FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "USMX
Amendment") is made and entered into as of November __, 1996, by
and between N M ROTHSCHILD & SONS LIMITED, a company organized
and existing under the laws of England with an address at Xxx
Xxxxx, Xx. Xxxxxxx'x Xxxx, Xxxxxx XX0X 0XX ("Lender"), and USMX,
INC., a company organized and existing under the laws of Delaware
with an address at 000 Xxxxx Xxxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000 ("USMX") pursuant to Section 11.1 of that certain Credit
Agreement dated as of July 11, 1996, between Lender and USMX (the
"USMX Credit Agreement").
R E C I T A L S
I. Pursuant to the USMX Credit Agreement, Lender
agreed, under certain terms and conditions, to loan to USMX
$2,500,000 to be used to finance the construction and initial
operation of the Illinois Creek, Alaska gold mining facility.
II. USMX OF ALASKA, INC., a Alaska corporation and
wholly-owned subsidiary of USMX ("USMXAK"), entered into a
separate Credit Agreement dated as of July 11, 1996, between
Lender and USMXAK (the "AK Credit Agreement") pursuant to which
Lender has agreed, under certain terms and conditions, to loan to
USMXAK up to $19,500,000.
III. USMX has executed a Guaranty, dated as of July
11, 1996 (the "Guaranty"), in favor of Lender pursuant to which
USMX guarantees the obligations of USMXAK to Lender under the AK
Credit Agreement and the other Loan Documents.
IV. The following Events of Default are known to
Lender to be currently outstanding under the AK Credit Agreement
and the USMX Credit Agreement and under the other Loan Documents:
A. USMX has failed to make an additional equity
contribution of $1,500,000 to USMXAK as required by
Section 10 of the Guaranty; and
B. USMX is not in compliance with the financial
covenants set forth in Section 11 of the Guaranty.
V. Lender, USMX and USMXAK have entered into that
certain Letter Agreement, dated October 29, 1996 (the "Letter
Agreement") pursuant to which Lender has agreed to waive until
December 31, 1996 the defaults listed in (A) and (B) of Recital
IV above (the "Waived Defaults") in exchange for certain actions,
agreements and undertakings by USMX and USMXAK, including the
execution and delivery to Lender of this USMX Amendment and the
First Amendment to the AK Credit Agreement, dated the date
hereof, by and between USMXAK and Lender, and the documents and
agreements contemplated by those two amendments (together, the
"Waiver Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual
provisions set forth below, the parties agree as follows:
A. Definitions. Capitalized terms used herein but
not otherwise defined shall have the meanings given thereto in
the USMX Credit Agreement.
B. Status of Loan Documents. USMX reaffirms its
liability for all of the obligations evidenced or secured by the
Loan Documents, and acknowledges that USMX has no defenses to
enforcement of the Loan Documents in accordance with their
respective terms and no basis for asserting any offset or other
claim against Lender.
C. Amendment of Credit Agreement. The USMX Credit
Agreement is hereby amended as follows:
1. The list of Exhibits on page iv is hereby
amended by the addition, in alphabetical order, of the
following:
Exhibit J Form of Escrow Agreement
Exhibit K Escrow Account Disbursement Schedule
2. The list of Schedules on page iv is hereby
amended by the addition, in numerical order, of the
following:
Schedule 7.13 Escrow Account Disbursement Schedule
3. Section 1.1 is hereby amended by the
addition, in alphabetical order, of the following
terms:
"Canadian Offering" shall have the meaning
specified in Section 7.12.
"Escrow Account" shall have the meaning specified
in Section 7.13.
"Escrow Agreement" shall have the meaning
specified in Section 7.13.
"First Amendment Fee" shall have the meaning
specified in Section 2.3(c).
4. The definition of "Conversion Price" in
Section 1.1 is hereby amended and restated to read in
its entirety as follows:
"Conversion Price" means (i) the U.S. dollar
equivalent price per share at which shares of common
stock of USMX are sold to the public in the Canadian
Offering (or any other sale of USMX's shares deemed by
Lender to satisfy USMX's obligations under Section
7.12), or (ii) in the absence of sales satisfying part
(i) hereof, at the average closing market price of
USMX's common stock quoted by NASDAQ for the ten (10)
Trading Days preceding December 31, 1996.
