SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number: 1-8641
COEUR D'ALENE MINES CORPORATION
(Exact name of registrant as specified on its charter)
IDAHO 82-0109423
------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer Ident.No.)
incorporation or organization)
P. O. Box I, Coeur d'Alene, Idaho 83816-0316
--------------------------------- ----------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (208) 667-3511
-----------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
-------------------------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of Issuer's classes of common stock, as of the latest
practicable date: Common stock, par value $1.00, of which 16,657,995 shares
were issued and outstanding as of July 28, 1995.
<PAGE>
COEUR D'ALENE MINES CORPORATION
INDEX
-----
Page No.
--------
PART I. Financial Information:
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- 3-4
June 30, 1995 and December 31, 1994
Consolidated Statements of Operations -- 5-6
Three Months Ended June 30, 1995 and 1994
Six Months Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows -- 7-8
Six Months Ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis of 11-16
Financial Condition and Results of Operations
PART II. Other Information.
Item 4. Submission of Matters to a Vote of Security-Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31,
1995 1994
------------ -------------
CURRENT ASSETS
Cash and cash equivalents $ 47,134,926 $ 14,707,278
Short-term investments 75,595,470 128,112,407
Receivables 12,218,238 7,677,269
Refundable income taxes 2,700,569 3,435,649
Inventories 33,389,973 34,215,127
------------ ------------
Total Current Assets 171,039,176 188,147,730
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 105,586,930 83,872,789
Less accumulated depreciation 39,678,981 37,394,296
------------- -------------
65,907,949 46,478,493
MINING PROPERTIES
Operational mining properties 109,268,067 102,571,977
Less accumulated depletion 35,249,459 38,162,432
------------- -------------
74,018,608 64,409,545
Developmental properties 104,796,475 95,896,774
------------- -------------
178,815,083 160,306,319
Net assets of discontinued operations 159,501 6,000,741
OTHER ASSETS
Funds held in escrow 2,270,695 2,270,695
Notes receivable 6,000,000
Debt issuance costs, net of
accumulated amortization 7,775,776 8,240,209
Other 994,998 917,206
------------- -------------
17,041,469 11,428,110
------------- -------------
$432,963,178 $412,361,393
============= =============
3
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31,
1995 1994
------------ -------------
CURRENT LIABILITIES
Accounts payable $ 4,584,088 $ 2,289,808
Accrued liabilities 4,905,483 4,426,925
Accrued interest payable 3,165,251 4,634,961
Accrued salaries and wages 3,595,420 3,867,801
Accrued litigation settlement 800,000
Short term project financing 5,000,000
Current portion of obligations
under capital leases 2,115,592 2,041,057
------------ -------------
Total Current Liabilities 23,365,834 18,060,552
OTHER LIABILITIES
6% Convertible Subordinated
Debentures 50,000,000 50,000,000
7% Convertible Subordinated
Debentures 74,987,000 75,000,000
6 3/8% Convertible Subordinated
Debentures 100,000,000 100,000,000
Obligations under capital leases 1,116,092 2,192,856
Other long-term liabilities 5,691,133 5,234,899
Limited Recourse Project Financing 11,091,007
Deferred income taxes 1,173,643 1,580,804
------------ -------------
Total Long-Term Liabilities 244,058,875 234,008,559
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value
per share-authorized 10,000,000
shares, none outstanding
Common Stock, $1.00 par value
per share--authorized 60,000,000
shares, issued and outstanding
16,657,995 and 16,633,163 shares
(including 1,058,453 held as
treasury stock) 16,657,995 16,633,163
Capital surplus 180,937,624 182,881,071
Accumulated deficit (16,811,270) (17,043,506)
Repurchased and nonvested shares (13,304,677) (13,358,309)
Unrealized losses on short-
term investment securities (1,941,203) (8,820,137)
------------ -------------
165,538,469 160,292,282
------------ -------------
$432,963,178 $412,361,393
============= =============
4
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- ---------------------------
1995 1994 1995 1994
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
INCOME
From mine operations:
Sales of concentrates
and dore' $ 23,620,545 $ 19,463,913 $ 41,511,714 $ 39,673,495
Less cost of mine
operations 17,931,591 16,485,944 33,972,120 33,825,493
-------------- -------------- -------------- --------------
Gross profits 5,688,954 2,977,969 7,539,594 5,848,002
Interest and other income 2,060,983 2,670,250 4,447,416 4,038,529
$ 23,620,545 $ 19,463,913 $ 41,511,714 $ 39,673,495
Total income 7,749,937 5,648,219 11,987,010 9,886,531
EXPENSES
Administration 1,001,307 950,362 1,965,678 2,541,071
Accounting and legal 488,701 434,985 856,670 855,925
General corporate 1,737,903 1,379,807 3,201,190 2,746,913
Mining exploration 856,581 1,215,186 1,992,684 1,951,510
Idle facilities 583,289 415,400 1,124,300 827,744
Interest 2,634,905 2,935,536 5,616,770 5,440,118
-------------- -------------- -------------- --------------
Total expenses 7,302,686 7,331,276 14,757,292 14,363,281
-------------- -------------- -------------- --------------
Net Income (loss) from
Continuing operations
before taxes 447,251 (1,683,057) (2,770,282) (4,476,750)
Benefit for
income taxes (791,744) (122,677) (642,321) (196,860)
-------------- -------------- -------------- --------------
Net Income (loss) from
Continuing operations 1,238,995 (1,560,380) (2,127,961) (4,279,890)
Income from discontinued
Operations (Net of
taxes) 2,168,533 225,581 2,360,196 347,792
------------- ------------- ------------- ------------
NET INCOME (LOSS) $ 3,407,528 $ (1,334,799) $ 232,235 $ (3,932,098)
============== ============== ============== ==============
</TABLE>
5
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- ---------------------------
1995 1994 1995 1994
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE DATA
Primary Earnings Per Share:
Weighted average number
of shares of Common
Stock outstanding 15,613,687 15,354,627 15,597,131 15,346,742
=========== =========== =========== ===========
Income (Loss) per share
from continuing
operations $ .08 $ (.10) $ (.14) $ (.28)
Income per share from
discontinued operations .14 .01 .15 .02
----------- ----------- ----------- -----------
NET INCOME(LOSS) PER SHARE $ .22 $ (.09) $ .01 $ (.26)
=========== =========== =========== ===========
Fully Diluted Earnings Per Share:
Weighted average number
of shares of Common
Stock outstanding 26,136,722
===========
Income (Loss) per share
from continuing
operations $ .11
Income per share from
discontinued operations .08
----------
NET INCOME(LOSS) PER SHARE $ .19
===========
Cash dividends per share $ 0.15 $ 0.15
========== ==========
See notes to consolidated financial statements.
