EXHIBIT 10.11
TERM BONDING AGREEMENT
This TERM BONDING AGREEMENT (this "Term Bonding Agreement") is made as of
August 1, 2002, among NATIONAL FIRE INSURANCE COMPANY OF HARTFORD ("CNA"),
APOLLO GOLD CORPORATION, an Ontario corporation ("Apollo Canada"), APOLLO GOLD,
INC., a Delaware corporation ("Apollo USA"), and MONTANA TUNNELS MINING, INC., a
Delaware corporation ("MTMI"), with reference to the following facts and
circumstances:
RECITALS:
A. MTMI is the wholly-owned Subsidiary of Apollo USA. Apollo USA is the
wholly-owned subsidiary of Apollo Canada. As used in this Term Bonding
Agreement and in the agreements and other documents attached as Exhibits to this
Term Bonding Agreement (the "Ancillary Agreements"), the term "Affiliates"
means, collectively, Apollo USA, Apollo Canada, and MTMI.
B. CNA is the surety, and MTMI's predecessor by reorganization was the
principal, under that certain HARD ROCK RECLAMATION BOND NO. 137564969 in the
current penal sum of $14,450,000 issued for the benefit of the STATE OF MONTANA,
DEPARTMENT OF ENVIRONMENTAL QUALITY (successor to STATE OF MONTANA, BOARD OF
LAND COMMISSIONERS) (the "Beneficiary"), on or about July 31, 1994, and amended
by INCREASE and DECREASE RIDERS (as modified, amended, and in effect, the
"Reclamation Bond"), and covering MTMI's Operating Permit No. 00113 for MTMI's
Montana Tunnels Mine located in Jefferson County, Montana (the "Mine").
C. CNA is the surety, and MTMI's predecessor by reorganization was the
principal, under that certain HARD ROCK RECLAMATION BOND NO. 137564972 in the
current penal sum of $53,186 issued for the benefit of the Beneficiary on or
about July 31, 1994, and amended by INCREASE RIDER dated on or about September
12, 1996 (as modified, amended, and in effect, the "Exploration Bond"), and
covering MTMI's Exploration License No. 00277. The Reclamation Bond and the
Exploration Bond are sometimes collectively referred to in this Term Bonding
Agreement as the "CNA Bonds."
D. On February 5, 1999, MTMI became the principal under the CNA Bonds
pursuant to the plan of reorganization and the confirmation order confirming
said plan entered December 28, 1998, in the bankruptcy proceedings styled In re
MONTANA TUNNELS MINING, INC., Debtor, United States Bankruptcy Court for the
District of Nevada, Case No. BK-N-98-30095.
E. Minding under MTMI's current Mine plan has concluded, and, but for the
investments proposed to be made by the Affiliates, MTMI standing alone lacks the
unencumbered financial resources necessary to complete the reclamation
obligations secured by the CNA Bonds.
F. The Affiliates require as a condition to making the investments
necessary to return MTMI to active mining operations, that CNA and the
Affiliates who are parties to such agreements enter into this Term Bonding
Agreement, the Collateral Trust Agreement substantially in the form of Exhibit A
attached to this Term Bonding Agreement (the "Trust Agreement"), the General
Indemnity Agreement (Canada), substantially in the form set forth in Exhibit B
attached to this Term Bonding Agreement (the "Apollo Canada Indemnity
Agreement"), the General Indemnity Agreement (USA), substantially in the form
set forth in Exhibit C attached to this Term Bonding Agreement (the "Apollo USA
Indemnity Agreement"), so as to provide for continuity of the CNA Bonds while
the pit expansion project is carried out.
G. CNA requires, as a condition to granting to MTMI the continuity of the
CNA Bonds during the Stand-Still Period and other benefits contemplated by this
Term Bonding Agreement, that the Affiliates enter into this Term Bonding
Agreement and the Ancillary Agreements, so as to provide CNA with a security
interest in the funds and investments ("Assets") to be deposited by one or more
of the Affiliates into and held in the Trust Account provided for in the Trust
Agreement (the "Trust Account").
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing, the mutual agreements
set forth below, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, CNA and the Affiliates (collectively,
"the Parties") agree as follows:
SECTION 1. INCREASES AND DECREASES IN PENAL SUMS.
-
1.1 INITIAL INCREASE. Within 5 business days after the Effective
Date (the "Closing Date"), and to take effect as of August 1, 2002, CNA shall
execute and deliver to the Beneficiary an Increase Rider substantially in the
form of Exhibit D attached to this Term Bonding Agreement, having the effect of
increasing the penal sum of the Reclamation Bond by $537,688 to an aggregate
total Reclamation Bond penal sum of $14,987,688; PROVIDED, HOWEVER, that the
Affiliates shall deposit (or shall cause MDEQ to deposit) $687,688 into the
Trust Account. The Affiliates' deposit into the Trust Account will occur prior
to or simultaneously with CNA's execution and delivery of the Increase Rider to
the Beneficiary.
1.2 SUBSEQUENT CHANGES IN PENAL SUMS. From time to time during
the effective term of this Term Bonding Agreement, CNA shall execute and deliver
all such "Decrease Riders (a CNA Bond Rider having the effect of reducing the
penal sum of either of the CNA Bonds) as may be requested by MTMI and consented
to by the Beneficiary. From time to time during the effective term of this Term
Bonding Agreement, CNA may, in CNA's sole discretion, but CNA shall not be
required to, execute and deliver any such further "Increase Riders" (a CNA Bond
Rider having the effect of increasing the penal sum of either of the CNA Bonds)
as may be requested by MTMI and accepted by the Beneficiary; PROVIDED, HOWEVER,
that, the Affiliates shall concurrently with the effectiveness of any Increase
Rider deposit into the Trust Account an additional amount of money equal in
value to the amount by which the penal sum of the affected CNA Bond is to be
increased by such Increase Rider.
SECTION 2. PREMIUM. CNA hereby acknowledges full payment of all premium,
commission, and other amounts payable with respect to the CNA Bonds for all
periods through and including July 31, 2002. For all periods on and after
August 1, 2002, no premium, commission, or other amounts in the nature of
premium or commission shall be payable with respect to the CNA Bonds. CNA shall
be solely responsible for any claim by, or liability to, any broker or agent
claiming entitlement to any premium, commission, or payment in the nature of
premium or commission on account of the CNA Bonds' remaining outstanding without
such broker or agent receiving premium or commission on and after August 1,
2002. CNA shall have sole responsibility to file any rate tariffs or other
documents, if any, necessary to permit the CNA Bonds to remain outstanding
during the Standstill Period as provided in this Term Bonding Agreement. On and
after August 1, 2002, the premiums on the aggregate penal sum of the CNA Bonds
shall accrue at a rate of 1.4% per annum. Accrued premiums shall not be due and
owing until such time as the total value of the Trust Account equals the then
current aggregate penal sum of the CNA Bonds. When the total value of the Trust
Account equals the then current aggregate penal sum of the CNA Bonds, the
Monthly Deposit Amount (as defined infra.) shall be paid to CNA in lieu of the
Trust Account, in satisfaction of premiums which have accrued but have not been
paid on the CNA Bonds. CNA shall be responsible for the payment of any
commissions to any agent or broker related to the CNA Bonds from the premiums
received by CNA. The accrued and unpaid premium balance shall be reduced by the
amount of the Monthly Deposit Amounts paid to CNA until the balance of the
accrued premiums is zero. Interest shall not accrue or be payable on the
accrued and unpaid premium balance or otherwise. CNA shall deliver to MTMI
within 10 days after the end of each Bonding Year, and at any other reasonable
interval upon request, a Premium Accrual Certificate setting forth the opening
balance, closing balance, and computation of premium accrued and paid for the
period since the last Premium Accrual Certificate in reasonable detail
sufficient to permit MTMI to confirm CNA's computations.
SECTION 3. TERM. This Term Bonding Agreement will take effect on the
date upon which the last Party to do so executes and delivers this Term Bonding
Agreement to the other Parties (the "Effective Date"), and shall continue in
effect indefinitely until terminated as provided in section 7.
SECTION 4. INDEMNITY AGREEMENT. Concurrent with the execution and
delivery of this Term Bonding Agreement, Apollo Canada shall execute and deliver
to CNA the Apollo Canada Indemnity Agreement and Apollo USA and MTMI shall
execute and deliver to CNA the Apollo USA Indemnity Agreement (collectively, the
"Indemnity Agreements"). Once executed and delivered by MTMI, the Apollo USA
Indemnity Agreement shall supersede the General Agreement of Indemnity executed
by MTMI in CNA's favor on January 6, 2000, and any other prior indemnity
agreement executed by MTMI. The Parties acknowledge and agree that, in the
absence of an Event of Default, the terms, conditions and remedies set forth in
the indemnity agreements will not be implemented. Accordingly, although the
Indemnity Agreements are executed and delivered by the Affiliates on the
Effective Date, the rights and remedies of CNA and the other entities included
within the term "Company," as defined in the Indemnity Agreements, may not be
exercised during the effective term of this Term Bonding Agreement unless an
Event of Default has occurred and is continuing.
SECTION 5. TRUST ACCOUNT
5.1 DEPOSITS TO THE TRUST ACCOUNT. On or before the Effective
Date, the Parties shall execute, deliver, and perform the Trust Agreement.
During the effective term of this Term Bonding Agreement, one or more of the
Affiliates shall make deposits into the Trust Account: (i) in the amount
calculated as provided in paragraph 5.2 during each month of the effective term
of this Term Bonding Agreement, commencing with August 2002, and continuing
until the value of the Trust Account is equal to the aggregate outstanding penal
sum of the CNA Bonds (each, a Monthly Deposit Amount"); and (ii) concurrently
with any increase in the aggregate penal sum outstanding under the CNA Bonds, in
the amount and as required pursuant to paragraph 1.2.
5.2 CALCULATION OF MONTHLY DEPOSIT OBLIGATIONS. Each successive
12-month period commencing each August 1 during the effective term of this Term
Bonding Agreement is referred to in the Term Bonding Agreement as a "Bonding
Year." The Monthly Deposit Amount for each Bonding Year shall be calculated as
follows:
5.2.1 The Monthly Deposit Amount for the 12 Monthly Deposits to
be made during the Bonding Year commencing August 1, 2002, shall be $75,000
per month and shall not be subject to adjustment; PROVIDED, HOWEVER, that
the $687,688 to be deposited in the Trust Account as a condition to the
Increased Rider provided for in paragraph 1.1 of this Term Bonding
Agreement includes as an integral component thereof the Monthly Deposit
Amounts otherwise payable on August 1, 2002 and September 1, 2002.
5.2.2 Starting in August 2003, if the arithmetic mean of the New
York Spot Market closing gold bid prices for all days when such market was
open during the Bonding Year then just ended as reported by KITCO, INC., on
its Internet reporting service accessible at xxxx://xxx.xxxxx.xxx (the
--------------------
"Average Gold Price") falls between $300 per ounce and $350 per ounce,
inclusive, then the Monthly Deposit Amount for the 12 Monthly Deposits to
be made during the Bonding Year then just commenced shall be $75,000.
5.2.3 Starting in August 2003, if the Average Gold Price for the
Bonding Year then just ended is greater than $350 per ounce, then the
Monthly Deposit Amount for the 12 Monthly Deposits to be made during the
Bonding Year then just commenced shall be the value derived by solving for
x in the formula x = $75,000 + [$1,000 * (a - $350], where a equals the
Average Gold Price for the Bonding Year then just ended rounded to the
nearest whole Dollar. By way of example and without limiting the generality
of the foregoing, a hypothetical Average Gold Price of $375 for any Bonding
Year would result in a Monthly Deposit Amount of $100,000 for the following
Bonding Year, calculated as follows: $100,000 = 75,000 + [$1,000 * ($375 -
$350)].
5.2.4 Starting in August 2003, if the Average Gold Price for the
Bonding Year then just ended is less than $300 per ounce, then the
Monthly Deposit Amount for the 12 Monthly Deposits to be made during the
Bonding Year then just commenced shall be the value derived by solving for
x in the formula x = $75,000 - [$1,000 * ($300 - a)], where a equals the
Average Gold Price for the Bonding Year then just ended rounded to the
nearest whole Dollar. By way of example and without limiting the generality
of the foregoing, a hypothetical Average Gold Price of $275 for any Bonding
Year would result in a Monthly Deposit Amount of $50,000 for the following
Bonding Year, calculated as follows: $50,000 = 75,000 - [$1,000 * ($300 -
$275)].