5. A new Section 2.3(c) is hereby added to read
in its entirety as follows:
(c) First Amendment Fee. In
consideration of Lender agreeing to enter into the
First Amendment to this Agreement and the other
documents and agreements executed and delivered by
Lender related to such First Amendment, USMX,
jointly and severally with AK, agrees to pay
Lender a fee in the amount of $100,000 (the "First
Amendment Fee"), which fee shall be payable on the
first to occur of (i) the offer and sale of equity
interests of USMX required by Section 7.12(a)
hereof; (ii) April 15, 1997; or (iii) such other
time as the First Amendment Fee can be paid by
either AK or USMX without reducing working capital
available to AK to an amount less than required by
AK for its continued operations, in the reasonable
judgement of Lender. The First Amendment Fee is
in addition to all other fees, expenses and
reimbursements paid or required to be paid by AK
or USMX to Lender.
6. Section 3.3(b) is hereby amended and restated
in its entirety to read as follows:
(b) Interest Periods. USMX may select
an interest period with respect to the Loan
("Interest Period") of 30, 90 or 180 days, or of
such other period of days as may be agreed to by
Lender in its sole discretion, on a 360-day year
basis. USMX will select Interest Periods by
giving notice to Lender in the Request for Advance
and thereafter at least three Business Days prior
to the expiration of the Interest Period then in
effect by an Interest Period Notice. If at any
time USMX fails to give timely notice of its
Interest Period selection, then USMX shall be
deemed to have selected an Interest Period of
30 days. No Interest Period shall end after the
Scheduled Maturity Date. Interest will be payable
in full at the end of each Interest Period,
provided that accrued interest will be payable
every ninety (90) days for Interest Periods
greater than 90 days.
7. A new Section 7.12 is hereby added to read in
its entirety as follows:
7.12 Public Offering. USMX shall
accomplish the following with respect to the offer
and sale of shares of its common stock:
(a) Not later than November
1, 1996, USMX will have prepared and have
filed with the appropriate securities
authorities in Canada an offering prospectus
for a public offering in Canada of its common
stock (the "Canadian Offering"), designed to
result in net proceeds (consisting of gross
proceeds received by USMX from the Canadian
Offering, less all costs, expenses and fees
payable by USMX associated with the Canadian
Offering) to USMX of not less than
U.S.$9,000,000;
(b) Not later than November
1, 1996, USMX will cause the lead underwriter
of the Canadian Offering to provide to Lender
a comfort letter addressed to Lender stating
that such lead underwriter believes that the
Canadian Offering as described in clause (a)
above can be successfully completed by
December 31, 1996;
(c) Not later than December
31, 1996, USMX shall complete the Canadian
Offering and immediately thereafter shall
take the following actions:
(i) Contribute
U.S.$1,500,000 to AK and cause AK to
immediately deposit such amount in the
AK Proceeds Account;
(ii) Pay, or cause
AK to pay, the First Amendment Fee, if
not previously paid;
(iii) Contribute
sufficient funds to AK to: (1) enable AK
to achieve Completion in the manner and
time frame envisioned by the Development
Plan, (2) permit AK to satisfy all of
the financial covenants and ratios
required by the Loan Documents, and (3)
provide AK with sufficient working
capital to operate the mine in the
manner contemplated by the Development
Plan;
(d) In the event USMX sells
any equity securities other than pursuant to
the Canadian Offering, or sells any material
portion of its assets (other than its
interest in the Montana Tunnels Mine) other
than in the ordinary course of its business,
USMX shall contribute fifty percent (50%) of
the first $1,000,000 of the net proceeds of
such sale, and all of the net proceeds of
such sale in excess of $1,000,000, to AK and
shall cause AK to deposit such proceeds in
the Proceeds Account, until a total of
$1,500,000 has been deposited thereto by AK.
8. A new Section 7.13 is hereby added to read in
its entirety as follows:
7.13 Escrow Account. Concurrently
herewith, USMX will (i) establish an escrow
account (the "Escrow Account") and execute and
deliver an Escrow Agreement related thereto in the
form of Exhibit J; and (ii) deposit $925,000 to
such account. Distributions from the Escrow
Account shall be made pursuant to the Escrow
Account Disbursement Schedule and as otherwise
provided in the Escrow Agreement.
9. Section 11.4 is hereby amended by changing
each use of the word "Agreement" to read "Agreement
(and any amendment to this Agreement)".