</TABLE>
6
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994
-------------- --------------
Income (loss) from continuing operations $ (2,127,961) $ (4,279,890)
Add (less) noncash items:
Depreciation, depletion and
amortization 8,494,450 8,803,022
Deferred income taxes (1,980,625) (484,369)
(Gain)Loss on disposition
of fixed assets 177,545 128,153
Gain on foreign currency transactions (549,237) (1,193,959)
Loss on sale of short-term
investments 1,128,405 575,245
Change in operating assets and liabilities:
Accounts receivable (3,828,194) (1,329,242)
Inventories 825,154 (148,917)
Accounts payable and
accrued liabilities 280,391 (722,884)
Interest payable (1,469,710) 1,229,329
-------------- --------------
950,218 2,576,488
Income (loss) from discontinued operations 2,360,196 347,792
Add (less) noncash items:
Depreciation, depletion and amortization 85,381 140,561
(Gain) loss on disposition of
discontinued operations (3,877,636)
Deferred income taxes 1,573,464 231,861
Change in operating assets and Liabilities:
Accounts receivable 601,242 (11,277)
Inventories (30,661) (450,794)
Accounts payable and accrued liabilities (109,218) 70,267
-------------- --------------
602,768 328,410
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 1,552,986 $ 2,904,898
7
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
1995 1994
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (1,831,149) (3,257,526)
Purchase of short-term investments (2,409,976) (102,093,405)
Proceeds from sale of short-term securities 60,012,234 17,560,691
Proceeds from sale of assets 550,846 253,784
Proceeds from sale of discontinued operations 2,854,766
Expenditures on operational
mining properties (12,511,283) (4,363,811)
Expenditures on developmental properties (29,294,873) (5,434,533)
Other 314,065 96,404
-------------- --------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 17,684,630 (97,238,396)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from offering of 6 3/8%
Convertible Subordinated Debentures 95,647,541
Proceeds from project financing 16,091,007
Retirement of obligations under capital
leases (1,002,229) (932,853)
Payment of cash dividends (2,339,376) (2,303,194)
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,749,402 92,411,494
-------------- --------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 31,987,018 (1,922,004)
Cash and cash equivalents at beginning of year:
relating to continuing operations 14,707,278 14,388,998
relating to discontinued operations 440,630 289,099
-------------- --------------
$ 47,134,926 $ 12,756,093
CASH AND CASH EQUIVALENTS AT END OF PERIOD:
RELATING TO CONTINUING OPERATIONS 47,134,926 12,302,015
RELATING TO DISCONTINUED OPERATIONS 454,078
-------------- --------------
$ 47,134,926 $ 12,756,093
See notes to consolidated financial statements.
8
<PAGE>
UNAUDITED
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A:
Other than as stated in the following notes, in the opinion of
management, the foregoing unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of operations for the periods shown. The Second
Quarter Form 10-Q Report should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
NOTE B: Inventories are composed of the following:
JUNE 30, DECEMBER 31,
1995 1994
------------ ------------
Mining:
Ore in process and on leach pads $28,121,283 $28,895,419
Dore' inventory 1,667,074 1,748,207
Supplies 3,601,616 3,571,501
------------ ------------
$33,389,973 $34,215,127
============ ============
Inventories of ore on leach pads and in the milling process are valued
based on actual costs incurred to place such ore into production, less costs
allocated to minerals recovered through the leaching and milling processes.
Inherent in this valuation is an estimate of the percentage of the minerals on
leach pads and in process that will ultimately be recovered. Management
evaluates this estimate on an ongoing basis. Adjustments to the recovery are
accounted for prospectively. All other inventories are stated at the lower
cost or market cost being determined using first in, first out and weighted
average cost methods. Dore' inventory includes product at the mine site and
product held by refineries.
NOTE C:
On May 2, 1995, the Company sold the assets of its flexible hose and tubing
division, The Flexaust Company, and shares of a related subsidiary for
approximately $10.0 million payable in cash, of which approximately $4 million
was paid at the time of closing and the balance is payable over the next five
years. The results of operations and the gain on sale of Flexaust
manufacturing segment are presented as "Discontinued Operations." The Company
recorded a pre-tax gain on the sale of approximately $3.9 million ($2.2
million net of income taxes) during the second quarter of 1995.
9
<PAGE>
NOTE D:
On July 7, 1995, the Company became the operator of, and acquired the
remaining 50% of the Kensington property near Juneau, Alaska, held by its
joint venture partner, Echo Bay Mines, Ltd. for $32.5 million plus a scaled
royalty on 1 million ounces of future gold production after Coeur recoups its
purchase price and expenditures remaining to place the property into
production. The Company plans to continue its development activities at the
Kensington property.
NOTE E:
Benefit for income taxes related to income from continuing operations is
primarily related to the realization of net operating loss carryforwards,
which offset taxes incurred on income from discontinued operations. The
benefit for income taxes is partially offset by amounts paid as a result of
Internal Revenue Service adjustments which were settled in the first quarter
of 1995.
NOTE F:
On January 1, 1995, the Company entered into an agreement with Asarco
Incorporated and formed a new company called Silver Valley Resources
Corporation. Both Coeur and Asarco contributed their respective interests in
the Galena and Coeur Mines, as well as other assets and waived certain cash
flow entitlements at the Galena Mine in return for shares of capital stock of
Silver Valley Resources Corporation. Coeur's 50% investment is included on the
balance sheet as operational mining properties. The transaction resulted in no
gain or loss to the Company.
NOTE G:
On April 19, 1995, the Company completed a limited recourse project
financing agreement with a bank syndicate lead by N.M. Rothschild & Sons, Ltd.
The agreement provides for the borrowing of up to $24 million for use in the
construction of the Fachinal project, contains various covenants and is
dependent upon attainment of certain completion tests. Furthermore, the
agreement restricts the recourse of the bank in the event of default to the
assets of the Company's Chilean subsidiary, Compania Minera CDE Fachinal
Limitada. The Company is required to guarantee repayment of the borrowing
until the project reaches defined completion, after which the project alone is
liable for repayment. The interest rate prior to completion is equal to LIBOR
plus 1.5% and increase to LIBOR plus 2.75% after completion. The borrowing is
repayable in eight equal remaining semiannual installments after project
completion.
