SECURITIES PURCHASE SECOND AMENDING AGREEMENT
THIS AGREEMENT is made as of the 22nd day of June, 1998
BETWEEN:
ROYAL OAK MINES INC., a corporation
amalgamated under the laws of the Province
of Ontario
(the "Corporation")
- and -
TRILON FINANCIAL CORPORATION,
(the "Agent")
WHEREAS the Corporation and the Agent entered into a Securities Purchase
Agreement dated as of the 17th day of April, 1998, which agreement was
amended by a Securities Purchase Amending Agreement made the 15th day of May,
1998 (collectively, the "Agreement);
AND WHEREAS capitalized terms not otherwise defined herein shall have
the meanings given them respectively in the Agreement;
AND WHEREAS pursuant to the Agreement, the Closing Date was May 28, 1998
or such other date as the Agent and the Corporation may agree upon as the
Closing Date;
AND WHEREAS the Corporation has requested that the Agent agree to extend
the Closing Date to June 23rd, 1998, and the Agent has agreed to extend the
Closing Date to June 23rd, 1998, subject to the other terms and conditions
hereinafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants hereinafter contained, the Agent agreeing to extend the
Closing Date as aforesaid and other good and valuable consideration, the
receipt and sufficiency of which being hereby acknowledged, the parties
hereto agree as follows:
1. Section 1.1(c) of the Agreement is hereby deleted in its entirety and is
replaced with the following:
"(c) "Aggregate Available Purchase Price" means the difference if any
between U.S.$120,000,000 and the amount of the Initial Purchase Price;"
2. Section 1.1(j) of the Agreement is hereby deleted in its entirety and is
replaced with the following:
"(j) "Closing Date" means June 23, 1998 or such other date as the
Agent and the Corporation may agree upon as the Closing Date;"
3. Section 1.1(bg) of the Agreement is hereby deleted in its entirety and
is replaced with the following:
"(bg) "Subordinated Notes" means the outstanding Secured 12.75% Senior
Subordinated Notes due 2006 in the aggregate principal amount of
U.S.$175,000,000;"
4. Section 1.1(bh) of the Agreement is hereby deleted in its entirety and
is replaced with the following:
"(bh) "Subordinated Note Trust Indenture" means the Trust Indenture
dated as of August 12, 1996 among the Corporation, Kemess Mines Inc. and
Mellon Bank, F.S.B. relating to the Subordinated Notes, as amended by
(i) the First Supplemental Indenture dated and effective as of December
31, 1997, (ii) the Second Supplemental Indenture dated and effective as
of January 31, 1998, (iii) the Third Supplemental Indenture dated and
effective as of May 19, 1998, (iv) the Fourth Supplemental Indenture
dated and effective the date hereof, and (v) the Fifth Supplemental
Indenture dated and effective the date hereof, each by and between the
Corporation and Chase Manhattan Trust Company, National Association, the
successor to Mellon Bank, F.S.B. as Trustee;"
5. The following is added to Agreement as new Section 1.1(bl):
"(bl) "Bank Working Capital Facility" means a working capital facility
provided to the Corporation by the Bank of Nova Scotia pursuant to a
credit agreement dated February 15, 1996 as amended by agreements dated
August 5, 1996 and May 30, 1997 in a maximum principal amount not to
exceed Can. $1,900,000 pursuant to which the Bank of Nova Scotia has
outstanding letters of credit on behalf of the Corporation and in
respect of which the
2
Corporation has provided to the Bank of Nova Scotia cash collateral as
security therefor in the approximate amount of Can. $2,012,126 as at May
19, 1998 plus interest thereon."
6. Section 2.2(a) of the Agreement is hereby amended to delete reference
therein to "U.S.$90,000,000" and to replace this reference with
"US$115,000,000".
7. The first sentence of Section 2.2(b) of the Agreement is hereby deleted
in its entirety and is replaced with the following:
"(b) Subject to Section 2.2(c) hereof and Section 2.2(d) hereof, the
Additional Purchase Price shall be paid as hereinafter set forth."