D. Reaffirmation. USMX hereby reaffirms each
representation, warranty, and covenant contained in the USMX
Credit Agreement with the same force and effect as if each were
separately stated herein and made as of the date hereof, except
(i) for such made as of a certain date, which are hereby
reaffirmed as of such date, and (ii) to the extent of any
variance therefrom disclosed on Exhibit A to the Omnibus
Certificate supplied to Lender pursuant to Paragraph H.3 hereof.
E. Title Matters. USMX represents and warrants to
Lender that, except as previously disclosed to Lender, it is the
sole owner of the AK Shares free and clear of all material
defects of title or Liens except as have previously been
permitted by Lender.
F. Default Under Loan Documents. USMX acknowledges
and agrees that any Default by USMX under this USMX Amendment
shall constitute a Default under each of the Loan Documents,
entitling Lender to exercise any or all rights and remedies
provided for in the Loan Documents. Lender's execution and
delivery of this USMX Amendment shall not be construed as a
waiver of any presently-existing Default under any of the Loan
Documents, whether or not such Default is known to Lender, except
that compliance by USMX with the Waived Defaults is hereby waived
by Lender until December 31, 1996.
G. Ratification of Credit Agreement. As modified by
this USMX Amendment, the USMX Credit Agreement is in all respects
ratified, approved and confirmed, and as so amended, shall remain
in full force and effect. From and after the date hereof, all
references to the Credit Agreement in any Loan Document or in any
Waiver Document shall be references to the USMX Credit Agreement
as amended by this USMX Amendment.
H. Conditions Precedent. The obligations of the
Lender under this USMX Amendment or the other Wavier Documents,
including specifically the waiver until December 31, 1996 of the
Waived Defaults, are, in addition to the conditions precedent
specified in Section 5.1 of the USMX Credit Agreement, subject to
the following conditions precedent, wherein each document to be
delivered to the Lender will be in form and substance
satisfactory to the Lender:
1. Closing. The execution and delivery of each
the Waiver Documents shall have occurred on or before
November 15, 1996, or such later date as agreed to by
Lender in its sole discretion.
2. Escrow Account. The Escrow Account required
by Section 7.13 of the USMX Credit Agreement shall have
been established and $925,000 shall have been deposited
into that account by USMX.
3. Omnibus Certificate. Lender shall have
received a certificate, signed by the chief executive
officer of the USMX, in the form attached hereto as
Attachment 1.
4. Opinion of USMX's Counsel. Lender shall have
received the opinion of counsel to USMX and USMXAK in
the form attached hereto as Attachment 2.
5. Waivers and Consents. USMX shall have
obtained all waivers and consents necessary or
desirable to enable it to enter into this USMX
Amendment and the other Waiver Documents.
6. Other Conditions. All conditions precedent
under each of the other Waiver Documents shall be
satisfied as determined by Lender in its sole
discretion.
I. Successors and Assigns. Nothing in this USMX
Amendment shall be construed as waiving or modifying any
provision of the AK Credit Agreement prohibiting transfer of the
Mining Properties without the prior written consent of Lender, or
making any such transfer a Default under the AK Credit Agreement.
Subject to the preceding sentence, this USMX Amendment shall bind
and benefit the parties and their respective heirs, personal
representatives, successors and assigns.
J. Governing Law; Severability; Merger. This USMX
Amendment shall be governed by and construed in accordance with
the laws of the State of Colorado. Wherever possible, each
provision of the Loan Documents is to be interpreted so as to be
effective and valid under applicable law. If any provision of
any Loan Document is for any reason and to any extent, invalid or
unenforceable, then neither the remainder of the Loan Document in
which such provision appears, nor any other Loan Document, nor
the application of the provisions to other persons or entities or
in other circumstances, shall be affected by such invalidity or
unenforceability. The USMX Credit Agreement, together with the
other Loan Documents, all as amended and modified by the Waiver
Documents, represent the final agreement between the parties
pertaining to the subject matter thereof.
K. Execution in Counterparts. This USMX Amendment
may be executed in two or more counterparts, all of which shall,
upon execution of identical counterparts by all parties,
constitute a single agreement. Lender and its attorneys are
authorized to remove and reattach signature and acknowledgement
pages of various counterparts in order to avoid unnecessary
recording and copying expense and to provide fully-executed
counterparts to each party.
Signed and delivered as of the date first mentioned
above.
USMX
USMX, INC.
By:
Xxxxxx X. Xxxxxx
President
LENDER
PER PRO
N M ROTHSCHILD & SONS LIMITED