NOTE H:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The results of the Company's operations are significantly affected by the
market prices of gold and silver which may fluctuate widely and are affected
by many factors beyond the Company's control, including interest rates,
expectations regarding inflation, currency values, governmental decisions
regarding the disposal of precious metal stockpiles, global and regional
political and economic conditions, and other factors. The Company's currently
operating mines are the Rochester Mine, which it wholly owns and operates, the
Golden Cross Mine, in which the Company has an 80% operating interest and the
El Bronce Mine in which the Company has a 51% operating interest.
On July 19, 1994, the Company's Board of Director's approved construction
of the Fachinal Project. Construction of the new mine is expected to be
completed in the fourth quarter of 1995 and is expected to produce, in its
first full year, 41,000 ounces of gold and 2.6 million ounces of silver. Total
project construction is expected to cost $41.8 million.
On July 7, 1995, the Company acquired the remaining 50% of the Kensington
property held by its joint venture partner, Echo Bay Mines, Ltd., for $32.5
million plus a net smelter return royalty that varies dependent upon gold
prices of at least $400 per ounce.
The Company plans to continue its developmental activities at the
Kensington Property. A production decision relating to the Kensington Property
is subject to the approval by the Company, a market price of gold of at least
$400 per ounce and the receipt of certain required permits. The market price
of gold (London final) on July 28, 1995 was $383.00 per ounce. With respect to
the permits, the Company is unable to control the timing of their issuance.
However, on June 15, 1995 an EPA Final Technical Assistance Report was
furnished to the Army Corps of Engineers which will lead to the conditional
issuance by the Corps of its section 404 permit in due course.
The Company plans, in connection with its ongoing evaluation of potential
acquisition candidates, to focus primarily upon mining properties and
businesses that are operational or expected to become operational in the near
future so that they can reasonably be expected to contribute to the Company's
near-term cash flow from operations.
11
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended June 30, 1995, Compared to Three Months Ended
June 30, 1994
Sales and Gross Profits
Sales of concentrates and dore' increased by $4,156,632, or 21%, for the
second quarter of 1995 over the same quarter of 1994 and was primarily
attributable to increased production and increases in metals prices. Silver
and gold prices averaged $5.48 and $387.94 per ounce, respectively, in the
second quarter of 1995 compared with $5.38 and $381.44 per ounce,
respectively, in the second quarter of 1994. In the second quarter of 1995,
the Company produced 1,679,814 ounces of silver and 41,822 ounces of gold
compared to 1,419,181 ounces of silver and 31,523 ounces of gold in the second
quarter of 1994.
The cost of mine operations for the second quarter of 1995 increased by
$1,445,647, or 8.8%, above the prior year's comparable quarter. Mine
operations gross profit as a percent of sales increased from 15% in the
quarter ended June 30, 1994 to 24% in the quarter ended June 30, 1995. As a
result, gross profits from mine operations increased by $2,710,985, or 91%.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $198.35 per ounce in the quarter ended June 30, 1995, compared to
$259.36 per ounce in the prior year's comparable quarter. The decrease was
primarily attributable to improved underground ore grades and lower negotiated
contract mining costs. The cash costs of production per ounce of silver on a
silver equivalent basis at the Rochester Mine amounted to $3.65 in the quarter
ended June 30, 1995, compared to $3.63 per ounce in the quarter ended June 30,
1994. The cash costs of production per ounce of gold at the El Bronce Mine
were $337.03 during the second quarter.
Interest and Other Income
Interest and other income decreased by $609,267, or 23%, in the second
quarter of 1995 compared to the second quarter of 1994. The difference is
primarily the result of a decrease in the level of the Company's cash and
securities portfolio.
Total Income
As a result of the above, the Company's total income increased by
$2,101,718, or 37%, in the second quarter of 1995 compared to the second
quarter of 1994.
12
<PAGE>
Expenses
For the second quarter of 1995, total expenses decreased by $28,590, or
less than 1%, below the prior year's comparable quarter. The decrease is
primarily due to decreases in interest expense of $300,631 and mining
exploration expenses of $358,605 offset by an increase in general corporate
expenses of $358,096.
Income (Loss) From Continuing Operations Before Taxes
As a result of the above, the Company's income from continuing operations
before income taxes amounted to $447,251 for the second quarter of 1995
compared to a loss from continuing operations before income taxes of
$1,683,057 for the second quarter of 1994. The Company reported an income tax
benefit for the second quarter of 1995 of $791,744 compared to $122,677 for
the same period of 1994. As a result, the Company reported net income from
continuing operations of $1,238,995, or $.08 per primary share, for the second
quarter of 1995 compared to a loss from continuing operations of $1,560,380,
or $.10 per share, for 1994's comparable quarter.
Income (Loss) From Discontinued Operations
On May 2, 1995, The Company sold the Flexaust division, a manufacturer of
flexible hose and tubing, for $10 million payable in cash of which $4 million
was paid at closing and the remainder is payable in five annual installments.
In the second quarter of 1995, the Company realized $2,168,533 from
discontinued operations (net of taxes) compared with $225,581 in the second
quarter of 1994.
Net Income
As a result of the above, the Company reported net income (loss) of
$3,407,528, or $.22 per primary share ($.19 per fully diluted share), for the
second quarter of 1995 compared with $(1,334,799), or $(.09) per share, for
the second quarter of 1994.
Six Months Ended June 30, 1995, Compared to Six Months Ended June 30, 1994
Sales and Gross Profits
Sales of concentrates and dore' increased by $1,838,219, or 5%, for the
six months ended June 30, 1995 over the same period of 1994 and was primarily
attributable to increased production in 1995 compared to the same period in
1994. During the first six months of 1995, the Company produced 3,208,631
ounces of silver and 78,394 ounces of gold compared to 2,929,578 ounces of
silver and 63,100 ounces of gold in the first six months of 1994. Silver and
gold prices averaged $5.09 and $383.52 per ounce, respectively, in the first
six months of 1995 compared to $5.33 and $382.87 per ounce, respectively, in
the same period in 1994.
13
<PAGE>
The cost of mine operations in the first six months of 1995 increased by
$146,627, or less than 1%, over the first six months of 1994. As a result,
gross profit from mine operations increased by $1,691,592, or 29%, in the
first six months of 1995 from 1994's comparable period. Mine operations gross
profit as a percent of sales increased from 15% in the six months ended June
30, 1994 to 18% in the six months ended June 30, 1995. The increase was
primarily attributable to the increases in the number of ounces of silver and
gold produced and sold during the six months ended June 30, 1995, from the
prior year's comparable period.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $217.27 per ounce in the six months ended June 30, 1995, compared
to $283.26 in the prior year's comparable six month period. The decrease was
primarily attributable to improved underground mine ore grades and lower
renegotiated contract mining costs. The cash costs of production per ounce of
silver on a silver equivalent basis at the Rochester Mine amounted to $3.80
per ounce in the six months ended June 30, 1995, compared to $3.64 in the six
months ended June 30, 1994. The cash costs of production per ounce of gold at
the El Bronce Mine were $303.12 for the six months ended June 30, 1995.