8. Section 2.2(b) of the Agreement is hereby amended to delete any
reference therein to "Aggregate Additional Purchase Price" and to replace
each such reference with "Aggregate Available Purchase Price".
9. The following is added to the Agreement as new Section 2.2(c):
"(c) The Corporation shall not at any time be entitled to and shall
not request an Additional Purchase Price Payment, and neither the
Lenders nor the Agent shall have any obligation to the Corporation or
otherwise to make an Additional Purchase Price Payment if at such time
or if as a result of the proposed Additional Purchase Price Payment the
Aggregate Available Purchase Price is or would be U.S.$5,000,000 or less
and if at such time Trilon Bancorp Inc. is the owner of the Proposed
Leaseback Assets. If Trilon Bancorp Inc. is not the owner of the
Proposed Leaseback Assets as a result of a sale thereof, the provisions
of this Section 2.2(c) shall thereafter no longer apply."
10. The following is added to the Agreement as new Section 2.2(d):
"(d) The Corporation shall not at any time be entitled to and shall
not request an Additional Purchase Price Payment, and neither the
Lenders nor the Agent shall have any obligation to the Corporation or
otherwise to make an Additional Purchase Price Payment if at such time
or if as a result of the proposed Additional Purchase Price Payment the
Aggregate Available Purchase Price is or would be U.S.$2,000,000 or less
unless at such time the Agent and the Lenders are satisfied in their
absolute discretion that, the Corporation has no outstanding obligations
or liabilities to the Bank of Nova Scotia pursuant to or in connection
with the Bank Working Capital Facility including any reimbursement or
indemnification obligations that constitute, or could constitute with
the passage of time, the giving of notice or the occurrence of a
default, "Permitted Indebtedness" as defined in and pursuant to clause
(v) of
3
the definition of "Permitted Indebtedness" in the Subordinated Note
Trust Indenture. For the purposes of this Section 2.2(d), the
Corporation will be deemed to have outstanding obligations or
liabilities to the Bank of Nova Scotia pursuant to or in connection with
the Bank Working Capital Facility that constitutes Permitted
Indebtedness pursuant to clause (v) of the definition of "Permitted
Indebtedness" in the Subordinated Note Trust Indenture until such time
that the Corporation has delivered to the Agent and the Lenders either
(i) an irrevocable confirmation in writing from the Bank of Nova Scotia
or (ii) an opinion of counsel acceptable to the Agent and the Lenders in
their absolute and unfettered discretion, that in each case, the
Corporation's obligations and liabilities to the Bank of Nova Scotia
pursuant to or in connection with the Bank Working Capital Facility have
been paid in full and that the Corporation has outstanding no
obligations or liabilities to the Bank of Nova Scotia that constitute
Permitted Indebtedness pursuant to clause (v) of the definition of
"Permitted Indebtedness" in the Subordinated NoteTrust Indenture."
11. The following is added to the Agreement as new Section 2.3(d):
"(d) The Corporation will pay to the Lenders on the Closing Date a fee
equal to 2% of the amount by which the Permitted Encumbrances set out in Part
I of SCHEDULE C1 of the Debentures exceeds Can.$10,000,000 at the Closing
Time (the "Lien Fee"); provided that no Default or Event of Default has
occurred and is continuing and provided further that the Permitted
Encumbrances set out in Part I of SCHEDULE C1 of the Debentures have been
permanently reduced by the Corporation to Can.$10,000,000 or less as at
December 31, 1998, (and the Corporation shall have provided to the Lenders
information and particulars to this effect satisfactory to the Lenders) the
Lenders shall refund to the Corporation on January 15, 1999 an amount equal
to 1/2 of the Lien Fee without any interest thereon. The Lien Fee shall be
paid by the Corporation as to 70.8% thereof to the Lenders purchasing Series
A Debentures and as to 29.2% thereof to the Lenders purchasing Series B
Debentures."