5.2.5 Notwithstanding the foregoing, at no time shall the Monthly
Deposit Amount be less than $0 per month.
5.2.6 Notwithstanding the foregoing, the Affiliates shall not be
obligated to make any Monthly Deposit Amount into the Trust Account at any
time when the value of the Trust Account shall then be equal to or greater
than the aggregate outstanding penal sum of the CNA Bonds. However, once
the value of the Trust Account is equal to or greater than the aggregate
outstanding penal sum of the CNA Bonds, the Monthly Deposit Amount shall be
paid to CNA, not the Trust Account, and shall reduce the outstanding
balance of the accrued and unpaid premiums. After the balance of the unpaid
premiums and commissions is reduced to zero, the Monthly Deposit Amounts
shall cease to be paid by the Affiliates. If any accrued and unpaid premium
shall be outstanding at a time when the value of the Assets in the Trust
Account exceeds the aggregate penal sum of the CNA Bonds, such surplus
shall be released to CNA as a payment of accrued and unpaid premium payable
under this Term Bonding Agreement. If all accrued premium payable under
this Term Bonding Agreement shall have been paid in full, then CNA shall
promptly release from the Trust Account to the sole control of the
Affiliates upon request any Assets held in the Trust Account that have the
effect of causing the Trust Account to have a value greater than the
aggregate penal sum of the CNA Bonds then outstanding.
5.2.7 Within 10 days after each August 1 during the effective
term of this Term Bonding Agreement, commencing with August 1, 2003, the
Affiliates shall deliver a Monthly Deposit Amount Calculation Certificate,
substantially in the form of Exhibit E attached to this Term Bonding
Agreement, executed by an authorized officer on behalf of each of the
Affiliates setting forth (i) the Average Gold Price for the Bonding Year
then just ended; (ii) setting forth all of the closing bid price data used
to calculate such Average Gold Price; and (iii) the Monthly Deposit Amount
for each of the 12 Monthly Deposits to be made during the Bonding Year then
just started, calculated as provided in this section 5.
5.2.8 All Monthly Deposit Amounts shall be received in the Trust
Account on or before the first business day of each month, except that (i)
the Monthly Deposit Amount for August 2002 and any subsequent month that
commences before the Closing Date shall be payable on the Closing Date; and
(ii) the Monthly Deposit Amount for each August after August 2002 shall be
received on or before the 15th business day of that month in order to
permit computation of the Monthly Deposit Amount for the Bonding Year then
just commenced.
5.3 SECURITY INTERESTS. Each of the Affiliates that hold an
interest in the Trust Accounts shall execute and file all such Form UCC-1
financing statements with the Delaware Secretary of State, and shall do all such
further acts and things as shall be necessary or convenient, in order to grant
to CNA and to continue in good standing a fully-perfected, first-priority
security interest in the full value of the Trust Account Assets (but no other
assets) in accordance with Article 9 of the Uniform Commercial Code as in effect
in the State of Delaware from time to time, such security interest to remain in
effect with respect to all assets held in the Trust Account until the CNA Bonds
are released.
5.4 USE OF ACCOUNT ASSETS. Unless earlier withdrawn under another
provision of this Term Bonding Agreement or the Ancillary Agreements, the Trust
Account Assets shall remain in the Trust Account until completion of mining at
MTMI's Mine and shall be used to secure MTMI's obligations to CNA pursuant to
the CNA Bonds.
SECTION 6. STAND-STILL. CNA Agrees that, during the effective term of
this Term Bonding Agreement but only so long as no Event of Default has occurred
and is continuing (the "Stand-Still Period"), CNA shall refrain from any
cancellation of the CNA Bonds, issuing any notice of cancellation of the CNA
Bonds, and any other act or omission aimed at cancellation of the CNA Bonds,
actual or purported.
SECTION 7. TERMINATION. So long as no Event of Default (as defined below)
has occurred and is continuing, this Term Bonding Agreement and the Ancillary
Agreements shall continue in effect indefinitely until terminated under any one
of the following the termination provisions:
7.1 TERMINATION UPON RELEASE OF CNA BONDS. This Term Bonding
Agreement and the Ancillary Agreements shall terminate automatically and without
notice when the Beneficiary shall have released the CNA Bonds. The Affiliates
may obtain release of the CNA Bonds by delivering substitute bonding to the
Beneficiary at any time. Upon the Affiliates' request, CNA will cooperate
through appropriate escrow arrangements whereby CNA's interests in the Trust
Account will be released simultaneously with the delivery of substitute bonding
so that the Trust Account assets can serve as security to the issuer of the
substitute bonding simultaneously with the release of the CNA Bonds.
7.2 TERMINATION WITHOUT CAUSE. So long as no Event of Default has
occurred and is continuing, CNA may not terminate this Term Bonding Agreement or
the Ancillary Agreements during the period from the Effective Date through the
July 31, 2017 (the "Stand-Still Period"). After the Stand-Still Period, CNA may
unilaterally terminate this Term Bonding Agreement and the Ancillary Agreements
without cause by giving not less than thirty (30) days written notice of
termination to the Affiliates. Until notice of termination is given, the Term
Bonding Agreement and the Ancillary Agreements shall continue in effect.
7.3 TERMINATION BY CNA FOR CAUSE. CNA may unilaterally terminate
this Term Bonding Agreement for cause, thereby giving CNA the unilateral right
to avail itself of the remedies under the indemnity agreements, if, but only if,
any of the following events shall occur and shall continue uncured for ten (10)
days after the Affiliates' receipt of CNA's written notice of the occurrence of
such event and demand for performance (each an "Event of Default").
7.3.1 CNA receives notice from the Beneficiary that CNA is
required to make payment of all or any portion of the penal sum of either
the CNA Bonds to the Beneficiary under the terms of either of the CNA Bonds
on account of MTMI's refusal or failure to perform any of MTMI's
obligations to Beneficiary which are secured by either of the CNA Bonds;
7.3.2 the Affiliates shall fail to deliver copies of Apollo
Canada's consolidated and consolidating quarterly and annual financial
statements to CNA within 30 days after the same are required to be
delivered to stockholders pursuant to applicable laws;
7.3.3 the Affiliates shall fail to make any deposit of funds
into the Trust Account when due in accordance with section 5 of this Term
Bonding Agreement;
7.3.4 the Affiliates shall breach any material obligation to CNA
under this Term Bonding Agreement or and of the Ancillary Agreements; or
7.3.5 the Affiliates shall fail to permit, at the request of CNA
on reasonable notice, CNA's designated representative(s), in reasonable
numbers and at reasonable intervals, to inspect the MTMI Mine site.
7.4 EFFECT OF CNA BONDS' INVALIDITY. In the event the State of
Montana shall withdraw CNA's certificate of authority to issue surety bonds or
otherwise take any action against CNA whereby the CNA Bonds are not deemed by
the State of Montana to satisfy bonding requirements applicable to MTMI to the
full extent of the CNA Bonds then penal sum without fault by CNA and MTMI is
ordered by the State of Montana to cease mining operations as a result, then, in
addition to any other remedies available under this Term Bonding Agreement or
applicable laws, the obligations of the Affiliates to make Monthly Deposits to
the Reclamation Account shall be suspended until mining operations are permitted
to resume. Once the CNA Bonds are released by the Beneficiary, monies in the
Trust Account shall be released to the Affiliates so as to enable the Affiliates
to use the money as collateral to obtain full substitute bonding from third
parties.
7.5 In the event of a Termination pursuant to sections 7.1, 7.2,
or 7.3 the Affiliates obligation to pay the accrued premiums and commissions
shall become due. In the event of a termination pursuant to section 7.1 the
Affiliates obligation to pay CNA the outstanding balance of the accrued premiums
and commissions shall survive the Termination and the Affiliates shall continue
to make Monthly Deposit Amount payments to CNA until the outstanding balance of
the accrued premiums and commissions is zero.
SECTION 8. MISCELLANEOUS.
8.1 FEES AND COSTS. Each of the Parties to this Term Bonding
Agreement shall pay its own respective attorneys' fees and expenses incurred in
connection with the negotiation and administration of this Term Bonding
Agreement and the Ancillary Agreements, if any. In the event of litigation
alleging a right to damages on account of a material breach of this Term Bonding
Agreement or the Ancillary Agreements, the prevailing party shall be entitled to
recover its costs and reasonable attorneys' fees.
8.2 DEFINED TERMS AND VARIANTS OF DEFINED TERMS. Any plural,
singular, possessive, feminine, masculine, past, present or future variant of
any of the terms defined parenthetically or otherwise in this Term Bonding
Agreement or any Ancillary Agreement shall have the correlative meaning of the
term of which it is a variant. As used in this Bonding Agreement: the symbol
"$" and the term "Dollars" each means United States Dollars; and the term
"ounces" and the abbreviation "oz." each means Xxxx Ounces.
8.3 ENTIRE AGREEMENT. Except as expressly provided in the
Ancillary Agreements, this Term Bonding Agreement contains the entire
understanding and agreement between the Parties in connection with the subject
matter hereof, and there are no oral or written collateral agreements between
the Parties. If there is any conflict between the provisions of this Term
Bonding Agreement and the Trust Agreement, the provisions of the Trust Agreement
shall prevail. The Term Bonding Agreement shall prevail if there is a conflict
between its provisions and that of any Ancillary Agreement except the Trust
Agreement.
8.4 EFFECT OF AMBIGUITIES. This Term Bonding Agreement and the
Ancillary Agreements are the result of extensive negotiations and shall be
deemed to have been jointly prepared by the Parties hereto. Any ambiguities
that may exist within this Term Bonding Agreement or any of the Ancillary
Agreements shall be construed neither in favor of nor against any Party or any
Affiliate but rather in accordance with the fair meaning thereof.
8.5 AMENDMENTS. Neither this Term Bonding Agreement nor any of
the Ancillary Agreements may to be altered or varied except in writing duly
signed by all of the Parties and all Affiliates that are parties thereto.
8.6 RELIANCE. Each Party acknowledges that it has been fully
advised by legal counsel of its choice with regard to this Term Bonding
Agreement and the Ancillary Agreements, and that, in executing this Term Bonding
Agreement and the Ancillary Agreements, it is relying fully upon its own
judgment and advice of such counsel and not upon any representation or warranty
of the other Party or such Party's Affiliates that is not expressly set forth in
writing in the Term Bonding Agreement or in the Ancillary Agreements.
8.7 THIRD-PARTY BENEFICIARIES. Except as otherwise provided in
this Term Bonding Agreement or the Ancillary Agreements, nothing in this Term
Bonding Agreement, either expressed or implied, is intended to confer upon or to
give any person (other than the Parties) any rights or remedies, or to release
any person from any liability or obligation, by reason of any term, provision,
condition, undertaking, warranty, representation, or agreement contained in this
Term Bonding Agreement. Without limiting the generality of the foregoing,
neither this Term Bonding Agreement nor any of the Ancillary Agreements is
intended to create any public or private trust for the benefit of the State of
Montana or any other person interested in the reclamation of MTMI's Mine site.
In executing and delivering the Term Bonding Agreement and the Ancillary
Agreements and in participating in the transactions contemplated by the Term
Bonding Agreement and the Ancillary Agreements, each of the Parties is acting as
an independent contractor in pursuit of its own interests and not as a
representative, employee, agent, or other fiduciary of any other Party.
8.8 NOTICES. All notices, instructions, or demands of any kind
that any Party desires to give or to make upon the other Party in connection
with this Term Bonding Agreement or the Ancillary Agreements shall be in writing
and shall be deemed to be delivered by depositing the notice, instruction or
demand in the United States mail, certified or registered,
return-receipt-requested, with first class or priority-mail postage,
certification or registration-fees, and return receipt fees pre-paid, and
addressed to the other Party as follows:
If to CNA, to: XXX
XXX Xxxxx, 00 Xxxxx
Xxxxxxx, XX 00000-0000
ATTN: Xxxxxx X. Xxxxxxx, Executive Vice
President And Chief Underwriting
Officer
ATTN: Xxxxxx X. Xxxxxxx, Vice President and
Chief Claims Officer
If to the Affiliates, to: Montana Tunnels Mining, Inc.
Denver Executive Offices
0000 XXX Xxxxxxxxx, Xxx. 000
Xxxxxx, XX 00000-0000
ATTN: General Counsel
Any Party may change its address for receiving notices stated above by giving
notice to the other Party as provided above.