Interest and Other Income
Interest and other income in the first half of 1995 increased by $408,887,
or 10%, compared to the first half of 1994. The increase was primarily a
result of management fee income resulting from the Company's interest in the
El Bronce Mine acquired on September 30, 1994, partially offset by reduced
interest income primarily a result of a decrease in the levels of the
Company's cash and securities portfolio.
Total Income
As a result of the above, the Company's total income increased by
$2,100,479, or 21%, in the six months ended June 30, 1995, over the prior
year's comparable quarter.
Expenses
Total expenses in the first half of 1995 increased by $394,011, or 3%,
over the prior year's comparable six-month period. The increase is primarily
attributable to increases of $296,556 in idle facilities expenses, $454,277 in
general corporate expenses and $176,652 in interest expenses, offset in part
by a decrease of $575,393 in administration expenses.
14
<PAGE>
Income (Loss) From Continuing Operations Before Taxes
As a result of the above, the Company's loss from continuing operations
before income taxes amounted to $2,770,282 in the first six months of 1995
compared to $4,476,750 in the first six months of 1994. The Company reported
an income tax benefit of $642,321 for the first six months of 1995, compared
to $196,860 in the first six months of 1994. As a result, the Company reported
a net loss from continuing operations of $2,127,961, or $.14 per share, in the
first six months of 1995, compared to a net loss of $4,279,890, or $.28 per
share, in the first six months of 1994.
Income From Discontinued Operations
As stated earlier, on May 2, 1995, the Company sold the Flexaust division,
a manufacturer of flexible hose and tubing. In the six months ended June 30,
1995, the Company reported income from discontinued operations (net of taxes)
of $2,360,196, or $.15 per share compared with $347,792, or $.02 per share,
for the six moths ended June 30, 1994.
Net Income (Loss)
As a result of the above, the Company reported a net income of $232,235,
or $.01 per share, in the first six months of 1995, compared to net loss of
$3,932,098, or $.26 per share, in the prior year's comparable six-month
period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1995 was approximately $147.7
million compared to approximately $170.1 million at December 31, 1994. The
ratio of current assets to current liabilities was 7.3 to 1 at June 30, 1995,
compared with 10.4 to 1 at December 31, 1994. The decrease in the Company's
working capital at June 30, 1995 compared to December 31, 1994 is primarily
attributable to the Company's investment in development stage properties.
Net cash provided by operating activities for the first six months of 1995
was $1,552,986 compared with $2,904,898 for the first six months of 1994. A
total of $17,684,630 of cash was provided by investing activities in the six
months of 1995 compared to $97,238,396 used in investing activities in the
first six months of 1994. Of the $97,238,396 used in investing activities
during the first six months of 1994, $102.1 million relates to the purchase of
investment grade intermediate term investments. The Company's financing
activities provided $12,749,402 of cash during the first six months of 1995
compared with $92,411,494 for the first six months of 1994. As a result of the
above, the Company's net cash increase for the first six months of 1995 was
$31,987,018 compared with a net cash decrease of $1,922,004 for the first six
months of 1994.
15
<PAGE>
For the years ended June 30, 1995 and 1994, the Company expended
$1,278,667 and $1,055,695 respectively, in connection with environmental
compliance activities at its operating properties. At June 30, 1995, the
Company had expended a total of approximately $4.9 million on environmental
and permitting activities at the Kensington property, which expenditures have
been capitalized as part of its development cost.
On July 19, 1994, the Company's Board of Directors approved the
construction of the Fachinal project following the completion by the
independent engineering firm of Flour Daniel Wright of a detailed feasibility
study. Pursuant to that study, the cost to complete Fachinal is estimated to
be $41.8 million. On April 19, 1995, the Company completed a limited recourse
project financing agreement with a bank syndicate lead by N.M. Rothschild &
Sons, Ltd. The agreement provides for the borrowing of up to $24 million for
use in the construction of the Fachinal project, contains various covenants
and is dependent upon attainment of certain completion tests. Furthermore, the
agreement restricts the recourse of the bank in the event of default to the
assets of the Company's Chilean subsidiary, Compania Minera CDE Fachinal
Limitada. The Company is required to guarantee repayment of the borrowing
until the project reaches defined completion, after which the project alone is
liable for repayment. The interest rate prior to completion of the project is
equal to LIBOR plus 1.5% and increases to LIBOR plus 2.75% after completion.
The borrowing is repayable in eight equal remaining semiannual installments
after project completion.
The Company and its wholly-owned subsidiary, Callahan Mining Corporation
("Callahan"), were advised by the Fish and Wildlife Service (the "Service") of
the U.S. Department of the Interior on July 18, 1995 that they were identified
as potentially responsible parties for damages resulting from injury to
federal natural resources with respect to the Bunker Hill Superfund Site. By
letter dated July 24, 1995, the Company and Callahan requested the Service to
identify the federal natural resources allegedly injured, set forth the basis
for the assertion that they are potentially responsible parties and quantify
the dollar amount of the alleged damages. The Company and Callahan presently
cannot state whether or estimate the extent to which, if any, they will be
liable for damages in connection with the matter.
16
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Company's Annual Meeting of Shareholders was held on May 9, 1995.
Messrs. Dennis E. Wheeler, Joseph C. Bennett, Duane B. Hagadone, James J.
Curran, James A. Sabala, James A. McClure, Jeffery T. Grade and Cecil D.
Andrus were nominated and elected to serve as members of the Board for one
year or until their successors are elected and qualified, by a vote of
12,730,655 shares for and 140,053 shares abstaining.
Shareholders ratified the selection of Ernst & Young to serve as the
Company's public accountants for the current fiscal year by a vote of
12,758,737 shares for, 47,592 shares against, with 64,379 shares abstaining.
Shareholders ratified the amendment of the Company's Executive
Compensation Program authorizing an additional 500,000 shares of Common Stock
by a vote of 11,578,310 shares for, and 1,086,257 shares against, with 206,111
shares abstaining.
Shareholders ratified the proposed Non-Employee Directors' Stock Option
Plan and to authorized 200,000 shares of Common Stock for issuance pursuant
thereto, by a vote of 11,644,237 shares for, 1,001,875 shares against, with
224,596 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed herewith:
Exhibit No. Document
------------- --------
10(a) Credit Agreement, dated June 8, 1994 between
Registrant/Seattle-First National Bank.
