GUARANTY
This GUARANTY (the "Guaranty"), dated as of July 28,
1997, is made by DAKOTA MINING CORPORATION, a corporation
continued under the Canada Business Corporation Act
("Guarantor"), in favor of and for the benefit of N M ROTHSCHILD
& SONS LIMITED, a company organized and existing under the laws
of England ("Lender").
RECITALS
A. Pursuant to an Agreement and Plan of Merger dated
February 5, 1997, as amended April 21, 1997 (the "Merger
Agreement") among Dakota, Dakota Merger Corporation and USMX,
Inc., a Delaware corporation ("USMX"), Dakota Merger Corporation
merged with USMX (the "Merger"), the surviving corporation, which
is now a wholly-owned subsidiary of Dakota. Guarantor has agreed
to extend up to $5,000,000 in loans to USMX pursuant to a Loan
Agreement dated as of March 11, 1997 (as such agreement may be
amended in accordance with its terms, the "Dakota Loan
Agreement"). Obligations of USMX to Guarantor under the Dakota
Loan Agreement (the "USMX/Dakota Obligations") to the extent of
$3,000,000 thereof are secured by a mortgage and assignment of
contract rights relating to the Thunder Mountain project located
in Valley County, Idaho and a pledge of 10,000 shares of stock in
MXUS, S.A. de C.V., a corporation organized under the laws of
Mexico. The real and personal property rights comprising the
Thunder Mountain project and the pledged MXUS shares are referred
to as the "Dakota Collateral".
X. Xxxxxxxxxx has previously extended a loan in the
principal amount of $2,500,000 to USMX pursuant to a Credit
Agreement between Rothschild and USMX dated as of July 11, 1996
(as amended in accordance with its terms, the "USMX Credit
Agreement"). Pursuant to an Agreement dated as of July 28, 1997
USMX has agreed to pay all amounts due under the USMX Credit
Agreement, and the parties have agreed to terminate the right of
Rothschild to convert all principal amounts thereunder into
common shares in USMX. Rothschild has also previously extended
or agreed to extend to USMX of Alaska, Inc., an Alaska
corporation which is a wholly-owned subsidiary of USMX
("USMXAK"), pursuant to a Credit Agreement dated as of July 11,
1996 loans in the maximum principal amount of $19,500,000.
Pursuant to a Second Amendment to Credit Agreement as of July 28,
1997, Rothschild has agreed to increase the credit available to
USMXAK thereunder to $20,500,000, and the parties have amended
such Credit Agreement in other respects (with such Credit
Agreement, as so amended, referred to as the "USMXAK Credit
Agreement"). Amounts due under the USMXAK Credit Agreement are
guaranteed by USMX pursuant to a Guaranty dated as of July 11,
1996 (the "USMX Guaranty"). All amounts due under (i) the USMXAK
Credit Agreement and under the collateral and other documents
executed by USMX and USMXAK (together, the "Borrowers") in
connection therewith, and (ii) the USMX Guaranty and the
collateral and other documents executed by USMX in connection
therewith are referred to collectively as the "USMX/Rothschild
Obligations."
X. Xxxxxxxxxx has consented to the Merger provided
that upon the effectiveness of the Merger, Dakota will provide
its unlimited guaranty of payment and performance of the
USMX/Rothschild Obligations until achievement of Completion, as
such term is defined in the USMXAK Credit Agreement, whereupon
such guaranty by Dakota will be limited in recourse to the shares
of USMX pledged by Dakota to secure such guaranty.
AGREEMENT
NOW, THEREFORE, Guarantor hereby covenants and agrees
to and with Lender as follows:
1. Condition Precedent. This Guaranty is subject to
satisfaction of the condition precedent that the Merger shall
have occurred. Until satisfaction of the foregoing condition
precedent, Guarantor shall have no obligations of any kind
hereunder to Lender or any other Person.
2. Defined Terms. Unless otherwise defined herein,
capitalized terms used in this Guaranty have the meanings
assigned to such terms in the Credit Agreements.