8.9 COUNTERPARTS. This Term Bonding Agreement and the Ancillary
Agreements may be executed in counterparts with the same force and effect as if
all signatures were set forth on a single instrument.
8.10 DUE AUTHORITY. Each party expressly warrants to the other
Party: (i) that it has the power and authority to execute and to deliver the
Term Bonding Agreement and the Ancillary Agreements to which it is a Party and
to perform its obligations thereunder; and (ii) that all necessary formalities
have been observed in executing this Term Bonding Agreement and the Ancillary
Agreements to which it is a Party.
8.11 EXHIBITS. Each of the Exhibits marked as Exhibit A through
Exhibit E and attached to this Term Bonding Agreement (the "Exhibits"), is
incorporated into this Term Bonding Agreement by this reference.
8.12 SUCCESSORS AND ASSIGNS. This Term Bonding Agreement, the
Ancillary Agreements, and the obligations, rights, and benefits of CNA and the
Affiliates thereunder, shall be binding upon and shall inure to the benefit of
their respective successors and assigns.
8.13 FURTHER ASSURANCES. The Parties shall do, or cause to be
done, all such further acts and things, as shall be reasonably necessary or
convenient to the end that the parties and the Affiliates will receive the
intended benefits of this Term Bonding Agreement. Without limiting the
generality of the foregoing, so long as an Event of Default has not occurred and
is not continuing CNA will from time to time when reasonably requested by an
Affiliate: (i) execute and deliver an estoppel certificate to any current or
prospective lender or vendor of any Affiliate that may request such
certification, so as to assure such lender or vendor that, as of the date of the
certificate, to the best knowledge of CNA: (A) an Event of Default has not
occurred and is not continuing; and (B) that CNA does not then claim a security
interest in any assets of the Affiliates other than the assets held in the Trust
Account: and, (ii) if requested by such lender or vender, CNA shall execute and
deliver a subordination agreement having the effect of subordinating any
security interests held by CNA to the security interests held or to be granted
by any Affiliate to such lender or vendor. Any request for an estoppel
certificate or a subordination agreement made to CNA under this paragraph 8.13
shall be accompanied by a certificate signed by a duly authorized officer on
behalf of all of the Affiliates certifying that, to the best knowledge of the
certifying officer, no Event of Default has occurred and is continuing, and CNA
may rely on such certificate in executing and delivering the requested estoppel
certificate or subordination agreement. Notwithstanding the above, in no event
shall CNA be required to execute an estoppel certificate or subordination
agreement for any Assets in the Trust Account.
IN WITNESS WHEREOF, the Parties have each executed this Term Bonding
Agreement by their duly authorized officers as of and with effect from the
Effective Date.
"CNA" "MTMI"
NATIONAL FIRE INSURANCE COMPANY OF MONTANA TUNNELS MINING, INC.
HARTFORD
By: /s/ Xxxxxx X. Greasal By: /s/ Xxxxxx X. Xxxxxxx
------------------------------- ----------------------------
XXXXXX X. XXXXXXX Xxxxxx X. Xxxxxxx
Its: VICE PRESIDENT & CHIEF CLAIMS Its: Vice President
OFFICER
Executed by MTMI on September 26, 2002,
Executed by CNA on September 25, at Helena, Montana.
2002, at CNA Plaza, Chicago,
IL 60685
"Apollo USA" "Apollo Canada"
APOLLO GOLD, INC. APOLLO GOLD CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- ----------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
Its: Vice President Its: Vice President
Executed by Apollo USA on Executed by Apollo Canada on
September 26, 2002, at Helena, September 26, 2002, at Helena, Montana
Montana
INDEX TO EXHIBITS
A. Collateral Trust Agreement
B. General Agreement of Indemnity (Canada)
C. General Agreement of Indemnity
D. Increase Rider
E. Monthly Deposit Amount Calculation Certificate
COLLATERAL TRUST AGREEMENT
THIS COLLATERAL TRUST AGREEMENT, dated as of September 26, 2002 (the
"Agreement"), among Montana Tunnels Mining, Inc. (the "Grantor"), Western Surety
Company (the "Beneficiary"), and THE NORTHERN TRUST COMPANY, an Illinois banking
corporation (the "Trustee"). The Grantor, the Beneficiary and the Trustee are
hereinafter each sometimes referred to individually as a "Party" and
collectively as the "Parties".
WITNESSETH:
WHEREAS, the Trustee is a member of the Federal Reserve System of the United
States of America and is not a Parent, Subsidiary or Affiliate of the Grantor of
the Beneficiary;
WHEREAS, the Grantor has been issued a Hard Rock Reclamation Surety Bond by
National Fire Insurance Company of Hartford (hereinafter "National Fire")
attached hereto as Exhibit 1 (the "Bond");
WHEREAS, the Grantor desires to transfer to the Trustee for deposit to a trust
account (the "Trust Account") money for the account of the Beneficiary for the
purpose of securing any and all of Grantor's obligations to National Fire under
the Bond and the agreements between Grantor and National Fire in connection with
the Bond, (all such obligations, together with any and all obligations of
Grantor to Beneficiary under this Collateral Trust Agreement, hereinafter
collectively "Grantor's Obligations" or "Obligations");
WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold such
assets in trust in the Trust Account for the sole use and benefit of the
Beneficiary for the purpose of facilitating the placement of money in the Trust
Account in order to secure the Grantor's Obligations to the Beneficiary and
National Fire under the Bond, and for the purpose of setting forth the duties
and powers of the Trustee with respect to the Trust Account;
WHEREAS, the Trust Account is established under the laws of the State of
Illinois:
NOW, THEREFORE, for and in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and the Parties hereby agree as follows:
Sec.1. Deposit and Maintenance of Assets to the Trust Account.
---------------------------------------------------------------
(a) The Grantor hereby establishes an irrevocable Trust Account,
pursuant to the terms of this Agreement to be held in trust by Trustee for the
benefit of the Beneficiary. All money deposited in the Trust Account by Grantor
is absolutely and irrevocably transferred to the Trustee for management pursuant
to this Agreement. Grantor, Beneficiary, and Trustee intend that no party,
including third parties, have access to any Assets in the Trust Account.
(b) The Grantor shall establish the Trust Account by transferring to it
an initial amount of $687,688 prior to October 1, 2002, with the Trustee, who
shall administer the Trust Account in its name as Trustee for the Beneficiary.
No withdrawal of the Assets (as hereinafter defined) of the Trust Account shall
be made except at the express direction of the Beneficiary as provided herein.
(c) The Grantor shall transfer to the Trustee, for deposit to the Trust
Account, the initial sum of $687,688, and may transfer to the Trustee, for
deposit to the Trust Account, such other amounts as may be allowed and/or
required under this Agreement, the Term Bonding Agreement, and the Bond (all
such amounts including incomes thereon and proceeds and reinvestments thereof
are herein referred to as the "Assets"). The deposits shall consist only of
money in U.S. dollars. The Trustee shall provide to the Beneficiary a
certification of its receipt of the Grantor's initial deposit.
(d) The Trust Account will consist of the monies in the aforementioned
account, any other cash subsequently deposited into the Trust Account, the
investments and reinvestments thereof and all earnings, interest, and profits
thereon, less any Withdrawal, Reduction or payments made by the Trustee pursuant
to this Agreement.
(e) The Grantor shall deliver any Assets to be deposited into the Trust
Account to the Trustee via wire transfer, except for the initial deposit which
may be made by checks. The Trustee shall have no duty to collect from the
Grantor or any other person any amounts that may be required by this Agreement
to be deposited into the Trust Account.
(f) Grantor agrees that it will not, without the prior written consent
of the Beneficiary, assign or transfer, and will not mortgage, pledge or
otherwise encumber or suffer to exist any lien on or with respect to, any money
in the Trust Account.
(g) Notwithstanding the foregoing, the parties intend that this Trust
be a "Grantor Trust" for federal income tax purposes and that all the income of
the trust shall be taxable on a current basis to the Grantor. The Trustee shall
prepare and file the appropriate tax returns.
Sec.2. Withdrawal of Assets from the Trust Account.
--------------------------------------------------
(a) Upon default in the performance of any of Grantor's Obligations,
the Beneficiary shall have the right, at any time and from time to time, to
withdraw from the Trust Account, upon written notice to the Trustee at Trustee's
address as set forth in Section 17 herein below (the "Withdrawal Notice"), any
quantity or amount of such Assets as are specified in such Withdrawal Notice.
Any Withdrawal Notice must be received by the Trustee no later than 3:00 p.m.
Chicago time the business day prior to execution of the withdrawal transaction.
The Withdrawal Notice may designate a third party (the "Designee") to whom
Assets specified therein shall be delivered and may condition delivery of such
Assets to such Designee upon receipt, and deposit to the Trust Account, of other
Assets specified in such Withdrawal Notice, all as determined by Beneficiary and
as set forth in the Withdrawal Notice. The Beneficiary need present no
statement or documentation in addition to a Withdrawal Notice in order to
withdraw any Assets.
(b) Upon receipt of a Withdrawal Notice, the Trustee shall, at
Beneficiary's written direction, promptly transfer such Assets to, or for the
account of, Beneficiary or such Designee as is specified in such written
direction.
(c) To the extent Beneficiary and Grantor agree that the Assets in the
Trust Account exceed Grantor's Obligations, Grantor shall have the right to
withdraw Assets from the Trust Account upon providing Trustee with written
notice (The "Reduction Notice"). The Reduction Notice shall be prepared by
Grantor, but shall have no force or effect unless and until confirmed and
approved by the Beneficiary in writing. The Reduction Notice shall reflect the
amount to be withdrawn from the Trust Account. Upon Beneficiary's confirmation
and approval of the Reduction Notice, Trustee shall deliver the amount to be
withdrawn per the written instructions of the Grantor as contained in the
Reduction Notice.
(d) Notwithstanding paragraphs (a), (b), and (c) of the Section 2 and
of this Agreement, in the absence of a Withdrawal Notice or Reduction Notice the
Trustee shall allow no withdrawal of any Assets from the Trust Account.
(e) The Trustee shall have no liability for any losses to the Trust
Account that may be incurred as a result of any liquidation of Assets of the
Trust Account in order to satisfy a request for a distribution in cash or for
the validity, enforceability, perfection or priority of any lien, charge,
security interest or other encumbrance claimed by any person against, in or with
respect to the Trust Account or any Asset thereof.
Sec.3. Application of Assets.
------------------------
(a) The Beneficiary hereby covenants to the Grantor that it shall use
and apply any withdrawn Assets for the following purposes only:
i) to pay or reimburse the Beneficiary or National Fire for any
unpaid or unreimbursed portion of Grantor's Obligations;
ii) to pay or reimburse the Beneficiary or National Fire for any
amounts due to Beneficiary or National Fire as a result of
Grantor's default under any Bond;
iii) to reimburse the Beneficiary or National Fire for any amounts
advanced by the Beneficiary or National Fire on behalf of Grantor
for services performed by third parties in accordance with the
Bond or Grantor's Obligations, and
iv) where any of the Grantor's Obligations remain unliquidated and
undischarged ten days prior to the termination date (as set forth
in Section 10), to withdraw the Assets and deposit such amounts
in a separate account, apart from its other assets, in the name
of the Beneficiary, in any bank or trust company organized in the
United States, in trust for the uses and purposes specified in
subparagraphs (i) through (iii) of this paragraph (a).
(b) The Trustee shall have no duty, responsibility or authority
whatsoever to determine that any Assets withdrawn from the Trust Account
pursuant to Section 2 of this Agreement will be used and applied in the manner
contemplated by paragraph (a) of this Section 3, or to take, or refrain from
taking any action on account of the use or application any Assets in relation to
the provisions of said paragraph (a) of this Section 3.
Sec.4. Income.
-------
The Trustee shall make such investments of any cash at any time in the
Trust Account as the Beneficiary may specifically direct in writing. In the
absence of such direction the Trustee shall invest such cash in one or more of
its propriety money market mutual funds. All payments of interest, dividends
and other income in respect of Assets in the Trust Account received by the
Trustee shall be deposited into the Trust Account, to become a part thereof for
all purposes hereunder, until such time as the Trustee is directed otherwise by
the Beneficiary. The parties hereby direct the Trustee to treat the Trust
Account as a grantor-type trust for federal and Illinois income tax purposes and
the Grantor shall provide the Trustee with a completed IRS Form W-9 and any
other documents the Trustee may reasonably request in order to comply with
federal income tax withholding rules and regulations then in force.
Sec.5 Corporate Actions.
