunder (including any
amendments, waivers, consents, supplements or other modifications to this
Agreement or any other Instrument as may from time to time hereafter be
required) including the reasonable fees and out-of-pocket expenses of counsel
for the Agent and for any Bank with respect thereto and with respect to advising
the Agent or any Bank as to its rights and responsibilities under this Agreement
and each other Instrument, and all reasonable costs and expenses, if any, in
connection with the enforcement of this Agreement, the Instruments, and the
other documents to be delivered hereunder, provided that the Borrower shall not
be obligated to pay fees or expenses of counsel for any Bank other than the
Agent incurred in connection with the preparation, execution and delivery of
this Agreement, the Instruments and the other documents to be delivered
hereunder prior to or at the time of the Amendment Effective Date. Without
limiting the generality of the foregoing, the Borrower agrees to pay the
63
reasonable fees and expenses of the Agent's mining engineer incurred from time
to time, including in connection with an annual tour and inspection of all mines
in the Mining Group.
In addition to any amounts that may become payable under Section 2.22, the
------------
Borrower shall pay any and all stamp, mortgage recording and other taxes, filing
fees or charges payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Instruments, and the other
documents to be delivered hereunder, and agrees to save the Agent and each Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes, filing fees or charges.
The Borrower agrees to indemnify and hold harmless the Agent and each Bank on
demand against any taxes (including any late payment penalties or interest)
imposed by any state of the United States or any agency or political subdivision
thereof on or in respect of (i) the interest and other amounts payable on any
loan under this Agreement and (ii) any payment of indemnity under this sentence,
so that such interest and indemnity payments shall be in an aggregate amount
which, after deduction of all such taxes (including penalties and interest) in
respect of such aggregate amount, will be equal to the amount of such interest.
In addition to the payment of expenses pursuant to the preceding
paragraphs, whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to indemnify, pay and hold harmless the Agent,
each of the Banks, and the officers, directors, employees, agents and other
Affiliates of the Agent and the Banks (collectively called the "Indemnitees")
-----------
from and against, any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against such Indemnitee, in any manner relating to or
arising out of this Agreement or the Instruments, the Banks' agreement to make
the Advances or participate in the Letter of Credit hereunder, the Issuer's
agreement to issue the Letter of Credit, the making of the Advances hereunder,
or in any way arising from any actions in connection with the transactions
contemplated hereby, or the use or intended use of the proceeds of Advances,
including in respect of any violation or alleged violation of any Environmental
Laws (the "indemnified liabilities"); provided, that the Borrower shall have no
----------------------- --------
obligation to an Indemnitee hereunder with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of any such Indemnitee.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them.
SECTION 9.6. Right of Setoff. Upon the occurrence and during the
---------------
continuance of any Event of Default, each Bank is hereby authorized at any time
and from time to time, without notice to the Borrower or the Parent (any such
notice being expressly waived by the Borrower
64
and the Parent), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the Borrower
or the Parent against any and all of the obligations of the Borrower and/or the
Parent now or hereafter existing under this Agreement and the Instruments,
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Bank under this
section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Bank may have.
SECTION 9.7. Successors and Assigns; Governing Law.
-------------------------------------
(a) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither the Borrower, the
-------- -------
Parent nor the Guarantors may assign or transfer their respective rights or
obligations hereunder without the prior written consent of the Agent and
all Banks and the rights of sale, assignment and transfer of the Banks are
subject to the following clause (b).