3. Guaranty.
(a) Guarantor hereby guarantees, absolutely and
unconditionally, the prompt and complete payment and performance
of the USMX/Rothschild Obligations when due (whether at the
stated maturity, by acceleration or otherwise) and at all times
thereafter, provided that, on or after Completion of the Project,
if no Default or Event of Default is outstanding, Lender's sole
recourse under this Guaranty shall be to the Pledged Collateral
(defined in the Pledge and Security Agreement of even date
herewith between Guarantor and Lender (the "Pledge Agreement").
Guarantor also agrees to pay any and all expenses (including
attorneys' fees and disbursements) related to or arising from
Lender's enforcement of this Guaranty. The guarantees and
obligations of this Section 3(a) are referred to collectively as
the "Guaranteed Obligations".
(b) Guarantor agrees that this Guaranty
constitutes a guaranty of payment and not of collection, and
Lender shall not be obligated to initiate, pursue or exhaust any
form of recourse or obtain any judgment against either of
Borrowers or others (including other guarantors) or to realize
upon or exhaust any collateral security held by or available to
Lender before being entitled to payment from the undersigned
hereunder. The liability of Guarantor shall not be limited,
diminished or affected by (i) any condition of either of
Borrowers or Guarantor (including bankruptcy, liquidation or
dissolution) or failure by Lender to file or enforce any claim
against the estate (in administration, bankruptcy, dissolution or
otherwise) of either of Borrowers, Guarantor or others, (ii) the
fact that recovery from either of Borrowers or any other person
is barred by any statute of limitations, invalidity, illegality,
unenforceability or for any other reason or that either of
Borrowers or Guarantor has valid defenses, claims or offsets
(whether at law, in equity or by agreement), (iii) any amendment,
modification or change of any kind or nature to the Credit
Agreements, the Loan Documents, or this Guaranty, or any
Instrument or understanding executed or entered into pursuant to
the Credit Agreements, (iv) any adjustment, indulgence,
forbearance or compromise granted by Lender to either of
Borrowers or Guarantor, or (v) any other circumstance which might
otherwise constitute a legal or equitable discharge of a
guarantor. Guarantor renounces all benefits of discussion and
division and waives diligence, presentment, protest, notice of
dishonor, protest or default, demand for payment upon Borrowers
or the undersigned, notice of acceptance of this Guaranty, notice
of any addition to or increase or decrease in the Obligations,
and all other notices and demands whatsoever.
(c) This Guaranty is a continuing guaranty, and
it will not be discharged until payment in full of all of the
Guaranteed Obligations and cancellation of this Guaranty by
Lender ("Termination") and will remain in full force and effect
notwithstanding any interruption in the business relations
between Borrowers and Lender or any increase or decrease from
time to time in the amount of the Obligations.
4. Guaranty Secured. Payment and performance under
this Guaranty is secured by pledges, encumbrances and security
interests in certain collateral pursuant to the Pledge Agreement.
Reference is hereby made to the Pledge Agreement for a definition
and description of such collateral so encumbered to secure all
the obligations of Guarantor hereunder.
5. Lender's Rights. Guarantor authorizes Lender,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty and/or any of the Guaranteed Obligations, and
exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale
thereof as Lender, in its discretion, may determine; and to
obtain a guaranty of the Guaranteed Obligations from any one or
more Persons and at any time or times to enforce, waive,
rearrange, modify, limit or release any of such other Persons
from their obligations under such guaranties. Guarantor hereby
acknowledges and agrees that the obligations of all Persons to
pay and satisfy the Guaranteed Obligations pursuant to their
respective agreements or guaranties (including Guarantor's
obligations hereunder) shall be joint and several.
6. Effectiveness; Reinstatement. This Guaranty shall
continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the
Guaranteed Obligations is rescinded or must otherwise be restored
or returned by Lender upon the insolvency, bankruptcy, dissolu
tion, liquidation or reorganization of either of Borrowers, or
upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, Borrowers
or any substantial part of their respective property, or
otherwise, all as though such payments had not been made.