-------------------
The Trustee shall advise the Grantor and Beneficiary upon receipt by
Trustee of notice of any corporate action affecting any Assets in the Trust
Account. The Trustee shall forward all corporate action materials, and such
other materials it regularly sends to its customers relating to the securities
it holds, to the Grantor, with a copy to the Beneficiary. The Trustee shall
follow instructions signed by the Grantor and Beneficiary with regard to voting
such corporate actions, and to the extent necessary, shall execute and deliver
such corporate actions to the appropriate party.
Sec.6. Additional Rights and Duties of the Trustee.
--------------------------------------------------
(a) The Trustee shall notify the Grantor and the Beneficiary in writing
within ten (10) days following each deposit to, or withdrawal from the Trust
Account.
(b) The Trustee shall accept and open all mail directed to the Grantor
or the Beneficiary in care of the Trustee.
(c) The Trustee shall furnish to the Grantor and the Beneficiary a
complete statement of all Assets and their market valuations in the Trust
Account upon the inception of the Trust Account and monthly thereafter.
(d) Upon reasonable notice from the Grantor or the Beneficiary, the
Trustee shall promptly permit the Grantor or the Beneficiary, their respective
agents, employees or independent auditors to examine, audit, excerpt, transcribe
and copy at their expenses, during the Trustee's normal business hours, any
books, documents, papers and records relating to the Trust Account or the
Assets.
(e) Except as otherwise provided in this Agreement, the Trustee is
authorized to follow and rely upon the instructions, and shall be fully
protected in acting in accordance with such instructions given by officers named
in incumbency certificates furnished to the Trustee from time to time by the
Grantor and the Beneficiary, respectively, and by Attorneys-in-fact acting under
written authority furnished to the Trustee by the Grantor or the Beneficiary,
including, without limitation, instructions given by letter, facsimile
transmission or electronic media, if the Trustee reasonably believes such
instructions to be genuine and to have been signed, sent or presented by the
proper party or parties and further provided such instructions are consistent
with the terms of this Agreement. The Trustee shall not be charged with notice
of any change in authority of an officer or attorney-in-fact of either Grantor
or Beneficiary until Trustee receives written notification of such change from
the party for which it will be effective. The Trustee shall not incur any
liability to anyone resulting from actions taken by the Trustee in reliance on
such instructions. The Trustee shall not incur any liability in executing
instructions (i) from any attorney-in-fact prior to receipt by it of notice of
the revocation of the written authority of the attorney-in-fact or (ii) from any
officer of the Grantor or the Beneficiary named in an incumbency certificate
delivered hereunder prior to receipt by it of a more current certificate.
(f) The duties and obligations of the Trustee shall only be such as are
specifically set forth in this Agreement, as it may from time to time be
amended, and no implied duties or obligations shall be read into this Agreement
against the Trustee. The Trustee shall not be subject to, nor obliged to
recognize, any other instrument governing the rights or duties of the other
parties to this Agreement (including the Bond), even though reference thereto
may be made in this Agreement. The Trustee shall be liable for its own and its
agents' negligence, willful misconduct, or lack of good faith, its being
understood that central banks, depositories and clearing organizations are not
the agents of the Trustee. In no event shall the Trustee be liable to any
person for punitive, special, indirect or consequential damages of any kind,
even if it is advised of the possibility thereof. In the event of such loss or
damage to the Assets resulting from the Trustee's or its agents' negligence,
willful misconduct, or lack of good faith, the Trustee, at its option, shall
promptly replace (at its own expense) said Assets (by, among other means,
posting appropriate security or bond with issuers of such Assets and obtaining
their reissuance) with other Assets of like kind and quality, or their value as
of the date of discovery of the loss.
(g) The Trustee shall have no responsibility to determine whether the
Assets in the Trust are sufficient to secure the Grantor's liability under the
Bond.
Sec.7. The Trustee's Compensation and Expenses.
--------------------------------------------
(a) Annual Fees. The Grantor shall pay the Trustee, as compensation
for its services under this Agreement, an annual fee for applicable services as
may be mutually agreed from time to time by the parties. The Grantor shall pay
the annual fee to the Trustee no later than 30 days after the execution date of
this Agreement, and within 30 days after each anniversary of the execution date
thereafter. However, in the event that the number of transactions exceed
twenty-five in one month the Trustee reserves the right to invoice the Grantor
on a quarterly basis with payment due no later than thirty days after the date
of the invoice. If the Grantor fails to pay the annual fee to the Trustee
within the allotted time, then the Trustee shall have the right to resign
pursuant to Section 9 herein.
(b) Other Fees. The Grantor shall pay or reimburse the Trustee for all
of the Trustee's reasonable expenses and disbursements in connection with its
duties under this Agreement (including, but not limited to attorney's fees and
expenses, on-line reporting fees, and other extraordinary expenses such as
shipping, special report requests, etc.), except any such expense or
disbursement resulting from the Trustee's negligence, willful misconduct, or
lack of good faith.
(c) No Assets shall be used or withdrawn from the Trust Account nor
lien, encumbrance or security interest in the Assets permitted or perfected for
the purpose of paying compensation to, or reimbursement of the expenses or
indemnification of, the Trustee.
(d) All taxes of any kind that may be assessed or levied against or in
respect of the Trust Fund shall be paid or reimbursed by Grantor.
Sec.8. Trustee Indemnification.
-------------------------
The Grantor hereby indemnifies the Trustee for, and defends and holds it
harmless against, any loss, liability, costs or expenses (including attorney's
fees and expenses) incurred (whether in its individual capacity or as Trustee)
or made without negligence, willful misconduct or lack of good faith on the part
of the Trustee, arising out of or in connection with the performance of its
obligations in accordance with provisions of this Agreement, including any loss,
liability, costs or expenses arising out of or in connection with the status of
the Trustee or its nominee as the holder of record of the Assets; provided,
however, that in the event that insolvency proceedings have been commenced by or
against the Grantor, or if the Grantor fails for any reason to make payment
within 30 days after any written request by the Trustee for indemnification
hereunder, the Beneficiary shall be liable for the obligations of the Grantor
under this paragraph. The Grantor and Beneficiary hereby acknowledge that the
foregoing indemnities shall survive the resignation of the Trustee or the
termination of this Agreement.
Sec.9. Resignation or Removal of the Trustee.
-------------------------------------------
(a) Trustee Resignation.
i) The Trustee may resign by giving not less than ninety (90) days
written notice thereof to the Beneficiary and to the Grantor.
Such resignation shall become effective upon the acceptance of
appointment by a successor Trustee and the transfer to such
successor Trustee of all Assets in the Trust Account in
accordance with this Agreement.
ii) Upon receipt of the Trustee's notice of resignation, the Grantor
and the Beneficiary shall appoint a successor Trustee. Any
successor Trustee shall be a bank that is a member of the Federal
Reserve System and shall not be a Parent, a Subsidiary or an
Affiliate of either the Grantor or the Beneficiary. Upon the
acceptance of the appointment as Trustee hereunder by a successor
Trustee and the transfer to such successor Trustee of all Assets
in the Trust Account, the resignation of the Trustee shall become
effective. Thereupon, such successor Trustee shall succeed to and
become vested with all the rights, powers, privileges and duties
of the resigning Trustee, and the resigning Trustee shall be
discharged from any future duties and obligations under this
Agreement, except as provided in Section 6(f) hereof.
iii) In the event of the Trustee's resignation, if an instrument of
acceptance by a successor Trustee has not been delivered to
Trustee within 60 days after the giving of notice of such
resignation, Trustee may, at the expense of Grantor, petition any
court of competent jurisdiction for the appointment of a
successor Trustee under this Agreement or appoint a successor
trustee meeting the qualifications hereunder.
iv) The Trustee must resign upon becoming a Parent, Subsidiary or
Affiliate of the Grantor or the Beneficiary.
v) Notwithstanding Section 9(a) above, if the Trustee resigns
because of the Grantor's failure to pay the annual fee as set
forth in Section 7(a) of this Agreement, then it may do so by
giving not less than sixty (60) days written notice to the
Grantor and the Beneficiary, and may at the expense of Grantor,
petition any court of competent jurisdiction for the appointment
of a successor Trustee under this Agreement within 30 days after
giving notice of such resignation or appoint a successor trustee
meeting the qualifications hereunder.
(b) Trustee Removal. The Grantor and the Beneficiary may, with or
without cause, jointly remove the Trustee by giving not less than 90 days
written notice thereof to the Trustee. Such removal shall become effective upon
the acceptance of appointment by a successor Trustee in accordance with
paragraph (a)(ii) of this Section 9.
Sec.10. Termination of the Trust Account.
-------------------------------------
(a) The Agreement and Trust Account may be terminated only after (i)
the Grantor or the Beneficiary has given the Trustee written notice of its
intention to terminate the Trust Account (the "Notice of Intention"), and (ii)
the Trustee has given the Grantor and the Beneficiary the written notice
specified in paragraph (b) of this Section 10. The Notice of Intention shall
specify the date on which the notifying Party intends the Trust Account to
terminate (the "Proposed Date").
(b) Within three days following receipt by the Trustees of the Notice
of Intention, the Trustee shall give written notification (the "Termination
Notice") to the Beneficiary and the Grantor of the date (the "Termination Date")
on which the Trust Account shall terminate. The Termination Date shall be
between 30 and 45 days after the date that the Notice of Intention was received
by the Trustee.
(c) On the Termination Date, and upon receipt of written approval of
the termination of the Trust Account from the Beneficiary, the Trustee shall
transfer to the Grantor any Assets remaining in the Trust Account, at which time
this Agreement, and all duties and obligations of the Trustee with respect to
such Assets shall cease.
Sec.11. Definitions.
------------
Except as the context shall otherwise require, the following terms shall
have the following meaning for all purposes of this Agreement (the definitions
to be applicable to both the singular and the plural forms of each term defined
if both forms of such term are used in this Agreement):
The term "Affiliate" with respect to any corporation shall mean a
corporation which directly, or indirectly through one of more intermediaries,
controls or is controlled by, or is under common control with, such corporation.
The term "Beneficiary" shall mean the Western Surety Company and any
statutory successor of the Western Surety Company, including without limitation,
its domiciliary rehabilitator, conservator or liquidator.
The term "Bond" shall mean the original Surety Bond issued to the Grantor
by National Fire or any Affiliate or Subsidiary of National Fire, and any
renewals, extensions, and increase/decrease riders thereof. See Exhibit 1.
The term "control", as it relates to corporate ownership, (including the
related terms "controlled by" and "under common control with") shall mean the
ownership, directly or indirectly, of more than 50% of the voting stock of a
corporation.
The phrases "deposit to the Trust Account," "deposited into the Trust
Account," and similar phrases shall mean that (i) the Assets being deposited
have been physically deposited with or transferred to or credited to the account
of the Trustee or its designated custodian and (ii) the Trustee has sent to the
Beneficiary a written confirmation of such deposit or transfer, clearly
identifying the amount and date received.
The term "Grantor" shall mean Montana Tunnels Mining, Inc. and any
successor of Montana Tunnels Mining, Inc., including without limitation, its
domiciliary rehabilitator, conservator or liquidator.
The term "National Fire" shall mean the National Fire Insurance Company of
Hartford and any statutory successor of the National Fire Insurance Company of
Hartford, including without limitation, its domiciliary rehabilitator,
conservator or liquidator.
The term "Person" shall mean and include an individual, a corporation, a
partnership, an association, a trust, an unincorporated organization or a
government or political subdivision thereof.
The term "Parent" shall mean an institution that, directly or indirectly,
controls another institution.
The term "Subsidiary" shall mean a person or institution controlled,
directly or indirectly, by another person or institution.
The term "Trustee" shall mean The Northern Trust Company, an Illinois
banking corporation, and any successor trustee.
Sec.12. Governing Law.
---------------
This Agreement shall be subject to and governed by and construed in
accordance with the laws of the State of Illinois without regard to its conflict
of laws rules.
Sec.13. Successors and Assigns; Applicability of Terms.