----------
(b) Assignments and Participations. Any Bank may, with the prior
------------------------------
approval of the Borrower and the Agent (which approvals shall not be
unreasonably withheld, and which consent of the Borrower shall not be
required during the continuation of an Event of Default) and the Issuer,
assign and delegate to its successors and affiliates or one or more banks
or other financial institutions all or any part of any Advance or Advances
owing to the Bank and all or any part of such Bank's Commitment; provided,
--------
that (a) each such assignment and delegation shall be of a constant, and
not a varying, percentage of the assigning Bank's Revolving Commitment,
Revolving Advances, Letter of Credit Commitment and Term Advances, (b) each
such assignment and delegation shall be in a minimum aggregate amount of
$10,000,000 (or, if less, the then remaining amount of such Bank's
Advances, Commitments and obligations to reimburse Disbursements under the
terms of this Agreement), and (c) each such assignment and delegation does
not result in increased costs to the Borrower at the time of such
assignment and delegation. Each assignee (an "Assignee Bank") shall
-------------
provide the Agent written notice of such assignment and delegation,
together with payment instructions, addresses, the Schedule of Gold Rates
per annum, and related information with respect to such Assignee Bank and
such Assignee Bank and the assignor Bank shall execute and deliver to the
Borrower and the Agent an assignment agreement substantially in the form of
Exhibit K hereto (an "Assignment Agreement"). Such assignor Bank or such
--------- --------------------
Assignee Bank must also pay a processing fee to the Agent upon delivery of
any Assignment Agreement in the amount of $2,500 (which fee shall be for
the sole account of the Agent). From and after the date the Agent accepts
such Assignment Agreement, (x) the Assignee Bank thereunder shall be
automatically deemed to have become a party hereto and to the extent that
rights and obligations hereunder have been assigned and delegated to such
Assignee Bank in
65
connection with such Assignment Agreement, shall have the rights and
obligations of a Bank hereunder and under any documentation executed in
connection herewith and (y) the assignor Bank, to the extent that rights
and obligations hereunder have been assigned and delegated by it in
connection with such Assignment Agreement, shall be released from its
obligations hereunder and under the related loan documentation. Within five
Business Days after its receipt of notice that the Agent has received an
executed Assignment Agreement, the Borrower shall execute and deliver to
the Agent (for delivery to the Assignee Bank) new Notes and Gold Receipts
evidencing such Bank's assigned Advances and Commitments. Any attempted
assignment and delegation not made in accordance with this subsection shall
be null and void. Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
Any Bank may, with prior notice to the Borrower and the Agent, at any
time sell to one or more banks or other financial institutions
participating interests in any or any part of its Advances, its Commitments
or other interests of such Bank hereunder; provided, however, that
-------- -------
(i) no participation contemplated in this clause shall relieve
such Bank from its Commitments or its other obligations hereunder or
under any other document executed in connection herewith,
(ii) such Bank shall remain solely responsible for the
performance of its Commitments and such other obligations,
(iii) the Borrower, each Guarantor and the Agent shall continue
to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement and each of the
other documents executed in connection herewith,
(iv) each participant shall be entitled to receive the same
information concerning the Borrower as a Bank hereunder, subject to
compliance with Section 9.11, and
------------
(v) no participant shall be entitled to require such Bank to
take or refrain from taking any action hereunder or under any other
document executed in connection herewith, except that such Bank may
agree with any participant that such Bank will not, without such
participant's consent, take any actions of the type described in
clause (b) or (c) of Section 9.1 with respect to the Advances and
---------- --- -----------
Commitments in which it is participating.
66
(c) Governing Law. This Agreement and (except as set forth in the
-------------
next sentence), the Instruments shall be governed by, and construed in
accordance with the laws of the State of Colorado. THE LETTER OF CREDIT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNATIONAL
STANDBY PRACTICES (ISP98), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION
NUMBER 590 (THE "ISP RULES") AND, AS TO MATTERS NOT GOVERNED BY THE ISP
---------
RULES, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.8. Consent to Jurisdiction. The Borrower and the Guarantors
-----------------------
irrevocably submit to the nonexclusive jurisdiction of (i) any United States
federal or Colorado State court sitting in the City of Denver, (ii) any United
States federal or New York State court sitting in the City of New York and (iii)
any United States federal or Georgia State court sitting in the City of Atlanta
in any action or proceeding arising out of this Agreement and agree that all
claims and matters in respect of such action and proceeding may be heard and
determined by such federal or State court. The Borrower and the Guarantors also
waive any objection they might now or hereafter have on the ground that any such
action or proceeding in such federal or State court has been brought in an
inconvenient forum. The Borrower and the Guarantors agree that service of
process may be made upon them by service on The Corporation Company at its
office in Denver in any such action or proceeding, and hereby irrevocably
appoint said The Corporation Company as Agent for service of process therein.