10(b) Limited Recourse Project Financing Agreement dated April 19,
1995 between Registrant and N.M. Rothschild & Sons, Ltd.
11 Statement regarding computation of per share earnings.
(b) Reports on Form 8-K
The current Report of Registrant dated May 2, 1995 and filed May 17,
1995 reported the sale of the Flexaust Company division of Callahan
Mining Company, a wholly-owned subsidiary of the Company. Amendment
No. 1 to that report was filed on June 6, 1995.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COEUR D'ALENE MINES CORPORATION
-------------------------------
(Registrant)
Dated August 8, 1995 /s/ Dennis E. Wheeler
--------------------
DENNIS E. WHEELER
Chairman, President and
Chief Executive Officer
Dated August 8, 1995 /s/ James A. Sabala
------------------
JAMES A. SABALA
Senior Vice President
(Principal Financial and
Accounting Officer)
CREDIT AGREEMENT EXHIBIT 10(a)
Between
COEUR D'ALENE MINES CORPORATION
and
SEATTLE-FIRST NATIONAL BANK
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
Definitions . . . . . . . . . . . . . . . . . . . . . .1
1.1 Additional Guarantors . . . . . . . . . . . . . . . . .1
1.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Available Amount. . . . . . . . . . . . . . . . . . . .2
1.4 Business Day. . . . . . . . . . . . . . . . . . . . . .2
1.5 Capitalized Lease Liabilities . . . . . . . . . . . . .2
1.6 Cash Equivalent Investment. . . . . . . . . . . . . . .2
1.7 Cash Equivalents. . . . . . . . . . . . . . . . . . . .3
1.8 Current Assets. . . . . . . . . . . . . . . . . . . . .3
1.9 Current Liabilities . . . . . . . . . . . . . . . . . .3
1.10 Environmental Laws. . . . . . . . . . . . . . . . . . .4
1.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . .4
1.12 GAAP. . . . . . . . . . . . . . . . . . . . . . . . . .4
1.13 Guarantor(s). . . . . . . . . . . . . . . . . . . . . .4
1.14 Hazardous Material. . . . . . . . . . . . . . . . . . .4
1.15 Indebtedness. . . . . . . . . . . . . . . . . . . . . .4
1.16 Initial Guarantors. . . . . . . . . . . . . . . . . . .4
1.17 Letter(s) of Credit . . . . . . . . . . . . . . . . . .5
1.18 Letter of Credit Balance. . . . . . . . . . . . . . . .5
1.19 Loan Documents. . . . . . . . . . . . . . . . . . . . .5
1.20 Obligations . . . . . . . . . . . . . . . . . . . . . .5
1.21 Person. . . . . . . . . . . . . . . . . . . . . . . . .5
1.22 Plan. . . . . . . . . . . . . . . . . . . . . . . . . .5
1.23 Prime Rate. . . . . . . . . . . . . . . . . . . . . . .5
1.24 Significant Subsidiary. . . . . . . . . . . . . . . . .5
1.25 Subordinated Debt . . . . . . . . . . . . . . . . . . .6
1.26 Subsidiary. . . . . . . . . . . . . . . . . . . . . . .6
1.27 Tangible Net Worth. . . . . . . . . . . . . . . . . . .6
1.28 Termination Date. . . . . . . . . . . . . . . . . . . .7
ARTICLE 2
Letter of Credit. . . . . . . . . . . . . . . . . . . .7
2.1 Issuance. . . . . . . . . . . . . . . . . . . . . . . .7
2.2 Fees. . . . . . . . . . . . . . . . . . . . . . . . . .7
2.3 Yield Indemnity . . . . . . . . . . . . . . . . . . . .8
ARTICLE 3
Guaranties. . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE 4
Conditions of Lending . . . . . . . . . . . . . . . . .8
4.1 Authorization . . . . . . . . . . . . . . . . . . . . .8
4.2 Documentation . . . . . . . . . . . . . . . . . . . . .9
4.3 Guaranties. . . . . . . . . . . . . . . . . . . . . . .9
4.4 Termination of Prior Facility . . . . . . . . . . . . .9
4.5 Proof of Insurance. . . . . . . . . . . . . . . . . . .9
4.6 Representations and Warranties. . . . . . . . . . . . .9
4.7 Compliance. . . . . . . . . . . . . . . . . . . . . . .9
-i-
<PAGE>
ARTICLE 5
Representations and Warranties. . . . . . . . . . . . 10
5.1 Existence . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Enforceability. . . . . . . . . . . . . . . . . . . . 10
5.3 No Legal Bar. . . . . . . . . . . . . . . . . . . . . 10
5.4 Financial Information . . . . . . . . . . . . . . . . 10
5.5 Liens and Encumbrances. . . . . . . . . . . . . . . . 11
5.6 Litigation. . . . . . . . . . . . . . . . . . . . . . 11
5.7 Payment of Taxes. . . . . . . . . . . . . . . . . . . 11
5.8 Employee Benefit Plan . . . . . . . . . . . . . . . . 12
5.9 Misrepresentations. . . . . . . . . . . . . . . . . . 12
5.10 No Default. . . . . . . . . . . . . . . . . . . . . . 12
5.11 No Burdensome Restrictions. . . . . . . . . . . . . . 12
ARTICLE 6
Affirmative Covenants . . . . . . . . . . . . . . . . 12
6.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . 12
6.2 Tangible Net Worth. . . . . . . . . . . . . . . . . . 13
6.3 Current Ratio . . . . . . . . . . . . . . . . . . . . 13
6.4 Debt Ratio. . . . . . . . . . . . . . . . . . . . . . 13
6.5 Cash Collateral . . . . . . . . . . . . . . . . . . . 13
6.6 Financial Information . . . . . . . . . . . . . . . . 13
6.7 Maintenance of Existence. . . . . . . . . . . . . . . 14
6.8 Books and Records . . . . . . . . . . . . . . . . . . 15
6.9 Ownership of Guarantors . . . . . . . . . . . . . . . 15
6.10 Access to Premises and Records. . . . . . . . . . . . 15
6.11 Notice of Events. . . . . . . . . . . . . . . . . . . 15
6.12 Payment of Debts and Taxes. . . . . . . . . . . . . . 16
6.13 Environmental Matters . . . . . . . . . . . . . . . . 16
6.14 Insurance . . . . . . . . . . . . . . . . . . . . . . 17
6.15 Additional Guarantors . . . . . . . . . . . . . . . . 17
ARTICLE 7
Events and Consequences of Default. . . . . . . . . . 18
7.1 Events of Default . . . . . . . . . . . . . . . . . . 18
(a) Nonpayment. . . . . . . . . . . . . . . . . . 18
(b) Breach of Warranty. . . . . . . . . . . . . . 18
(c) ERISA . . . . . . . . . . . . . . . . . . . . 18
(d) Failure to Perform. . . . . . . . . . . . . . 18
(e) Defaults on Other Obligations . . . . . . . . 18
(f) Guaranties. . . . . . . . . . . . . . . . . . 19
(g) Loss, Destruction, or Condemnation of Property19
(h) Attachment Proceedings and Insolvency . . . . 19
(i) Judgments . . . . . . . . . . . . . . . . . . 20
(j) Government Approvals. . . . . . . . . . . . . 20
7.2 Remedies Upon Default . . . . . . . . . . . . . . . . 20
7.3 Alleged Default by Bank . . . . . . . . . . . . . . . 20
ARTICLE 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . 21
8.1 Manner of Payments. . . . . . . . . . . . . . . . . . 21
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 Documentation and Administration Expenses . . . . . . 22
8.4 Collection Expenses . . . . . . . . . . . . . . . . . 23