----------------------------------------------------
This Agreement shall be binding upon, and shall inure to the benefit of all
parties to it as well as their respective successors and assigns, provided that
no Party may assign or transfer this Agreement or any of its rights or
obligations hereunder, whether by merger, consolidation, sale of all or
substantially all of its assets, liquidation, dissolution or otherwise, except
as expressly permitted by this Section 12 of this Agreement. Without limiting
the generality of the foregoing, no covenant, representation, or obligation of
one party to another under this Agreement shall apply to, or be enforceable by
any other person or entity, whether or not such person or entity is also a party
to this Agreement, except as otherwise expressly provided herein. The
Beneficiary may assign, with the consent of the Trustee, which consent shall not
be unreasonably withheld, to another Person (hereinafter referred to as the
"Transferee") all, but not part, of its right, title and interest in, to and
under this Agreement; provided that (i) the Transferee shall have the requisite
power and authority to enter into and carry out the transactions contemplated
hereby, (ii) the Transferee shall have entered into an agreement, in form and
substance reasonably satisfactory to the Trustee, whereby the Transferee
confirms that it shall be deemed a party to this Trust Agreement, agrees to be
bound by all of the terms of, and to undertake all of the obligations of the
Beneficiary contained in this Trust Agreement, and (iii) such transfer shall not
violate any provision of any applicable law, agreement or other instrument or
create a relationship which result in violation thereof. Upon any such transfer
by the Beneficiary to a Transferee as above provided, such Transferee shall be
deemed to be the Beneficiary for all purposes of this Trust Agreement and each
reference herein to the Beneficiary shall thereafter be deemed to be a reference
to such Transferee.
Sec.14. Severability; Nonwaiver.
-------------------------
In the event that any provision of this Agreement shall be declared invalid
or unenforceable by any regulatory body or court having jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining portions of this Agreement. Any forbearance, failure or delay
by the Beneficiary in exercising any right, power or remedy under this Trust
Agreement shall not preclude the exercise or further exercise thereof. Every
right, power and remedy of the Beneficiary shall continue in full force and
effect until such right, power or remedy is specifically waived by the
Beneficiary.
Sec.15. Entire Agreement.
------------------
This Agreement constitutes the entire agreement among the Parties, and
there are no understanding or agreements, conditions or qualifications relative
to this Agreement which are not fully expressed in this Agreement; provided that
this provision shall not affect the contractual obligations between Grantor and
Beneficiary as between themselves.
Sec.16. Amendments.
-----------
This trust Agreement may be amended in writing by mutual consent by the
Beneficiary and the Grantor, provided that any amendment that changes the duties
or responsibilities of the Trustee shall also require the written consent of the
Trustee.
Sec.17. Notices, etc.
--------------
Unless otherwise provided in this Agreement, all notices, directions,
requests, demands, acknowledgments and other communications required or
permitted to be given or made under the terms hereof shall be in writing and
shall be deemed to have been duly given or made (a)(i) when delivered
personally, (ii) when made or given by telecopier (provided that, where made or
given by telecopy, receipt of such telecopy is promptly confirmed by telephonic
inquiry), or (iii) when delivered by prepaid courier or overnight delivery
service; and (b) when addressed as follows:
If to the Grantor: Montana Tunnels Mining, Inc.
Denver Executive Offices
0000 XXX Xxxxxxxxx, Xxx. 000
Xxxxxx, XX 00000-0000
If to the Beneficiary: Western Surety Company
XXX Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
If to the Trustee: The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention:
Facsimile No.:
Each Party may from time to time designate a different address or facsimile
transmission number for notices, directions, requests, demands, acknowledgements
and other communications by giving written notice of such change to the other
Parties. All notices, directions, requests, demands, acknowledgements and other
communications relating to the termination of the Trust Account shall be in
writing and may not be made or given by prepaid telex, telegraph, telecopier or
facsimile transmission. Notices to any designee or attorney-in-fact of the
Beneficiary or Grantor shall be governed by this Section and shall be addressed
to the location and person in writing advised to the Trustee from time to time.
Sec.18, Representations and Warranties of Grantor.
----------------------------------------------
The Grantor hereby represents and warrants to the Trustee and Beneficiary
that:
(a) This Agreement has been duly and validly executed and delivered by
the Grantor and constitutes the legal, valid and binding obligation of the
Grantor.
(b) The execution, delivery and performance by the Grantor of this
Agreement, and the transfer and conveyance of Assets by the Grantor pursuant
hereto, do not and will not (i) violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination or award presently in
effect having applicability to the Grantor, of (ii) result in a breach of or
constitute a default under any indenture or loan or credit agreement, or any
other agreement or instrument, to which the Grantor is a party or by which the
Grantor or any of its properties may be bound or affected.
(c) No authorization, consent, approval license, qualification or
formal exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority, or with any securities
exchange or any other Person is required in connection with
(i) the execution, delivery or performance by the Grantor of this
Agreement or
(ii) the transfer and conveyance of the Assets by the Grantor in the
manner and for the purposes contemplated by this Agreement.
(d) At the date of each delivery by the Grantor to the Trustee of each
deposit amount, the Trustee will then be the lawful owner of, and will have good
and marketable title to such Assets, free and clear of all liens or
encumbrances.
Sec.19. Headings.
---------
The headings of the Sections have been inserted for convenience of
reference only and shall not be deemed to constitute a part of this Agreement.
Sec.20. Counterparts.
-------------
This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall constitute an original, but such
counterparts together shall constitute but one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
Montana Tunnels Mining, Inc. as Grantor
By: _____________________________________/s/
Title: Vice President
Date: 09-26-02
Western Surety Company as Beneficiary
By: _____________________________________/s/
Title: Vice President & Chief Claims Officer
Date: 9-30-02
The Northern Trust Company, as Trustee
By: _____________________________________/s/
Title: Vice President
Date: 10-04-02
CNA SURETY
GENERAL AGREEMENT TO INDEMNITY (CANADA)
THIS AGREEMENT is made and delivered by the undersigned person and/or
entities (hereinafter individually and collectively called the "Indemnitor" for
the use and benefit of any and all of Continental Casualty Company, National
Fire Insurance Company of Hartford, American Casualty Company of Reading,
Pennsylvania, the Continental Insurance Company, Fireman's Insurance Company of
Newark, New Jersey, Western Surety Company (U.S.), Universal Surety of America,
and Surety Bonding Company of America (hereinafter individually and collectively
called the "Company").
Recitals
--------
1. The Company is comprised of insurers licensed in various
jurisdictions to write insurance products and surety bonds.
2. The Indemnitor has requested and will, in the future, be making
various requests of the Company to execute and deliver, construe, renew, or
substitute (hereinafter collectively referred to as "issue") surety bonds,
including undertakings, instruments of guarantee, and other like obligations
(hereinafter collectively referred to as "bond" or "bonds"), on its behalf or on
behalf of subsidiary companies and divisions, affiliates, partnerships, ventures
or other entities and enterprises, whether now in existence or hereinafter
created or acquired. In which it has or may have an interest or participation
(hereinafter referred to as "Related Parties").
3. The Indemnitor acknowledges that if and any Related Parties will be
benefited by the issuance of the bonds and understands that the Company requires
the indemnitor to execute and deliver this Agreement as a condition of issuing
any such bond.
Agreements
----------
NOW THEREFORE, in consideration of the Company's issuance of any bond
on behalf of the indemnitor or any Related Party, the Indemnitor, for itself and
for its successors and assigns, agrees as follows:
1. Recitals. The above Recitals are incorporated herein and made a
--------
part hereof by reference.
2. Premiums. The Indemnitor shall pay to the Company, in care of and
--------
to the attention of, CNA Surety - Canada, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx X0X 0X0 premiums and other charges at the rates and at the terms
specified with respect to each bond issued in the Company's schedule of rates,
which, with any additions or amendments thereto, is by reference made a part
hereof, and shall continue to pay the same, where such premium or charge is
annual, until the Company shall be discharged and released, to the Company's
satisfaction, from any liability or responsibility arising from or related to
matters arising from each such bond.
3. Right to Issue. The Company is not required, by reason of any
----------------
applications for a bond or by reason of having issued a previous bond, to
execute or procure the execution or participate in the execution of any such
bond, and the Company, at its option, may decline to execute or to participate
in or procure the execution of any such bond without impairing the validity of
this Agreement. The Indemnitor understands and agrees, for itself and for any
Related Party, that the Company may not be licensed in (a) an Indemnitor's
domicile or place(s) of business or (b) jurisdictions either in which parties in
whose favor bonds are or will be issued or where transactions are to be
performed for which bonds are or will be issued. The indemnitor understands and
agrees, for itself and for any Related Party, that the Company is not obligated
to obtain any license in any jurisdiction for any purpose.
4. Indemnity. (a) The Indemnitor shall exonerate, indemnify and hold
---------
the Company harmless from and against every claim, demand, liability, cost,
charge, suit, judgment, or expense of any kind whatsoever, including but not
limited to attorney's fees and costs, incurred or sustained by the Company due
to any or all of the following: (1) by having issued, procured, or reinsured
the issuance of bonds for the Indemnitor or any Related Party or any renewals or
continuations thereof or substitutes therefore, (2) by reason of the failure of
any Indemnitor to perform or to comply with the provisions of this Agreement.
(3) by bringing legal action to enforce Indemnitor's obligations under this
Agreement, (4) by making an independent investigation of a claim, demand, or
suit, and (5) by attempting to procure or procuring the Company's release of
liability or responsibility under any bond.
(b) The Indemnitor shall deposit with the Company an amount of money or
other collateral security acceptable to the Company, as soon as liability exists
or is asserted against the Company, whether or not the Company shall have made
any payment therefore, equivalent to the larger of (1) the amount of any reserve
set by the Company or (2) such amount as the Company, in its sole judgment,
shall deem sufficient to protect it from loss. The Company shall have the right
to use the deposit, or any portion thereof, in payment or settlement of any
liability, loss, or expense for which Indemnitor would be obligated to Indemnify
the Company under the provisions of this Agreement. If for any reason the
Company deems it necessary to increase a reserve to cover any possible liability
or loss, the Indemnitor shall deposit with the Company, immediately upon the
Company's demand, an amount of money equal to any such increase. The Company
shall have no obligation to invest or to provide a return on any such deposits.
The Company may sell or realize upon any and all such collateral security, at
public or private sale, with or without notice to Indemnitor, or by any other
method permitted by applicable law.
(c) In the event of payment by the Company, the Indemnitor agrees to
accept the Company's voucher or other documentation of payment as prima facta
evidence of the payment's propriety and Indemnitor's liability for the payment.
(d) If the Company issues any bond in connection with a contract, the
Company is hereby authorized, but not required, without notice to the Indemnitor
or any Related Party, to consent to any change in the contract, or in the plans
or specifications relating thereto, and to make or guarantee advances or loans
for the purpose of the contract without necessity of seeing to their
application. The Indemnitor agrees that the amount of all such advances or
loans, unless repaid with legal interest by the principal for whom any such bond
was issued to the Company when due, shall be conclusively presumed to be a loss
under this Agreement.
(e) The Indemnitor shall continue to remain bound under the terms of
this Agreement even though the Company may, from time to time, without notice or
knowledge to Indemnitor, accept or release other agreements of indemnity or
collateral in connection with the issuance of the bonds.
(f) The Indemnitor understands and agrees that this Agreement is a
continuing agreement to indemnify over an indefinite period and that bonds
issued by the Company pursuant to this Agreement may vary widely in amounts and
nature and that the Indemnitor and any Related Party will be bound by all such
bonds, and any increases in the panel limits of such bonds. The Company shall
have the right, in its sole discretion, and is hereby authorized, without notice
to any Indemnitor or Related Party, but is not obligated, to consent to the
increase or decrease the penal amount of any bond and to execute or consent to
any continuations, enlargements, modifications, and renewals of any bond.
5. Claims against the Company. (a) upon becoming aware of any
-----------------------------
demand, notice, or proceeding preliminary to fixing any liability with which the
Company may be subsequently charged under any bond, the Indemnitor shall
immediately notify the Company in a writing delivered in care of and to the
attention of CNA Surety - Canada, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
X0X 0X0, to the attention of CNA Surety's Vice President. The Company reserves
the right to change periodically the address for delivery of notification by the
Company's written direction delivered to the Indemnitor.
(b) The Company shall have the exclusive right to determine for itself,
the Indemnitor, and any Related Party whether any claim or suit brought against
the Company or any principal, for which any bond was issued, shall be settled or
defended, and the Company's decision shall be binding and conclusive upon the
Indemnitor.