Borrowers and Lender may modify, rearrange, extend for any period
and/or renew from time to time the Guaranteed Obligations without
notice to Guarantor, and in such event the obligations of
Guarantor with respect to the Guaranteed Obligations shall not be
released, discharged or reduced and Guarantor will remain fully
bound hereunder on such Guaranteed Obligations. This Guaranty
may be enforced by Lender and any subsequent holder of the
Guaranteed Obligations and shall not be discharged by the
assignment or negotiation of all or a part of the Guaranteed
Obligations.
7. Default. If either of Borrowers has failed to pay
or perform when due the Guaranteed Obligations or there is an
event with respect to Guarantor that would require or permit the
acceleration pursuant to either of the Credit Agreements of any
outstanding loan, then all of the Guaranteed Obligations shall be
immediately due and payable by Guarantor, regardless of whether
the payment of the Guaranteed Obligations has been accelerated or
either of Borrowers is in default with respect to the Guaranteed
Obligations.
8. Merger. This Guaranty shall not be affected by
any change in the name of either of Borrowers, or by the
acquisition of either of Borrowers' business by any person, firm
or corporation, or by any change whatsoever in the objects,
capital structure or constitution of Borrowers, or by any merger,
amalgamation or consolidation of either of Borrowers with any
corporation, or by any dissolution or liquidation of either of
Borrowers, but shall, notwithstanding the happening of any such
event, continue to apply to all the Obligations whether
theretofore or thereafter incurred, and in this instrument the
word "Borrowers" shall include every such person, firm, partner
and corporation and all successors of the customer. Guarantor
shall promptly notify Lender of any change or event described in
this Section 8.
9. No Waiver. Lender shall not be obligated to
exercise any right, power or privilege hereunder, and no failure
to exercise and no delay in exercising, on the part of Lender,
any such right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. No notice to or demand on
Guarantor shall be deemed to be a waiver of the right of Lender
to take further action without notice or demand as provided
herein. No waiver shall be applicable except in the specific
instance for which given, nor in any event shall any modification
or waiver of any provision of this Guaranty be effective unless
in writing and signed on behalf of Lender.
10. Representations and Warranties.
(a) Guarantor hereby represents and warrants to
Lender that:
(i) Benefit to Guarantor: Guarantor's
guaranty pursuant to this Guaranty reasonably may be
expected to benefit, directly or indirectly, Guarantor;
(ii) Familiarity and Reliance: Guarantor is
familiar with, and has independently reviewed the books
and records regarding, the financial condition of
Borrowers and is familiar with the value of any and all
collateral intended to be created as security for the
Guaranteed Obligations. Notwithstanding the foregoing,
Guarantor is not relying on such financial condition or
the collateral as an inducement to enter into this
Guaranty;
(iii) No Representation: Neither Lender nor
any other person, corporation or entity has made any
representation, warranty or statement to Guarantor with
regard to Borrowers or their respective financial
condition in order to induce Guarantor to execute this
Guaranty; and
(iv) Guarantor's Financial Condition: As of
the date hereof and after giving effect to this
Guaranty and the contingent liability evidenced hereby,
Guarantor is and will be solvent, and has assets which,
fairly valued, exceed its obligations, liabilities and
debts.
11. Guarantor's Covenants.
(a) Guarantor hereby covenants and agrees with
Lender to deliver to Lender in a timely and
complete manner all financial and other
information concerning Guarantor which is
required to be provided by Borrower to Lender
pursuant to the USMXAK Credit Agreement.
(b) Guarantor hereby covenants and agrees with
Lender to cause USMX and Borrower to perform
all of the Guaranteed Obligations under the
USMX Guaranty and the USMXAK Credit
Agreement, respectively, or under the other
documents and instruments included in the
Guaranteed Obligations to which USMX or
Borrower, respectively, are parties.
(c) Guarantor hereby covenants and agrees not to
accelerate the due date of the USMX/Dakota
Obligations or to exercise any rights it may
have with respect to the Dakota Collateral
based upon any failure to perform or other
default by USMX prior to the full
satisfaction and discharge of the
USMX/Rothschild Obligations.
12. Notices. All notices, demands, instructions or
other communications required or permitted to be given or made to
Guarantor or Lender shall be given in accordance with the
provisions of the USMXAK Credit Agreement at the addresses set
forth on the signature pages hereof.