12. Section 3.1(i) of the Agreement is hereby deleted in its entirety and is
replaced with the following:
"(i) NO OBLIGATION TO ISSUE SHARES. Except for (i) agreements,
options, warrants, rights and conversion or other rights granted to
current or former directors and employees of the Corporation in respect
of which no more than 10 million Common Shares of the Corporation may be
acquired, (ii) agreements to issue to the Corporation shares of APM
(which shares when issued will be subject to the Security and all share
certificates in respect thereof will, at the request of the Lenders, be
delivered to the Lenders), (iii) special warrants and common shares
which may be issued by the Corporation to its creditors, in lieu
4
of partial payment to such creditors, and to other Persons, and (iv)
10,000,000 common shares being issued to the consenting holders of the
Subordinated Notes, there are no agreements, options, warrants, rights
of conversion or other rights pursuant to which the Corporation or any
of the Subsidiaries is or may become obligated to issue any shares or
any securities convertible into, or exchangeable for, shares."
13. Section 3.1(m) of the Agreement is hereby deleted in its entirety and is
replaced with the following:
"(m) LIMITATION ON PAYMENT RESTRICTIONS. Except for restrictions
contained herein, in the Senior Secured Debenture Facility and in the
Subordinated Note Trust Indenture, and restrictions in favour of the
holders of the Permitted Hedging Indebtedness to the extent such
restrictions herein and in the Subordinated Note Trust Indenture have
been agreed to and adopted by the Corporation and such holders, neither
the Corporation nor any Subsidiary is subject to any consensual
restriction on its ability (a) to pay dividends or make any other
distributions on its equity securities to, or pay any indebtedness owing
to, or repurchase or redeem any equity securities from, the holders of
such equity securities, the Corporation or any other Subsidiary, (b) to
make any loans or advances to the Corporation or any other Subsidiary,
or (c) to transfer any of its property or assets to the Corporation or
any other Subsidiary."
14. Section 3.1(s) of the Agreement is hereby amended to delete reference
therein to the "annual report on Form 10-K for the fiscal year ended December
31, 1997" and to replace this reference with the "quarterly report on Form
10-Q for the fiscal quarter ended March 31, 1998 and to delete reference
therein to the "annual report" and to replace this reference with the
"quarterly report".
15. Section 3.1(u)(i) of the Agreement is hereby amended to delete reference
therein to "Can.$10,000,000" and to replace this reference with
"Can.$15,000,000".
16. Section 3.1(u)(ii) of the Agreement is hereby amended to delete
reference therein to "Can.$10,000,000" and to replace this reference with
"Can.$15,000,000".
17. Section 3.1(ae) of the Agreement is hereby deleted in its entirety and
is replaced with the following:
"(ae) SUBORDINATED NOTES. Other than the Disclosed Defaults, the
Corporation is in compliance with all terms and conditions and
agreements applicable to the
5
Subordinated Notes, and the Corporation will after giving effect to the
transactions contemplated by this Agreement and the other Documents, be
in compliance with all terms and conditions and agreements applicable to
the Subordinated Notes. The indebtedness under the Debentures, the
Royalty Agreement and the Royalty Debenture will fully constitute
"Permitted Indebtedness" and the Security and the Royalty Debenture will
in each and every respect constitute "Permitted Liens" under the
Subordinated Note Trust Indenture. The indebtedness under the
Debentures and the amounts if any from time to time outstanding on
account of the Royalty Agreement will constitute "Senior Indebtedness"
under the Subordinated Note Indenture. The indebtedness under the
Debentures will constitute "Designated Senior Indebtedness" under the
Subordinated Note Indenture. The indebtedness of any Subsidiary under
or on account of the Debentures will constitute "Guarantor Senior
Indebtedness" under the Subordinated Note Indenture. The Lenders will
be entitled to the benefit of and can rely on the provisions of the
Subordinated Note Indenture relating to "Senior Indebtedness",
"Designated Senior Indebtedness" and "Guarantor Senior Indebtedness" and
the holder of the royalty pursuant to the Royalty Agreement will be
entitled to the benefit of and will be entitled to rely on the
provisions of the Subordinated Note Indenture relating to "Senior
Indebtedness" to the extent of the amounts if any from time to time
outstanding on account of the Royalty Agreement. Each of the Lenders
and the holder of the royalty pursuant to the Royalty Agreement, to the
extent of the amounts if any from time to time outstanding on account of
the Royalty Agreement, will be entitled to enforce such provisions as
are applicable to it directly against the Corporation and any other
Subsidiary. The Corporation has delivered to the Agent coplete and
accurate copies of all agreements and documents relating to the
Subordinated Notes including, without limitation, the Subordinated Note
Trust Indenture. The Subordinated Notes will be at the Closing Date and
thereafter remain in accordance with their terms, fully subordinated and
postponed to the obligations of the Corporation to the Agent and the
Lenders under the Documents."