6. Indemnitor. (a) The Indemnitor will, upon the written request
----------
of the Company, promptly procure the full and complete discharge of the Company
from any bonds specified in such request and all liability by reason of such
bonds. If such full and complete discharge is unattainable, the Indemnitor will,
if requested by the Company, promptly provide to the Company an irrevocable
letter of credit acceptable to the Company, as collateral, in an amount
sufficient, in the Company's opinion, to cover all undischarged liability under
any such bond, or promptly make other provisions acceptable to the Company to
collateralize fully such undischarged liability. The Indemnitor further agrees
that, in the event of its breach of the foregoing obligation, the Company will
have no adequate remedy at law and shall therefore be entitled to specific
performance of the Indemnitor's obligation. The Company's failure to act to
enforce its right to specific performance hereunder shall not be construed as a
waiver of that right.
(b) The Indemnitor understands and agrees that the circumstances,
financial or otherwise, of any Related Party may change substantially over the
period of this Agreement. The Indemnitor agrees to keep itself fully informed as
to the business activities and financial affairs of the Related Party and of the
risks in which they are being engaged so that it is always aware of the risks or
hazards in continuing to act as the Indemnitor.
(c) The Indemnitor hereby expressly waives any notice from the Company of
any fact or information coming to the notice or knowledge of the Company
affecting its rights or the rights or liabilities of the Indemnitor.
(d) In the event of any claim or demand being made by the Company against
the Indemnitor, or any one or more of them, by reason of the execution of a bond
or bonds, the Company is hereby expressly authorized to settle with any one or
more of the Indemnitors individually, and without reference to the others, and
such settlement or composition shall not affect the liability of any of the
others. The Indemnitor hereby expressly waives the right to be discharged and
released by reason of the release of one or more of the joint debtors, and
hereby consents to any settlement or composition that may hereafter be made.
(e) In the event the Indemnitor or any Related Party shall (1) abandon,
forfeit, default, delay in performance of, or otherwise breach any contract for
which the Company has provided any bond, (2) breach any such bond, (3) fail,
neglect or refuse to pay for any labor or materials used in the prosecution of
such contract, (4) have proceedings instituted against it alleging that it is
insolvent, or for the appointment of a receiver or trustee for the benefit of
creditors, whether or not the Indemnitor or Related Party is insolvent, or admit
(in writing or otherwise) its inability to pay its debts as they become due, or
makes or commences any voluntary assignment for the benefit of creditors, or any
petition or proceeding for relief under any applicable law relating to
bankruptcy, liquidation or for relief from prosecution of creditors, (5) have
proceedings instituted against it, the affect of which may be to hinder, delay
or impede the normal satisfactory performance of the Indemnitor's or any Related
Party's obligations for which the Company issued any bond, or (6) fail, neglect
or refuse to give prompt written notice to the Company of material change in, or
change materially, after notice to and objection by the Company, the character,
identity, control, management, beneficial ownership, legal status, or existence
of the Indemnitor, the Company shall have the right, but not the obligation, to
take possession of any work under the contract and, at the expense of the
Indemnitor, to complete the contract, or cause, or consent to the completion of
such contract. In such event, the Indemnitor for itself and for any Related
Party hereby assigns, transfers, and sets over this to the Company (to be
effective as of the date of such bond or bonds), and grants to the Company a
security interest in, all of the Indemnitor's and any Related Party's rights
under and interest in any and all such contracts, including the right, title and
interest in and to all subcontracts let in connection with such contracts, all
machinery, plant equipment, tools and materials which shall be upon the site of
the work or elsewhere for the purposes of the contracts, including all materials
ordered for the contracts; and any and all sums due under the contracts at the
time of such event, or which may thereafter become due. Indemnitor for itself
and for any Related Party hereby authorizes the Company, as such parties' true
and lawful attorney in fact, to endorse in the name of the payee, and to receive
and collect, and to disburse the proceeds of, any check, draft, warrant or other
instrument made or issued in payment as a result of the performance of any such
contract.
(f) Upon occurrence of any of the events described in clauses (1) through
(5) of subparagraph 6(e), and in addition to any and all other powers, rights
and remedies of the Company under this Agreement or as provided at law or
otherwise, the Company shall have the rights and remedies of a secured party
under applicable personal property security legislation or similar or comparable
legislation in any jurisdiction where any of the Indemnitor or any property or
assets in which the Company has been granted rights under this Agreement, or
otherwise, may be located. Without limitation, the Company may itself, or
through an agent or representative, take possession of any such property or
assets and use the same (without compensation to the applicable debtor,
Indemnitor or Related Party) for purposes of obtaining its release or avoiding
or mitigating any loss, for completion of the work under any contract, or
otherwise, to perform its obligations with respect to any bond, or may sell or
otherwise dispose of the same in whole or in part at public or private sale,
with or without notice to the debtor, Indemnitor, or Related party, or by any
other method permitted by applicable law.
(g) At any time, and until such time as the Company's obligations under
any bond are discharged and released, the Company shall have the right of access
to the books, records, and accounts of the Indemnitor and any Related Party, and
any person or entity, when requested by the Company, is hereby authorized by the
Indemnitor and any Related Party to furnish to the Company any information
requested by the Company from such person or entity.
(h) The Indemnitor for itself and for any Related Party waives the notice
of issuance of any bond, notice or any default or act giving rise to any claim
under any bond, any liability of the Company under any bond, and any and all
liability of its part under this Agreement.
(i) The Indemnitor understands and agrees that other than for the entity
issuing a bond, no other entity included within the definition of the "Company"
in this Agreement assumes any obligation whatsoever with respect to either this
Agreement or such bond.
(j) This Agreement may be terminated by the Indemnitor upon written notice
sent by registered mail in care of and to the attention of CNA Surety - Canada,
000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0, to the attention of CNA
Surety's Vice President, of not less than twenty (20) days. In no event,
however, shall any such termination notice operate to modify, bar, discharge,
limit, affect or impair the liability of the Indemnitor, with respect to, upon
or by reason of any and all such bonds issued prior to such termination.
7. Security Agreement. The Indemnitor agrees to execute and deliver
------------------
any and all documents the Company deems necessary or convenient to create or to
maintain its interest in any assets provided by Indemnitor, from time to time,
for the benefit of the Company, including without limitation mortgage agreements
and/or security agreements, in form and substance satisfactory to the Company,
under which the Indemnitor gives the Company first priority mortgage or security
interest over certain assets of the Indemnitor to secure the Indemnitor's
performance of its obligations under this Agreement.
8. Co-Sureties. All of the terms, provisions, and conditions of this
-----------
Agreement shall be extended to and for the benefit not only of the Company
either as a direct writing company or as a co-surety or reinsurer but also for
the benefit of any surety or insurance company or companies with which the
Company may participate as a co-surety or reinsurer and also for the benefit of
any other company which may issue any bond at the request of the Company on
behalf of the Indemnitor or its subsidiaries or affiliates.
9. Currency Requirements. (a) All payments made by the Indemnitor to
----------------------
the Company under this Agreement shall be in either United States Dollars or
Canadian Dollars, whichever is determined by the Company, and in no other
currency, and shall be sent via wire transfer to any bank account designated by
the Company unless the Company directs the Indemnitor otherwise in writing.
(b) The Indemnitor shall apply for and obtain all foreign exchange
approvals and validations (including the filing of a report and obtaining of the
acceptance of such report) from any foreign exchange authorities which are
necessary for this Agreement and for all undertakings contemplated by this
Agreement. If any country of applicable jurisdiction has laws restricting the
transfer of money from such country, then the Indemnitor shall immediately
obtain such authorizations and approvals as are necessary to transfer money
outside of such country to the United States in an amount equal to 100% of each
bond for a period expiring no earlier than 24 months after the completion date
of the contract being bonded or any warranty period, whichever is later. If the
completion date of the contract or the warranty period is extended or the amount
of the bond is increased, the Indemnitor shall obtain amended authorizations and
approvals to reflect the extension or increases. Evidence of authorizations and
approvals must accompany any bond application, any request for an increase in
the bond amount or any request for a waiver of the extension of the contract or
warranty period. If any country of applicable jurisdiction enacts laws
restricting foreign exchange after a bond is issued, then the indemnitor shall
immediately obtain authorizations and approvals with respect to that bond as set
forth above.
(c) If, for the purpose of obtaining or enforcing judgment in any court
in any jurisdiction, it becomes necessary to convert into any currency (the
"Judgment Currency") an amount which is payable hereunder or in connection
herewith in another currency (the "Original Currency"), then the data selected
by that court as the date as of which the rate of currency exchange for
conversion, including any premiums or costs payable in connection with the
currency conversion, is to be determined shall be deemed to be the "Conversion
Date." If there is any change in the rate of currency exchange between the
Conversion Date and the actual receipt by the payee, the party obligated to make
such payment shall, notwithstanding any such judgment, and as a separate and
additional obligation, pay all such additional amounts as may be necessary to
ensure that the amount received by the payee in the Judgment Currency, when
converted at the rate of exchange prevailing at 4:00 p.m. (New York time), on
the business day immediately preceding the date of the payee's receipt, will
produce the amount due in the Original Currency.
10. Dispute Resolution and Choice of Law. (a) The Company may, in its
-------------------------------------
sole discretion, choose to enforce this Agreement in either of the following:
(1) the Courts of Ontario or the Federal Court of Canada, or (2) arbitration
governed by the Arbitration Act, 1991 (Ontario) as amended. If arbitration is
chosen by the Company, the following terms of the arbitration apply (the "Rules
of Procedure"); (i) the site of the arbitration shall be in Xxxxxxx, Xxxxxxx,
(ii) the arbitration proceedings shall be conducted in the English language, and
(iii) the arbitral award shall be final and binding on the parties. Insofar as
the provisions of the Arbitration Act, 1991 (Ontario) are not inconsistent with
the Rules of Procedure, the provisions of such Act shall apply. This Agreement
shall be governed by and interpreted and enforced in accordance with the laws in
force in the Province of Ontario (excluding any conflict of laws rule principle
which might refer such construction to the laws of another jurisdiction) and
shall be treated in all respects as an Ontario contract. Each party irrevocably
submits to the non-exclusive jurisdiction of the courts of Ontario and of the
Federal Court of Canada.
(b) The parties hereby acknowledge that they have required that this
document and all writings related hereto be drawn up in the English language.
Les parties reconnaissant par les presentes avoir exige que le present document
ainsi que tous documents relies soient rediges en langue anglais.
(c) The English language shall be the language used for the interpretation
of this Agreement. If there is any inconsistency, discrepancy or contradiction
between the English language version of this Agreement and any translation of
this Agreement in any other language, the English language version shall prevail
over any such translation.
11. Miscellaneous. (a) This Agreement constitutes the entire agreement
-------------
of the parties with respect to the subject matter hereof. This Agreement may be
executed in counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
(b) This Agreement applies to bonds issued by the Company on behalf
of the undersigned Indemnitor and any Related Party. Any notification by the
Company to any one individual or entity comprising the Indemnitor shall
constitute notice to the remaining individuals and entities comprising the
Indemnitor and any Related Party.
(c) The Indemnitor warrants and represents that all necessary action has
been taken by it to authorize the execution and delivery of this Agreement.
(d) If the Indemnitor includes more than one individual or legal entity,
then the obligations of the Indemnitor arising under this Agreement are joint
and several among those individuals and entities. If any person named by this
Agreement as an Indemnitor fails to execute this Agreement or if its execution
by any Indemnitor shall be defective or invalid for any reason, such failure,
defect or invalidity shall not in any manner diminish or otherwise affect the
obligation or liability hereunder of any other Indemnitor. The nature of any
bond principal to sign any bond shall not relieve the Indemnitor of liability
under this Agreement. The Indemnitor may not assign this Agreement or its
obligations hereunder without the prior written consent of the president of CNA
Surety Corporation.
(e) No action or failure to act by the Company shall constitute a waiver
of any right, power, or remedy afforded it by this Agreement, at law, or
otherwise, nor shall such action or inaction constitute approval or acquiescence
of any breach by the Indemnitor, except as may be specifically agreed in
writing.
(f) This Agreement may be amended only by a writing executed by the
Indemnitor and by CNA Surety Corporation, not on its own behalf, but on behalf
of the Company. Paragraph headings are for the convenience of reference only and
are not a part of this Agreement.
(g) If any part of this Agreement shall be void or unenforceable under the
laws of any jurisdiction governing its construction, this Agreement shall not be
void or violated thereby, but shall be construed as enforced with the same
effect as though such part was omitted.
IN WITNESS WHEREOF, the Indemnitor has executed and delivered this
Agreement this 24th day of September (month) 2002 (year), and the Company has
accepted this Agreement in Xxxxxxx, Xxxxxxx, Xxxxxx, as of this date.