13. Amendments. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by
Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by Lender, and, in the case
of any amendment, by Guarantor, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
14. Successor and Assigns. This Guaranty shall extend
to and inure to the benefit of Lender and its successors and
assigns, and every reference herein to Guarantor is a reference
to, and shall be construed as including, Guarantor and the
successors and assigns of Guarantor, to and upon all of whom this
Guaranty and agreement shall extend and be binding.
15. Further Assurances. Guarantor agrees to execute
and deliver to Lender all such documents and to take all such
other action as may be reasonably requested by Lender to more
fully vest in and assure Lender of all of the rights, powers,
privileges and remedies herein intended to be granted to or
conferred upon Lender.
16. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
COLORADO, INCLUDING THE CONFLICTS OF LAW PROVISIONS THEREOF.
17. VENUE; SUBMISSION TO JURISDICTION. FOR THE
PURPOSE OF ASSURING THAT LENDER MAY ENFORCE ITS RIGHTS UNDER THIS
GUARANTY, GUARANTOR, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS,
HEREBY IRREVOCABLY (A) AGREES THAT ANY LEGAL OR EQUITABLE ACTION,
SUIT OR PROCEEDING AGAINST GUARANTOR, OR BY GUARANTOR AGAINST
LENDER, ARISING OUT OF OR RELATING TO THIS GUARANTY, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER
OF ANY OF THE FOREGOING SHALL BE INSTITUTED ONLY IN STATE AND
FEDERAL COURTS LOCATED IN THE CITY AND COUNTY OF DENVER,
COLORADO; (B) WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO SUCH VENUE OF ANY SUCH ACTION, SUIT OR PROCEEDING OR ANY
CLAIM OF FORUM NON CONVENIENS; (C) SUBMITS ITSELF TO THE
NONEXCLUSIVE JURISDICTION OF ANY SUCH STATE OR FEDERAL COURT FOR
PURPOSES OF ANY SUCH ACTION, SUIT OR PROCEEDING; AND (D) WAIVES
ANY IMMUNITY FROM JURISDICTION TO WHICH IT MIGHT OTHERWISE BE
ENTITLED IN ANY SUCH ACTION, SUIT OR PROCEEDING WHICH MAY BE
INSTITUTED IN ANY SUCH STATE OR FEDERAL COURT, AND WAIVES ANY
IMMUNITY FROM THE MAINTAINING OF AN ACTION AGAINST IT TO ENFORCE
IN ANY SUCH STATE OR FEDERAL COURT OR ELSEWHERE, ANY JUDGMENT FOR
MONEY OBTAINED IN ANY SUCH ACTION, SUIT OR PROCEEDING AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY IMMUNITY FROM EXECUTION.
GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF THE AFORESAID
COURTS BY THE MAILING OF COPIES OF SUCH PROCESS TO THE BORROWERS,
BY CERTIFIED OR REGISTERED MAIL, AT THE ADDRESS REFERENCED IN
SECTION 12 HEREOF.
18. WAIVER OF JURY TRIAL. GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR
EQUITABLE ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED HEREBY OR THE
SUBJECT MATTER OF ANY OF THE FOREGOING.
19. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY
REPRESENTS THE FINAL AGREEMENT BETWEEN LENDER AND GUARANTOR WITH
RESPECT TO THE MATTERS SET FORTH HEREIN AND MAY NOT BE CONTRA
DICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENT OF LENDER AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN LENDER AND GUARANTOR RELATING TO THIS GUARANTY
OR THE MATTERS SET FORTH HEREIN.
[Signatures on following page]
IN WITNESS WHEREOF, the undersigned has caused this
Guaranty to be duly executed and delivered as of the 28th day of
July, 1997.
DAKOTA MINING CORPORATION
By:
Xxxx X. Xxxx
President
000 Xxxxxxxxxxx Xxxxxx, #0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
FAX: (000) 000-0000
N M ROTHSCHILD & SONS LIMITED
By:
Name: Xxxxx X. Xxxxx
Title: Attorney-in-Fact
Address:
c/o Rothschild Denver Inc.
000 Xxxxxxxxxxx Xxxxxx, #0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx
FAX: (000) 000-0000