18. The following is added to the Agreement as new Section 3.1(ai):
"3.1 (ai) SCHEDULE W lists particulars, including bank, branch address,
account type and account number, of each bank account maintained by the
Corporation and by each of the Subsidiaries."
19. Section 4.1(i) of the Agreement is hereby amended to delete reference
therein to "Can.$10,000,000" and to replace this reference with
"Can.$15,000,000".
20. Section 4.1(l)(i) of the Agreement is hereby amended to delete reference
therein to "Can.$10,000,000" and to replace this reference with
6
"Can.$15,000,000".
21. Section 4.1(o) of the Agreement is hereby deleted in its entirety and
replaced with the following:
"(o) TIME FRAME. All of the conditions set out in this Section 4.1
shall have been satisfied, each in accordance with the provisions of
this Agreement, on or prior to June 23, 1998."
22. The following is added to the Agreement as new Section 4.1(r):
"(r) SUBORDINATED NOTEHOLDERS INTER-CREDITOR AGREEMENT. The Lenders,
the Agent and the Corporation shall have entered into an inter-creditor
agreement with Chase Manhattan Trust Company, National Association as
trustee under the Subordinated Note Indenture and with any collateral
agent appointed by it if and to the extent they have been granted the
Permitted Encumbrances described in Section (l) of the definition
thereof at or prior to the Closing Time, in form and substance
satisfactory to the Lenders, including provisions that notwithstanding
the granting of such security the consenting holders of the Subordinated
Notes will take reasonable steps to ensure that they are placed in a
separate class of creditors than the Lenders in any insolvency
proceedings relating to the Corporation and if notwithstanding the
foregoing they are placed in the same class of creditors they will
assign their votes to the Lenders so as to permit the Lenders to vote
against and defeat any restructuring plan in such insolvency
proceedings."
23. Section 4.2(f) of the Agreement is hereby deleted in its entirety and is
replaced with the following:
"(f) SECURITY. The Lenders shall be satisfied that upon and after
making the Additional Purchase Price Payment the Liens under the
Security are and will remain valid and enforceable and will rank senior
in priority to all other Liens, claims and interests in the Mortgaged
Property, except for such Liens relating to or securing Debt of the
Corporation not in excess of Can.$15,000,000 as may be held by holders
of those Existing Encumbrances set out in Part 1 of SCHEDULE C1 to the
Debentures;"
24. The Series A Debenture attached as Schedule A-1 to the Agreement is
hereby deleted in its entirety and is replaced with the Series A Debenture
attached as Schedule A-1 to this agreement.
25. The Series B Debenture attached as Schedule A-2 to the Agreement is
hereby deleted in its entirety and is replaced with the Series B Debenture
attached as
7
Schedule A-2 to this agreement.
26. The Royalty Agreement attached as Schedule C to the Agreement is hereby
deleted in its entirety and is replaced with the Royalty Agreement attached
as Schedule C to this agreement.
27. This agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts together
shall constitute but one and the same instrument.
28. This agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Subject to the last sentence of Section 6.10 of the Agreement, nothing
herein, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this agreement.
29. Time shall be of the essence of this agreement.
30. Subject to the provisions hereof, the parties hereto hereby ratify and
confirm the provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement
under seal as of the day and year first above written.
ROYAL OAK MINES INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: Chief Financial Officer
TRILON FINANCIAL CORPORATION
By: /s/ Xxx Xxxxxxx
--------------------------------
Name: Xxx Xxxxxxx
Managing Partner
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxx
Vice President
8