Witness/Attest Apollo Gold Corporation
____________________________________/s/ _________________________________/s/
Name: Xxxxxx X. Xxxxxxx, Secretary Name/Title: R. Xxxxx Xxxxxxx (seal)
Date: 09/24/02 Initial(s) President
--------------------- ------------------------------------
CORPORATE ACKNOWLEDGEMENT
State of Colorado
County of Arapahoe
On this 24th day of September, 2002 before me personally appeared Xxxxxx X.
Xxxxxxx to me known, who, being by me duly sworn, did acknowledge and say that
he/she is the President of the Apollo Gold Corporation the corporation which
executed the foregoing agreement; that he/she knows the seal of the corporation;
that the seal affixed by order of the Board of Directors of the corporation, and
that he/she signed his/her name to the foregoing agreement by like order.
___________________________________/s/
Xxxxxxxx X. XxXxxxxxxx
Commission Expires 2/13/2006
--------------
Continental Casualty Company
National Fire Insurance Company of Hartford
American Casualty Company of Reading, Pennsylvania
The Continental Insurance Company
Firemen's Insurance Company of Newark, New Jersey
Western Surety Company
Universal Surety of America
Surety Bonding Company of America
--------------------------------------------------------------------------------
CNA Surety
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------
GENERAL AGREEMENT
OF INDEMNITY
This Agreement entered into by and between the undersigned, herein called the
Indemnitors, and Continental Casualty Company, National Fire Insurance Company
of Hartford, American Casualty Company of Reading, Pennsylvania, The Continental
Insurance Company, Firemen's Insurance Company of Newark, New Jersey, Western
Surety Company, Universal Surety of America, Surety Bonding Company of America
and their successors, assigns, affiliates, and subsidiary companies, CNA Surety,
000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, as the case may be, any one or all
hereinafter called the Company, witnesseth:
WHEREAS, in the transaction of business certain bonds, undertakings and other
writings obligatory in the nature of a bond, hereinafter referred to as "bond"
or "bonds," may have heretofore been, and may hereafter be, required by, for, or
on behalf of the undersigned Indemnitors or any one or more of the Indemnitors
whose bonds and undertakings the Indemnitors do hereby affirm to have a
substantial material or beneficial interest, and as a condition precedent to the
execution of any and all such bonds, the Company requires execution of this
General Agreement of Indemnity.
NOW, THEREFORE, in consideration of the premises, and of the execution or
continuance of such bonds, and for other good and valuable considerations, the
undersigned Indemnitors do, for themselves, their heirs, executors,
administrators and assigns, jointly and severally, agree with the Company as
follows:
1. The Indemnitors will pay to the Company, at its Office in Chicago,
Illinois, premiums and charges at the rates and at the times specified in
respect to each such bond in the Company's schedule of rates, which, with any
additions or amendments thereto, is by reference made a part hereof, and will
continue to pay the same where such premium or charge is annual, until the
company shall be discharged and released from any and all liability and
responsibility upon and from each such bond or matters arising therefrom, and
until the Indemnitors shall deliver to the Company at its Office in Chicago,
Illinois, competent written evidence satisfactory to the Company of its
discharge from all liability on such bond or bonds.
2. The Indemnitors will indemnify and save the Company harmless from
and against every claim, demand, liability, cost, charge, suit, judgment and
expense which the Company may pay or incur in consequence of having executed, or
procured the execution of such bonds, or any renewals or continuations thereof
or substitutes therefore, including, but not limited, to fees of attorneys,
whether on salary, retainer or otherwise, and the expense of procuring, or
attempting to procure, release from liability, or in bringing suit to enforce
the obligation of any of the Indemnitors under this Agreement. In the event the
Company deems if necessary to make an independent investigation of a claim,
demand or suit, the Indemnitors acknowledge and agree that all expense attendant
to such investigation is included as an indemnified expense. In the event of
payments by the Company, the Indemnitors agree to accept the voucher or other
evidence of such payments as prima facie evidence of the propriety thereof, and
of the Indemnitors' liability therefore to the Company.
3. Payment shall be made to the Company by the Indemnitors as soon as
liability exists or is asserted against the Company, whether or not the Company
shall have made any payment therefor. Such payment shall be either equal to the
larger of (a) the amount of any reserve set by the Company, or (b) such amount
as the Company, in its sole judgment, shall deem sufficient to protect it from
loss. The Company shall have the right to use the deposit, or any part thereof,
in payment or settlement of any liability, loss or expense for which the
Indemnitors would be obligated to indemnify the Company under the terms of this
Agreement. If for any reason the Company shall deem it necessary to increase a
reserve to cover any possible liability or loss, the Indemnitors will deposit
with the Company, immediately upon demand, a sum of money equal to any increase
thereof as collateral security to the Company for such liability or loss.
4. The Indemnitors immediately upon becoming aware of any demand,
notice, or proceeding preliminary to determining or fixing any liability with
which the Company may be subsequently charged under any such bond, shall notify
the Company thereof in writing at its Office, CNA Surety, 000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000.
5. The Company shall have the exclusive right to determine for itself
and the Indemnitors whether any claim or suit brought against the Company or the
principal upon any such bond shall be settled or defended and its decision shall
be binding and conclusive upon the Indemnitors.
6. The Company, and its designated agents, shall, at any and all
reasonable times, have free access to the books and records of the Indemnitors.
The Indemnitors hereby authorize the Company to obtain a credit report at the
time this Agreement is secured, in any review or renewal, at the time of any
potential or actual claim, or for any other legitimate purpose as determined by
the Company in its reasonable discretion.
7. If such bond be given in connection with a contract, the Company is
hereby authorized, but not required, to consent to any change in the contract or
in the plans or specifications relating thereto and to make or guarantee
advances or loans for the purpose of the contract without necessity of seeing to
the application thereof, it being understood that the amount of all such
advances or loans, unless repaid with legal interest by the Contractor to the
Company when due, shall be conclusively presumed to be a loss hereunder.
8. In the event the Indemnitors, or any of them, shall (a) fail to pay
any premium charge when due, or (b) fail to pay any amounts due under paragraphs
2 or 3, or (c) abandon, forfeit or breach such contract, or (d) breach any bond
given in connection therewith, or (e) fail, neglect or refuse to pay for any
labor or materials used in the prosecution of such contract, or (f) have
proceedings instituted against them, or any of them, alleging that they are
insolvent, or for the appointment of a receiver or trustee for the benefit of
creditors, whether such Indemnitor(s) are insolvent or not, or (g) have
proceedings instituted against them, or any of them, the effect of which may be
to deprive any of them of the use of any part of the equipment used in
connection with the work under the contract so as to hinder, delay or impede
the normal satisfactory progress of the work (hereinafter individually and
collectively referred to as "Event of Default"), the Company shall have the
right, but not the obligation, to take possession of the work under the contract
and under any other contract in connection with which the Company has given its
bond or bonds within the purview of this Agreement and, at the expense of the
Indemnitors, to complete the contract(s), or cause, or consent, to the
completion thereof.
9. The Indemnitors hereby assign, transfer, and set over to the Company
(to be effective as of the date of such bond or bonds, but only in the Event of
Default), all of their rights under the contract(s), including their right,
title and interest in and to all subcontracts let in connection therewith; all
machinery, plant, equipment, tools and materials which shall be upon the site of
the work or elsewhere for the purposes of the contract(s), including all
materials ordered for the contract(s); and any and all sums due under the
contract(s) at the time of such default, or which may thereafter become due, and
the Indemnitors hereby authorize the Company to endorse in the name of the
payee, and to receive and collect any check, draft, warrant or other instrument
made or issued in payment of any such sum, and to disburse the proceeds thereof.
10. The Indemnitors understand and agree that the circumstances,
financial or otherwise, of any one or more of the Indemnitors may change
substantially over the period of this Agreement and the Indemnitors therefore
agree to keep themselves fully informed as to the business activities and
financial affairs of any one or more of the Indemnitors and of the risks being
engaged in so that the Indemnitors are always aware of the risks or hazards in
continuing to act as Indemnitors. The Indemnitors hereby expressly waive any
notice from the Company of any fact or information coming to the notice or
knowledge of the Company affecting its rights or the rights or liabilities of
the Indemnitors.
11. In the event of any claim or demand being made by the Company
against the Indemnitors, or any one or more of the parties so designated, by
reason of the execution of a bond or bonds, the Company is hereby expressly
authorized to settle with any one or more of the Indemnitors individually, and
without reference to the others, and such settlement or composition shall not
affect the liability of any of the others, and the Indemnitors hereby expressly
waive the right to be discharged and released by reason of the release of one or
more of the joint debtors, and hereby consent to any settlement or composition
that may hereafter be made.
12. The Company is not required, by reason of any applications for a
bond or by reason of having issued a previous bond or bonds or otherwise, to
execute or procure the execution of or participate in the execution of any such
bond or bonds and the Company, at its option, may decline to execute or to
participate in or procure the execution of any such bond without impairing the
validity of this Agreement. The Indemnitors understand and agree that other
than for the entity issuing a bond, no other entity included within the
definition of the "Company" in this Agreement assumes any obligation whatsoever
with respect to either this Agreement or such bond.
13. If the Company procures the execution of such bonds by other
companies, or executes such bonds with co-sureties, or reinsures any portions of
such bonds with reinsuring companies, then all the terms and conditions of this
Agreement shall apply and operate for the benefit of such other companies,
co-sureties and reinsurers as their interests may appear.
14. The liability of the Indemnitors hereunder shall not be affected by
the failure of the Indemnitors to sign any such bond, nor by any claim that
other indemnity or security was to have been obtained, nor by the release of any
indemnity, nor the return or exchange of any collateral that may have been
obtained and if any party signing this Agreement is not bound for any reason,
this Agreement shall still be binding upon each and every other party.
15. This Agreement may be terminated by the Indemnitors, or any one or
more of the parties so designated, upon written notice sent by registered mail
to the Office of the Company, CNA Surety, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, of not less than twenty (20) days. In no event, however, shall any such
termination notice operate to modify, bar, discharge, limit, affect or impair
the liability of any party hereto, with respect to, upon or by reason of any and
all such bonds, undertakings and obligations executed prior to the date of the
Company's receipt and notice of such termination.
16. Indemnitors agree that their liability shall be construed as the
liability of a compensated Surety, as broadly as the liability of the Company is
construed toward its obligee.
17. The Indemnitors understand and agree that this document is a
continuing agreement to indemnify over an indefinite period and that bonds and
undertakings issued by the Company pursuant to this Agreement may vary widely in
amounts and nature and that the Indemnitors will be bound by all such bonds and
undertakings, and any increases in the penal limits of such bonds and
undertakings.
18. If any provision or provisions, or portion thereof, of this
Agreement shall be void or unenforceable under the laws of any jurisdiction
governing its construction, this Agreement shall not be void or vitiated
thereby, but shall be construed and enforced with the same effect as though such
provision or provisions, or portion thereof, were omitted.
19. This Agreement shall constitute a Security Agreement and a
Financing Statement for the benefit of the Company in accordance with the
Uniform Commercial Code and any similar statute and may be used by the Company
without in any way abrogating, restricting or limiting the rights of the
Company. The Company may add such schedules to this Agreement describing
specific items of security covered hereunder as shall be necessary. For the
purpose of recording this Agreement, a photocopy of this Agreement acknowledged
before a Notary Public as being a true copy hereof shall be regarded as an
original The foregoing rights of the Company to use this Agreement as a
Security Agreement and a Financing Statement and to add Schedules to this
Agreement shall be binding as of the effective date of this Agreement, but the
Company's right to exercise the rights granted to it under this paragraph shall
be conditioned upon the occurrence of an Event of Default.
20. This Agreement applies to bonds, undertakings and other writings
obligatory in nature of a bond, written by the Company on behalf of or for the
benefit of the undersigned Indemnitors and any and all of their wholly or
partially owned subsidiary companies, successive subsidiaries whether direct or
indirect, divisions or affiliates, partnerships, joint ventures or co-ventures
or limited liability companies, or other entities, in which any of the
undersigned Indemnitors, their wholly or partially owned subsidiary companies,
successive subsidiaries whether direct or indirect, divisions or affiliates have
an interest or participation whether open or silent, jointly, severally, or in
any combination with each other, now in existence or which may hereafter be
created or acquired. This Agreement and the Indemnitors' obligations hereunder
may not be assigned without the prior written consent of the Company.
IN TESTIMONY WHEREOF, the Indemnitors have hereunto set their hands and affixed
their seals this 24th day of September, 2002.
