N M Rothschild & Sons Limited
Xxx Xxxxx, Xx. Xxxxxxx'x Xxxx, Xxxxxx XX0X 0XX
USMX, INC.
USMX of Alaska, INC.
000 Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
29th October 1996
Gentlemen,
ILLINOIS CREEK FINANCING
This letter sets forth an agreement among NM Rothschild &
Sons Limited (NMR), USMX, INC. (USMX) and USMX of
Alaska, INC.(USMXAK) concerning the credit facilities
established by NMR for the Illinois Creek Project pursuant
to the following Credit Agreements (together for the Credit
Agreements):
1. The Credit Agreement between NMR as Lender and USMX as
Borrower dated as of July 11, 1996 (the "USMX Credit
Agreement")
2. The Credit Agreement between NMR as Lender and USMXAK
as Borrower dated as of July 11, 1996 (the "USMXAK Credit
Agreement")
1. Defined Terms. Capitalised terms used in this letter
agreement which are not defined herein will have the
meanings given to them in the Credit Agreements.
2. Waiver of Existing Events of Default. An Event of
Default is currently outstanding under the Credit Agreement
and under the Loan Documents associated therewith, in that
USMX has failed to deposit US$1,500,000 in the Proceed
Account contemplated by the USMXAK Credit Agreement. In
addition, as a result of the actions contemplated by
Paragraph 3.b. below, USMX will not be in compliance with
the financial covenants set forth in section 11 of the USMX
Guaranty. Both such Events of Default are referred to
together as the "Existing Events of Default".
NMR hereby agrees to waive the Existing Events of
Default (and only the Existing Events of Default)
until December 31, 1996, and not to take any actions
permitted by the Credit Agreements or other Loan
Documents based on the Existing Events of Default,
subject to the terms and conditions set forth in
this letter agreement.
3. Conditions of Waiver. The foregoing waiver of the
Existing Events of Default is conditioned upon compliance by
USMX and USMXAK, respectively, with each of the following
conditions:
a. Stock Offering, etc. By not later than November 1,
1996 USMX (a) will prepare and file with appropriate
securities authorities in Canada a prospectus for a public
offering in Canada of common stock of USMX with project net
proceeds to USMX of not less than US$9,000,000, and copies
thereof will be provided to NMR; (b) will cause Newcrest
Capital the underwriter, or other underwriter for such
offering, to provide a comfort letter addressed to NMR to
the effect that such underwriter believes that such stock
offering can be completed by December 31, 1996; and (c) by
December 31, 1996, USMX will complete such offering and will
deposit in the Proceeds Account US$1,500,000 in accordance
with the requirements of the Credit Agreements, In addition,
if USMX makes any other disposition of shares of common
stock or other equity interests in USMX, or otherwise
realises any material cash proceeds from sale or other
disposition of assets, or if USMXAK sells any royalty or
other interest in its properties or assets or otherwise
realises any material cash proceeds from sale or other
disposition of assets, fifty (50%) of the first US$1,000,000
of net proceeds therefrom and one hundred (100%) of net
proceeds therefrom in excess of US$1,000,000 will promptly
be deposited in the Proceeds Account until US$1,500,000 has
so been deposited in the Proceeds Account by USMX. USMX,
USMXAK and NMR agree that no sale of a royalty or other
property or revenue interest may be made with respect to the
properties included in the Illinois Creek Project without
the prior consent of NMR, which may be granted or withheld
at NMR's sole discretion.
b. USMXAK Loans Previously Advanced. NMR has previously
Advanced to USMXAK certain funds pursuant to the USMXAK
Credit Agreement. A portion of such Advances in the
approximate amount of US$7,500,000 remains on deposit in the
Proceeds Account. Promptly after execution of this
agreement, (I) NMR permit the distribution of approximately
US$2,400,000 from the Proceeds Account in the form of checks
in amounts and payable to the Persons identified in
Attachment 1 hereto; and (ii) US$4,500,000 of the funds in
the Proceeds Account will be transferred by USMXAK and NMR
from the Proceeds Account to NMR. Except for interest which
has accrued on such US$4,500,000 from the date Advanced by
NMR through the date such funds are transferred to NMR, such
funds will be treated as if they had not previously been
Advanced, and such funds will remain available to be
Advanced to USMXAK under the USMXAK Credit Agreement, in
accordance with all of its terms and conditions. The
remaining credit balance of approximately US$600,000 in the
Proceeds Account and all additional Advances under the
USMXAK Credit Agreement will be available for disbursement
to USMXAK from the Proceeds Account in accordance with the
terms and conditions of the USMXAK Credit Agreement.