8.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . 23
8.6 Assignment. . . . . . . . . . . . . . . . . . . . . . 23
8.7 Merger. . . . . . . . . . . . . . . . . . . . . . . . 23
8.8 Amendments. . . . . . . . . . . . . . . . . . . . . . 24
8.9 Mandatory Arbitration . . . . . . . . . . . . . . . . 24
8.10 Construction. . . . . . . . . . . . . . . . . . . . . 25
8.11 Termination of Agreement. . . . . . . . . . . . . . . 26
EXHIBITS:
Exhibit A -- Form of CFO Certificate
-ii-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made between Coeur d'Alene Mines
Corporation, an Idaho corporation ("Borrower"), and Seattle-First National
Bank, a national banking association (including its successors and/or assigns,
"Bank"). The parties agree as follows:
ARTICLE 1
Definitions
All terms defined below shall have the meaning indicated. All references
in this Agreement to:
(a) "dollars" or "$" shall mean U.S. dollars. Any item
denominated in a currency other than U.S. dollars, shall be
converted into U.S. Dollars at Bank's spot rate of exchange
between such currency and U.S. dollars, as quoted on the date
of calculation.;
(b) "Article," "Section," or "Subsection" shall mean articles,
sections, and subsections of this Agreement, unless otherwise
indicated;
(c) terms defined in the Washington version of the Uniform
Commercial Code, R.C.W. ss.62A.9-101, et seq. ("UCC"), and
not otherwise defined in this Agreement, shall have the
meaning given in the UCC; and
(d) an accounting term not otherwise defined in this Agreement
shall have the meaning assigned to it under GAAP.
1.1 Additional Guarantors shall have the meaning given in Section 6.14.
1.2 Affiliate of a Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power:
(a) to vote 10% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners of such Person; and
(b) to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
1.3 Available Amount shall mean at any time the amount of the Credit Limit
minus the face amount of all Letters of Credit outstanding.
-1-
<PAGE>
1.4 Business Day shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Seattle, Washington, are authorized or
required by law to close.
1.5 Capitalized Lease Liabilities shall mean all monetary obligations of
Borrower or any Subsidiary under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
1.6 Cash Equivalent Investment shall mean, at any date:
(a) any evidence of Indebtedness, maturing not more than one year
after such date, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by Bank or any other corporation (other
than an Affiliate of Borrower or of any Guarantor) organized under the
laws of any State of the United States or of the District of Columbia and
rated A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc.;
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such date, which is issued by Bank or any other
commercial banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of not
less than US$500,000,000 (for purposes of this Section, an "Approved
Bank"); or
(d) any repurchase agreement entered into with Bank or any Approved
Bank which repurchase agreement is:
(i) secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c)
above, and
(ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of
Bank or such Approved Bank.
1.7 Cash Equivalents shall mean all of Borrower's consolidated cash, Cash
Equivalent Investments and all debt and equity marketable security
investments,
-2-
<PAGE>
stated at the lower of cost or market, made in compliance with Borrower's
board of directors-adopted, Bank-reviewed investment policy.
1.8 Current Assets shall mean all consolidated assets of Borrower, on a
GAAP basis, which may be properly classified as current assets in accordance
with GAAP.
1.9 Current Liabilities shall mean all consolidated indebtedness of
Borrower, on a GAAP basis, maturing on demand or within a period of one year
from the date when Borrower's current liabilities are determined and which may
be properly classified as current liabilities in accordance with GAAP.
1.10 Environmental Laws shall mean all applicable federal, state, or local
statutes, laws, ordinances, codes, rules, regulations, and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment issued in the U.S. by any
federal, state, or local authority or in any other jurisdiction by any similar
governmental or other authority.
1.11 ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.12 GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States and as consistently applied by
Borrower.
1.13 Guarantor(s) shall mean the Initial Guarantors and each Additional
Guarantor.
1.14 Hazardous Material shall mean any substance or material defined or
designated as hazardous or toxic wastes, hazardous or toxic material, a
hazardous, toxic or radioactive substance or other similar term by any
applicable federal, state, or local statute, regulation, or ordinance now or
hereafter in effect.
1.15 Indebtedness shall mean, as to any Person, (a) all consolidated
obligations, on a GAAP basis, included in the liability section of a balance
sheet of Borrower, and (b) all obligations of such Person which should be, in
accordance with GAAP, recorded as Capitalized Lease Liabilities.
1.16 Initial Guarantors shall mean each of the following corporations,
jointly and severally, Coeur Alaska, Inc., a Delaware corporation, CDE Chilean
Mining Corporation, a Delaware corporation, Callahan Mining Corporation, an
Arizona corporation, Coeur Gold New Zealand, Limited., a New Zealand
corporation,
-3-
<PAGE>
Coeur New Zealand, Inc., a Delaware corporation, and Coeur-Rochester, Inc., a
Delaware corporation.
1.17 Letter(s) of Credit shall have the meaning assigned in Article 2.
1.18 Letter of Credit Balance shall mean the aggregate outstanding
liability of Bank at any given time under all combined Letters of Credit.
1.19 Loan Documents shall mean collectively this Agreement, the L/C
Agreements, and all other documents, instruments, and agreements now or later
executed in connection with this Agreement.
1.20 Obligations shall mean Borrower's obligation to reimburse Bank for
all amounts drawn under the Letters of Credit, and all fees, costs, expenses,
and indemnifications due to Bank under this Agreement.
1.21 Person shall mean any individual, partnership, corporation, business
trust, unincorporated organization, joint venture, or any governmental entity,
department, agency, or political subdivision.