Apollo Gold, Inc.
/s/ Xxxxxx X. Xxxxxxx /s/ R. Xxxxx Xxxxxxx
------------------------------------ -------------------------
Witness/Attest Xxxxxx X. Xxxxxxx, R. Xxxxx Xxxxxxx, President
Secretary
0000 XXX Xxxx., Xxx. 000, Xxxxxx, XX 0000 XXX Xxxx., Xxx. 000,
------------------------------------ -------------------------
80237-2511 Denver, CO
----------
80237-2511
Street or X.X. Xxx Xxxx Xxxxx Xxxxxx xx X.X. Xxx Xxxx Xxxxx
Xxxxxxx Tunnels Mining, Inc.
/s/ Xxxxxx X. Xxxxxxx /s/ R. Xxxxx Xxxxxxx
------------------------------------ -------------------------
Witness/Attest Xxxxxx X. Xxxxxxx, R. Xxxxx Xxxxxxx, President
Secretary
0000 XXX Xxxx., Xxx. 000, Xxxxxx, XX 0000 XXX Xxxx., Xxx. 000,
------------------------------------ -------------------------
Denver, CO
----------
Street or X.X. Xxx Xxxx Xxxxx Xxxxxx xx X.X. Xxx Xxxx Xxxxx
00000-0000 80237-2511
_________________________________ ______________________________(LS)
Witness/Attest
___________________________________ __________________________________
Street or X.X. Xxx Xxxx Xxxxx Xxxxxx xx X.X. Xxx Xxxx Xxxxx
XXXXX OF CO )
--------------------
ss
COUNTY OF ARAPAHOE
--------------------
On this 24th day of September, year 2002, before me personally appeared
Xxxxxx X. Xxxxxxx
--------------------------------------------------------------------------------
to me known, who, being by me duly sworn, did acknowledge and say that he/she is
the President of the Apollo Gold, Inc. , the corporation which executed the
------------------
foregoing agreement; that he/she knows the seal of the corporation; that the
seal affixed to the foregoing agreement is such corporate seal; that it was so
affixed by the order of the Board of Directors of the corporation, and that
he/she signed his/her name to the foregoing agreement by like order.
/s/ Xxxxxxxx X. XxXxxxxxxx
---------------------------
Notary Public
Commission expires 2/13/2006
STATE OF CO )
-------------------
ss
COUNTY OF ARAPAHOE
------------------
On this 24th day of September, year 2002, before me personally appeared
Xxxxxx X. Xxxxxxx
--------------------------------------------------------------------------------
to me known, who, being by me duly sworn, did acknowledge and say that he/she is
the President of the Montana Tunnels Mining, Inc., the corporation which
----------------------------
executed the foregoing agreement; that he/she knows the seal of the corporation;
that the seal affixed to the foregoing agreement is such corporate seal; that it
was so affixed by the order of the Board of Directors of the corporation, and
that he/she signed his/her name to the foregoing agreement by like order.
/s/ Xxxxxxxx X. XxXxxxxxxx
---------------------------
Notary Public
Commission expires 2/13/2006
Bond No. 137564969
INCREASE - DECREASE RIDER
TO BE ATTACHED TO and to form part of Bond Number 137564969 issued by
NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, as Surety, on behalf of MONTANA
TUNNELS MINING, INC., of Spokane, Washington, hereinafter referred to as the
Principal, and in favor of the STATE OF MONTANA, DEPARTMENT OF ENVIRONMENTAL
QUALITY, of Helena, Montana, hereinafter referred to as the Obligee, effective
the 31st day of July 1994.
IN CONSIDERATION of the premium charged for the attached bond and other
good and valuable consideration, it is understood and agreed that, effective the
1st day of August 2002, and subject to all the terms, conditions and limitations
of the attached bond, the penal sum thereof shall be, and the same is hereby,
increased from the penal sum of FOURTEEN MILLION FOUR HUNDRED FIFTY THOUSAND AND
NO HUNDREDTHS UNITED STATES DOLLARS (US$14,450,000.00) to the penal sum of
FOURTEEN MILLION NINE HUNDRED EIGHTY-SEVEN THOUSAND SIX HUNDRED EIGHTY-EIGHT AND
NO HUNDREDTHS UNITED STATES DOLLARS (US$14,987,688.00). In no event, however,
shall the aggregate liability of the Surety exceed the larger of the
aforementioned sums, it being the intent hereof to preclude cumulative
liability.
SIGNED, SEALED AND DATED this 25th day of September 2002.
Accepted by:
"Obligee" "Principal"
STATE OF MONTANA, DEPARTMENT OF MONTANA TUNNELS MINING, INC.
ENVIRONMENTAL QUALITY
By: /s/ Xxxxxx XxXxxxxxxx By: /s/ R. Xxxxx Xxxxxxx
-------------------------- ---------------------------------
R. Xxxxx Xxxxxxx, President [seal]
Name: Xxxxxx XxXxxxxxxx
-----------------
Title: Bureau Chief [seal]
-----------------------
"Surety"
NATIONAL FIRE INSURANCE COMPANY
OF HARTFORD
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx, Attorney in Fact
[seal]
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
---------------------------
County of Sacramento
---------------------------
On September 25, 2002 before me, Xxxxxx X. Xxxxx, Notary Public
------------------ -----------------------------------------
Date NAME, TITLE OF OFFICER, "XXXX XXX, NOTARY
PUBLIC"
personally appeared Xxxxxxx X. Xxxxx
-----------------------------------------------------------
NAME(S) OF SIGNER(S)
(x) personally known to me - OR - ( ) proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal
Seal
/s/ Xxxxxx X. Xxxxx
------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
(_) INDIVIDUAL
(_) CORPORATE OFFICER Increase/Decrease Rider Bond #137564969
---------------------------------------
TITLE OR TYPE OF DOCUMENT
(_) PARTNER(S) (_) LIMITED
(_) GENERAL One (1)
---------------------------------------
NUMBER OF PAGES
(X) ATTORNEY-IN-FACT
(_) TRUSTEE(S)
(_) GUARDIAN/CONSERVATOR
(_) OTHER_______________________ September 25, 2002
---------------------------------------
____________________________ DATE OF DOCUMENT
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
National Fire Insurance Company No Other Signers
------------------------------- ---------------------------------------
_______________________________ SIGNER(S) OTHER THAN NAMED ABOVE
POWER OF ATTORNEY APPOINTING INDIVIDUAL ATTORNEY-IN-FACT
Know All Men By These Presents, That Continental Casualty Company, an
Illinois corporation, National Fire Insurance Company of Hartford, a Connecticut
corporation, and American Casualty Company of Reading, Pennsylvania, a
Pennsylvania corporation (herein called "the CNA Companies"), are duly organized
and existing corporations having their principal offices in the City of Chicago,
and State of Illinois, and that they do by virtue of the signatures and seals
herein affixed hereby make, constitute and appoint
Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X.
--------------------------------------------------------------------------------
Xxxxx, Individually
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
of San Francisco, California
---- --------------------------------------------------------------------------
______their true and lawful Attorney(s)-in-Fact with full power and
authority hereby conferred to sign, seal and execute for and on their behalf
bonds, undertakings and other obligatory instruments of similar nature_____
- In Unlimited Amounts -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and to bind them thereby as fully and to the same extent as if such instruments
were signed by a duly authorized officer of their corporations and all the acts
of said Attorney, pursuant to the authority hereby given is hereby ratified and
confirmed.
This Power of Attorney is made and executed pursuant to and by authority of
the By-Law and Resolutions, printed on the reverse hereof, duly adopted, as
indicated, by the Boards of Directors of the corporations.
In Witness Whereof, the CNA Companies have caused these presents to be
signed by their Vice President and their corporate seals to be hereto affixed on
this 10th day of October, 2001.
Continental Casualty Company
National Fire Insurance Company of Hartford
American Casualty Company of Reading, Pennsylvania
SEAL /s/ Xxxxxxx Genglar
-----------------------------------------------
Xxxxxxx Genglar Group Vice President
State of Illinois, County of Xxxx, xx:
On this 10th day of October, 2001, before me personally came Xxxxxxx
Genglar to me known, who, being by me duly sworn, did depose and say: that he
resides in the City of Chicago, State of Illinois; that he is a Group Vice
President of Continental Casualty Company, an Illinois corporation, National
Fire Insurance Company of Hartford, a Connecticut corporation, and American
Casualty Company of Reading, Pennsylvania, a Pennsylvania corporation described
in and which executed the above instrument; that he knows the seals of said
corporations; that the seals affixed to the said instrument are such corporate
seals; that they were so affixed pursuant to authority given by the Boards of
Directors of said corporations and that he signed his name thereto pursuant to
like authority, and acknowledges same to be the act and deed of said
corporations.
SEAL
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
My Commission Expires June 5, 2004 Xxxxxx X. Xxxxxxx Notary Public
CERTIFICATE
I, Xxxx X. Ribikawskis, Assistant Secretary of Continental Casualty
Company, an Illinois corporation, National Fire Insurance Company of Hartford, a
Connecticut corporation, and American Casualty Company of Reading, Pennsylvania,
a Pennsylvania corporation do hereby certify that the Power of Attorney herein
above set forth is still in force, and further certify that the By-Law and
Resolution of the Board of Directors of the corporations printed on the reverse
hereof is still in force. In testimony whereof I have hereunto subscribed my
name and affixed the seal of the said corporations this 25th day of
------
September , 2002 .
------------- -------
Continental Casualty Company
National Fire Insurance Company of Hartford
American Casualty Company of Reading, Pennsylvania
SEAL /s/ Xxxx X. Ribikawskis
--------------------------------------------------
Xxxx X. Ribikawskis Assistant Secretary
EXHIBIT E
TO TERM BONDING AGREEMENT
PAGE 1 OF 1 PAGE
[FORM OF]
MONTHLY DEPOSIT AMOUNT CALCULATION CERTIFICATE
(for Monthly Deposits to be made during the Bonding Year commenced August 1,
20[__])
TO: NATIONAL FIRE INSURANCE COMPANY OF HARTFORD
1. Terms defined in the Term Bonding Agreement dated as of August 1, 2002,
among National Fire Insurance Company of Hartford, Montana Tunnels Mining, Inc.,
Apollo Gold, Inc., and Apollo Gold Corporation (the "Term Bonding Agreement")
and not otherwise defined in this certificate are used in this certificate as so
defined.
2. During the Bonding Year just ended on July 31, 20(), the arithmetic
mean of the New York Spot Market closing gold bid prices for all days when such
market was open during such Bonding Year as reported by KITCO, INC. (or other
mutually agreeable gold price index), on its Internet reporting service
accessible at xxxx://xxx.xxxxx.xxx, was: $__________ per Xxxx Ounce (the
--------------------
"Average Gold Price").
3. Attached hereto is a schedule setting forth each such closing bid price
during such Bonding Year and the computation of the Average Gold Price set forth
in paragraph 1 above.
4. The Monthly Deposit Amount for each of the 12 Monthly Deposits to be
made during the Bonding Year just commenced is: $__________ per month,
calculated as provided in section 5 of the Term Bonding Agreement as follows
[check applicable box]:
- The Average Gold Price reported in paragraph 2 falls between $300
per ounce and $350 per ounce, inclusive. Therefore, the Monthly
Deposit Amount for the Bonding Year just commenced is $75,000.
- The Average Gold Price reported in paragraph 2 is greater than
$350 per ounce. Therefore, the Monthly Deposit Amount for the
Bonding Year just commenced is the value derived by solving
for x in the formula x = $75,000 + [$1,000 . (a -$350)],
where a equals the Average Gold Price reported in paragraph 2
above rounded to the nearest whole Dollar.
- The Average Gold Price reported in paragraph 2 above is less
than $300 per ounce. Therefore the Monthly Deposit Amount for the
Bonding Year just commenced is the value derived by solving for x
in the formula x = $75,000 - [$1,000 . ($300 - a)], where a
equals the Average Gold Price reported in paragraph 2 rounded to
the nearest whole Dollar, but subject to the limitation that x
may not be less than $0.
APOLLO GOLD CORPORATION APOLLO GOLD, INC.
By:___________________________ By: ___________________________
Name: ________________________ Name: ____________________________
Title:________________________ Title: ____________________________
Date:_________________________ Date: ____________________________
MONTANA TUNNELS MINING, INC.
By: ___________________________
Name: ________________________
Title: ________________________
Date: ________________________
Attachment: Schedule listing New York Spot Market closing gold bid prices and
showing computation.