c. USMXAK Proceeds Account. USMX and NMR will establish
an additional Proceeds Account for USMX (the "USMX Proceeds
Account"), and USMX will promptly deposit US$925,000 in the
USMX Proceeds Account. Provided no Events of Default (other
than those waived by NMR pursuant hereto) are outstanding
and continuing under the USMX Credit Agreement, credit
balances in the USMX Proceeds Account will be distributed to
USMX in accordance with the budget appended hereto as
Attachment 2 or as otherwise agreed by USMX and NMR.
d. Modification of Stock Conversion Price. USMX and NMR
will modify the USMX Credit Agreement to provide that the
price at which NMR may elect to convert Loans under the USMX
Credit Agreement in to common stock is sold pursuant to the
public offering contemplated in clause a. above, (or at any
other price at which such common stock is sold by USMX in a
private placement acceptable to NMR), or, in the absence
thereof by December 31, 1996, at the average closing market
price of the common stock quoted by NASDAQ for the ten
trading days preceding such date.
e. Arrangements for NMR Monitoring of Illinois Creek
Project Activities. NMR and Rothschild Denver will
establish arrangements for monitoring of completion of the
Illinois Creek Project and the management and payments of
costs and expenses associated therewith. Such arrangements
will involve independent consultants and representatives of
Rothschild Denver, Inc. and NMR working together to develop
and approve a working plan and budget, including a specific
list of vendors, suppliers and other creditors of the
Illinois Creek Project to be paid from the funds available
for borrowing under the USMXAK Credit Agreement. Such
activities will include participation by NMR in the decision
concerning the date at which the Project should be suspended
for the winter season.
f. NMR Compensation. In consideration for the waiver of
the Existing Events of Default and in recognition of the
additional risk being assumed by NMR pursuant hereto, USMX
and USMXAK jointly and severally agree to pay NMR a fee of
US$100,000, which fee will be payable on the firs to occur
of (i) a date upon which such payment can be made without
materially reducing the working capital reasonably required
by USMX and USMXAK for continued operations or (ii) April
15, 1997.
g. Definitive Agreements. NMR, USMX and USMXAK will
execute definitive agreements incorporating the foregoing
terms not later than November 1, 1996 or such later date as
may be approved by NMR in its sole discretion. Any failure
to complete and execute such definitive agreements by such
date will constitute an Event of Default under each of the
Credit Agreements.
4. General. This letter agreement is binding on and
enforceable against NMR, USMX and USMXAK, and their
respective permitted successors and assigns. This Agreement
constitutes an amendment and revision of the Loan Documents
in accordance with the foregoing terms.
5. Conditions. This letter agreement will be effective
only upon satisfaction of each of the following conditions
by USMX and USMXAK by not later than Tuesday, October 29,
1996.
a. execution hereof by USMX and USMXAK and return of a
copy hereof as so executed to Rothschild Denver Inc;
d. delivery of a certificate of an officer of USMX and
USMXAK, in form reasonably acceptable to Rothschild Denver
Inc., confirming the approval of this letter agreement by
the respective board of directors of USMX and USMXAK, which
approval may be effected by action of the respective
executive committees are so authorised to act, and appemding
copies of the resolutions adopted by such boards of
directors (or such executive committees, as applicable)
providing such approval;
c. delivery if an opinion of counsel of USMX and USMXAK,
in form reasonably acceptable to Rothschild Denver Inc.,
confirming the due authorisation, execution and delivery of
this letter agreement by USMX and USMXAK, and confirming
that this letter agreement is binding on and enforceable
against USMX and USMXAK in accordance with its terms
Yours Sincerely
Xxxxxxx X. Price Xxxxxxx Xxxxxxxx
Director Director
Agreement confirmed this day of October,
1996.
USMX, INC.
By:
Xxxxxx X. Xxxxxx
President
Agreement confirmed this day of October,
1996.
USMX of ALASKA, INC.
By:
Xxxxxx X. Xxxxxx
President