1.22 Plan shall mean any employee benefit plan or other plan maintained
for Borrower's employees and covered by Title IV of ERISA, excluding any plan
created or operated by or for any labor union.
1.23 Prime Rate shall mean the floating commercial loan reference rate of
Bank, publicly announced from time to time as its "prime rate" (calculated on
the basis of actual number of days elapsed over a year of 360 days), with any
change in the Prime Rate to be effective on the date the "prime rate" changes.
1.24 Significant Subsidiary shall mean, at any date, each Subsidiary that:
(a) accounted for at least 5% of consolidated revenues of Borrower
and its Subsidiaries or 5% of consolidated earnings of Borrower and its
Subsidiaries before interest and taxes, in each case for the fiscal
quarter of Borrower most recently ended on or prior to such date; or
(b) has assets which represent at least 5% of the consolidated assets
of Borrower and its Subsidiaries as of the last day of the last fiscal
quarter of Borrower most recently ended on or prior to such date; all of
which shall be as reflected on the financial statements of Borrower for
the period, or as of the date, in question.
1.25 Subordinated Debt shall mean all Indebtedness of Borrower which is
subordinated to the repayment of the Obligations on terms, and pursuant to
documentation, in form and substance satisfactory to Bank, as necessary to
assure subordination.
-4-
<PAGE>
1.26 Subsidiary shall mean, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person. Except as otherwise
indicated herein, references to Subsidiaries shall refer to Subsidiaries of
Borrower.
1.27 Tangible Net Worth shall mean the consolidated net worth of Borrower
and its Subsidiaries after subtracting therefrom the aggregate amount of any
intangible assets of Borrower and its Subsidiaries including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names.
1.28 Termination Date shall mean July 1, 1997, or such earlier date upon
which Bank's commitment to lend is terminated pursuant to Subsection 7.2(a).
ARTICLE 2
Letter of Credit
2.1 Issuance. Upon Borrower's execution of Bank's standard form
Application and Agreement for Standby Credit ("L/C Agreement"), and a
statement of purpose for the letter of credit to be issued, Bank shall issue
for Borrower's account standby letters of credit (together with all letters of
credit issued by Bank for Borrower's account and outstanding prior to the date
of this Agreement, "Letter(s) of Credit") in amounts not to exceed $10,000,000
in the aggregate. Each Letter of Credit shall have a maximum tenor of 360
days, and if "evergreen" shall be cancelable by Bank within 60 days of each
anniversary date. If there is a draw under a Letter of Credit, Borrower shall
on demand immediately reimburse Bank for the amount of the draw, together with
interest on the amount drawn, from the date of draw until paid, at a floating
rate equal to the Prime Rate plus 2% per annum. Bank shall in addition have
all rights provided in the L/C Agreement. Any default in an L/C Agreement
shall be a Default.
2.2 Fees. Borrower shall pay to Bank in advance, upon issuance of each
Letter of Credit and on each anniversary of such issuance, an annual fee of
1.25% per annum on the outstanding balance of the Letter of Credit on the date
payment is due. Borrower shall additionally, on demand, pay transaction fees
according to Bank's then-outstanding standard fee schedule on all drafts,
transfers,
-5-
<PAGE>
extensions, and other transactions in regard to the Letters of Credit, and
reimburse Bank for all out-of-pocket costs, legal fees, and expenses.
2.3 Yield Indemnity. If any law or regulation imposes or increases any
reserve, special deposit, or similar requirement against letters of credit
issued by Bank or subjects Bank to any tax, charge, fee, deduction, or
withholding of any kind in regard to the Letters of Credit, Borrower shall
promptly on demand indemnify Bank for any such increased costs, taxes, or
charges (other than taxes based on Bank's gross or net income).
ARTICLE 3
Guaranties
The Obligations shall be absolutely and unconditionally guaranteed by the
Initial Guarantors and the Additional Guarantors, jointly and severally, in
form satisfactory to Bank. Borrower authorizes Bank to release to any present
or future guarantor all information the Bank possesses concerning Borrower or
any loans, credits, or other financial accommodations made to Borrower by
Bank.
ARTICLE 4
Conditions of Lending
Bank's obligation to issue the initial Letter of Credit is subject to the
conditions precedent listed in Sections 4.1 through 4.5, and to issue
subsequent Letters of Credit is subject to the conditions precedent listed in
Sections 4.6 and 4.7, unless waived by Bank in writing:
4.1 Authorization. Borrower shall have delivered to Bank a certified copy
of the resolution of Borrower's board of directors authorizing the
transactions contemplated by this Agreement and the execution, delivery, and
performance of all Loan Documents, together with appropriate certificates of
incumbency. Each corporate guarantor shall have delivered to Bank a certified
copy of a resolution of such guarantor's board of directors, satisfactory in
form to Bank, authorizing its guaranty.
4.2 Documentation. Borrower shall have executed and delivered to Bank all
documents to reflect the existence of the Obligations.
4.3 Guaranties. Each guarantor shall have executed and delivered its
guaranty to Bank, and each such guaranty shall remain in full force and
effect.
4.4 Termination of Prior Facility. Borrower shall have terminated, and
shall have no further letters of credit or advances outstanding under, the
$38,000,000 credit facility evidenced by the Amended and Restated Loan
Agreement
-6-
<PAGE>
dated June 17, 1993, among Borrower, various banks, Bank as "Issuing Bank,"
and N.M. Rothschild & Sons Limited as "Agent."
4.5 Proof of Insurance. Proof of insurance as required by Section 6.14 has
been provided to Bank.
4.6 Representations and Warranties. The representations and warranties
made by Borrower in the Loan Documents and in any certificate, document, or
financial statement furnished at any time shall continue to be true and
correct, except to the extent that such representations and warranties
expressly relate to an earlier date.
4.7 Compliance. No Default or other event which, upon notice or lapse of
time or both would constitute a Default, shall have occurred and be
continuing, or shall exist after giving effect to the advance of credit to be
made.
ARTICLE 5
Representations and Warranties
To induce Bank to enter into this Agreement, Borrower represents,
warrants, and covenants to Bank as follows:
5.1 Existence. Borrower is in good standing as a corporation under the
laws of the state of its incorporation, has the power, authority, and legal
right to own and operate its property or lease the property it operates and to
conduct its current business; and is qualified to do business and is in good
standing in all other jurisdictions where the ownership, lease, or operation
of its property or the conduct of its business requires such qualification.
5.2 Enforceability. The Loan Documents, when executed and delivered by
Borrower, shall be enforceable against Borrower in accordance with their
respective terms.