SECTION 9.9. Waiver of Jury Trial . THE AGENT, THE BANKS, EACH GUARANTOR
--------------------
AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE
EXISTING AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE BANKS OR THE BORROWER.
THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE BANKS ENTERING INTO THIS AGREEMENT.
SECTION 9.10. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 9.11. Confidentiality. Each Bank agrees to use reasonable efforts
---------------
to ensure that any information concerning the Borrower and the Guarantors
obtained by such Bank or any authorized agents or representatives of such Bank
pursuant to this Agreement which is not
67
contained in a report or other document filed with the Securities and Exchange
Commission, distributed by the Borrower or the Guarantors to shareholders or
otherwise available to the public generally or otherwise independently known by
such Bank (otherwise than by breach of these confidentiality obligations by such
Bank) will, to the extent permitted by law and except as may be required by
valid subpoena or other external reporting requirements or as may be necessary
in litigation in the sole determination of the Banks, be treated confidentially
by such Bank and will not be distributed or otherwise made available by such
Bank to any Person other than such Bank's employees, authorized agents or
representatives who have a reasonable need to know such information.
Notwithstanding the foregoing, any Bank may furnish copies of any information
received hereunder to any assignee or participant pursuant to Section 9.7
(including any potential assignee or participant, so
-----------
long as such Person agrees in writing to be bound by the terms of Section 9.7).
-----------
SECTION 9.12. Severability. In the event that any one or more provisions
------------
contained in this Agreement should for any reason be held to be unenforceable in
any respect under the laws of the United States of America or any state, such
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed in the applicable jurisdiction as if such unenforceable
provision had not been contained herein.
68
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
ECHO BAY INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
ECHO BAY MINES LTD.
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
ROUND MOUNTAIN GOLD CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
ECHO BAY MINERALS COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
ECHO BAY EXPLORATION INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
ECHO BAY CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------------
Title: Senior Vice President, Finance & CFO
00
XXX XXXX XX XXXX XXXXXX
By: /s/ X.X. Xxxxxxxx
--------------------------------------------
Title: Senior Relationship Manager
By: /s/ Xxxxxx X. XxXxxxxx
--------------------------------------------
Title: Relationship Manager
Address For Notices to Agent:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
Address For Notices to Bank--Gold Borrowings:
The Bank of Nova Scotia
Scotia Capital Markets
ScotiaMocatta
00 Xxxx Xxxxxx Xxxx
Xxxxxx Plaza, 68th Floor
Toronto, Ontario M5W 2X6
CANADA
Attention: Director
Telecopy No.: (000) 000-0000
With Copy (stamped "For Advice Only") to:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
70
With Copy (stamped "For Advice Only") to:
The Bank of Nova Scotia
Corporate Banking - Mining
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: Vice President
Telecopy No.: (000) 000-0000
Address For Notices to Bank--Base and LIBOR
Borrowings:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
With Copy (stamped "For Advice Only") to:
The Bank of Nova Scotia
Corporate Banking - Mining
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: Vice President
Telecopy No.: (000) 000-0000
71
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ X.X. Xxxx
----------------------------------
Name: X.X. Xxxx
Title: Managing Director
Address For Notices to Bank--Gold
Borrowings:
Canadian Imperial Bank of Commerce
Investment Bank
Precious Metals Dept.
5th Floor
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 000
XXXXXX
Attention: Xxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
With Copy (Stamped "For Advice
Only") to:
Canadian Imperial Bank of Commerce
Atlanta Agency
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Loan Administration Department
Telex No.: 54-2413
Telecopy No.: (000) 000-0000
72
With Copy to:
Canadian Imperial Bank of Commerce
Corporate Bank
Global Mining Group
000 Xxx Xxxxxx, XXX Place
0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Telecopy No.: (000) 000-0000
Also With Copy to:
Canadian Imperial Bank of Commerce
Corporate Bank
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Address For Notices to Bank--Base
Borrowings:
Canadian Imperial Bank of Commerce
Atlanta Agency
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Loan Administration Department
Telex No.: 54-2413
Telecopy No.: (000) 000-0000
73
With Copy to:
Canadian Imperial Bank of Commerce
Corporate Bank
Global Mining Group
000 Xxx Xxxxxx, XXX Place
0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Telecopy No.: (000) 000-0000
With Copy to:
Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Address For Notices to Bank--LIBOR
Borrowings:
Grand Cayman Branch
c/o Canadian Imperial Bank of
Commerce
Atlanta Agency
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Loan Administration Department
Telex No.: 54-2413
Telecopy No.: (000) 000-0000
74
With Copy to:
Canadian Imperial Bank of Commerce
Corporate Bank
Global Mining Group
000 Xxx Xxxxxx, XXX Place
0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Telecopy No.: (000) 000-0000
With Copy to:
Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
75
CREDIT SUISSE
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Title: Vice President
By: /s/ Xxxxxx Xxxx
--------------------------------------------
Title: Director
Address For Notices to Bank--Gold Borrowings:
Credit Suisse First Boston
00 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx XxXxxx
Precious Metal Desk
Telecopy No.: (000) 000-0000
With Copy to:
Credit Suisse First Boston
0 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Client Services
Telecopy No.: (000) 000-0000
76
Address for Notices to Bank--Base
Borrowings:
Credit Suisse First Boston
0 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Client Services
Telecopy No.: (000) 000-0000
Address for Notices to Bank--LIBOR
Borrowings:
Credit Suisse First Boston
0 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Client Services
Telecopy No.: (000) 000-0000
00
XXX XXXXX XXXXXXXXX BANK
By: /s/ Xxxxx X. Xxxxxx
------------------------
Title: Vice President
Address for Notices to Bank:
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Addresses For Notices to Bank--Gold Borrowings:
The Chase Manhattan Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Bullion Division
1 CMP-15
Telecopy No.: (000) 000-0000
With Copy to:
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
Address For Notices to Bank--Base and LIBOR Borrowings:
The Chase Manhattan Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Telecopy No.: (000) 000-0000
00
XXXXXXXX XXXXXXXX XXXX XX XXX XXXX
By: /s/ Xxxxxxx Xxxx
-------------------------------
Title: Vice President
Address for Notices to Bank:
Republic National Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. XxXxxx
Telecopy: (000) 000-0000
Addresses For Notices to Bank--Gold Borrowings:
Republic National Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
With Copy to:
Republic National Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. XxXxxx
Telecopy No.: (000) 000-0000
79
Address For Notices to Bank--Base and LIBOR
Borrowings:
Republic National Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
80
BARCLAYS BANK PLC
By: /s/ Xxxx X. XxXxxxx
------------------------------------
Title: Vice President
Address for Notices to Bank:
Barclays Bank PLC
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx XxXxxxx
Telecopy: (000) 000-0000
Addresses For Notices to Bank--Gold Borrowings:
Barclays Bank PLC
Barclays Precious Metals
0xx Xxxxx, 0 Xxxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxx, XX0X 788
Attention: Ms. Xxxxxx Xxxxxxxx
Telecopy No.: 011 44 171 621 5292
With Copy to:
Barclays Bank PLC
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telecopy No.: (000) 000-0000/5307/5308
Address For Notices to Bank--Base and LIBOR
Borrowings:
Barclays Bank PLC
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telecopy No.: (000) 000-0000/5307/5308
81