5.3 No Legal Bar. The execution, delivery, and performance by Borrower of
the Loan Documents, and the use of the loan proceeds, shall not violate any
existing law or regulation applicable to Borrower; any ruling applicable to
Borrower of any court, arbitrator, or governmental agency or body of any kind;
Borrower's articles of incorporation or bylaws; any security issued by
Borrower; or any mortgage, indenture, lease, contract, undertaking, or other
agreement to which Borrower is a party or by which Borrower or any of its
property may be bound.
5.4 Financial Information. By submitting each of the financial statements
required by Subsection 6.6(a) and 6.6(b), Borrower is deemed to
-7-
<PAGE>
represent and warrant that: (a) such statement is complete and correct and
fairly presents the financial condition of Borrower as of the date of such
statement; (b) such statement discloses all liabilities of Borrower that are
required to be reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent; and (c) such statement has been prepared in
accordance with GAAP. As of this date, there has been no adverse change in
Borrower's financial condition since preparation of the last such financial
statements delivered to Bank which would materially impair Borrower's ability
to repay the Obligations.
5.5 Liens and Encumbrances. Borrower and each Subsidiary has sufficient
title to each of its assets in order to conduct its respective business as
presently conducted and as contemplated to be conducted; all of the leases,
subleases, licenses, claims, rights, concessions, and agreements material to
the business of Borrower or any Subsidiary, and under which Borrower or any
Subsidiary holds any properties, are in full force and effect and neither
Borrower nor any Subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of Borrower or any
Subsidiary under any such lease, sublease, license, claim, concession, or
agreement, or affecting or questioning the rights of Borrower or such
Subsidiary to the continued possession of the premises under any such lease,
sublease, license, claim, concession, or agreement.
5.6 Litigation. Except as disclosed in writing to Bank, there is no
threatened (to Borrower's knowledge) or pending litigation, investigation,
arbitration, or administrative action which may materially adversely affect
Borrower's business, property, operations, or financial condition.
5.7 Payment of Taxes. Borrower has filed or caused to be filed all tax
returns when required to be filed; and has paid all taxes, assessments, fees,
licenses, excise taxes, franchise taxes, governmental liens, penalties, and
other charges levied or assessed against Borrower or any of its property
imposed on it by any governmental authority, agency, or instrumentality that
are due and payable (other than those returns or payments of which the amount,
enforceability, or validity are contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP are
provided on Borrower's books).
5.8 Employee Benefit Plan. Borrower is in compliance in all respects with
the provisions of ERISA and the regulations and published interpretations
thereunder. Borrower has not engaged in any acts or omissions which would make
-8-
<PAGE>
Borrower liable to the Plan, to any of its participants, or to the Internal
Revenue Service, under ERISA.
5.9 Misrepresentations. No information, exhibits, data, or reports
furnished by Borrower or delivered to Bank in connection with Borrower's
application for credit misstates any material fact, or omits any fact
necessary to make such information, exhibits, data, or reports not misleading.
5.10 No Default. Borrower is not in default in any Loan Document, or in
any contract, agreement, or instrument to which it is a party.
5.11 No Burdensome Restrictions. No contract or other instrument to which
Borrower is a party, or order, award, or decree of any court, arbitrator, or
governmental agency, materially impairs Borrower's ability to repay the
Obligations.
ARTICLE 6
Affirmative Covenants
So long as this Agreement shall remain in effect, or any liability exists
under the Loan Documents, Borrower shall:
6.1 Use of Proceeds. Use the Letters of Credit to back reclamation and
surety bonds, primarily for the Golden Cross Mine in New Zealand, and for
other general corporate purposes in the ordinary course of Borrower's
business.
6.2 Tangible Net Worth. Maintain a Tangible Net Worth of not less than
$150,000,000 measured semiannually as of the second quarter end and the fiscal
year end.
6.3 Current Ratio. Maintain a ratio of Current Assets to Current
Liabilities of not less than 2.0 to 1, measured semiannually as of the second
quarter end and the fiscal year end.
6.4 Debt Ratio. Maintain a ratio of Indebtedness to Tangible Net Worth of
not more than 2.0 to 1, measured semiannually as of the second quarter end and
the fiscal year end.
6.5 Cash Collateral. Fully cash-collateralize all outstanding Letters of
Credit by placing immediately available funds in a non-interest-bearing bank
control account at Bank, pledged to Bank, if at any time Borrower's Cash
Equivalents becomes, or would become, as a result of any contemplated
transaction, less than $50,000,000, such collateralization to be effected
prior to consummation of such transaction.
6.6 Financial Information. Maintain a standard system of accounting in
accordance with GAAP and furnish to Bank the following:
-9-
<PAGE>
(a) Quarterly Financial Statements. As soon as available and, in any
event, within 60 days after the end of each fiscal quarter of each fiscal
year, a copy of the consolidated statement of operations of Borrower for
the quarter and for the current fiscal year through such quarter, and for
each such quarter a copy of the consolidated balance sheet, consolidated
statement of shareholders' equity, and consolidated statement of cash flow
of Borrower as of the end of such quarter, setting forth, in each case, in
comparative form, figures for the corresponding period of the preceding
fiscal year, all in reasonable detail and satisfactory in scope to Bank,
prepared by the chief financial officer of Borrower, and in form and
substance satisfactory to Bank;
(b) Annual Financial Statements. As soon as available and, in any
event, within 90 days after the end of each fiscal year, a copy of the
consolidated balance sheet, consolidated statement of operations,
consolidated statement of shareholders' equity, and consolidated statement
of cash flow of Borrower for such year, setting forth in each case, in
comparative form, corresponding figures from the preceding annual
statements, each audited by Ernst and Young or one of the other "Big 6"
independent certified public accounting firms, certifying that such
statement is complete and correct, fairly presents without qualification
the financial condition of Borrower for such period, is prepared in
accordance with GAAP, and has been audited in conformity with generally
accepted auditing standards;
(c) Other Certificates. By February 1 and August 1 of each year, a
certificate of the chief financial officer of Borrower, in the form of
Exhibit A attached, as to the semiannual period most recently ended; and
(d) Additional Financial Information. As soon as available and, in
any event, within ten days after request, such other data, information, or
documentation as Bank may reasonably request.
6.7 Maintenance of Existence. Preserve and maintain its existence, powers,
and privileges in the jurisdiction of its incorporation, and qualify and
remain qualified in each jurisdiction in which its presence is necessary or
desirable in view of its business, operations, or ownership of its property.
Borrower shall also maintain and preserve all of its property which is
necessary or useful in the proper course of its business, in good working
order and condition, ordinary wear and tear excepted.
-10-
<PAGE>
6.8 Books and Records. Keep accurate and complete books, accounts, and
records in which complete entries shall be made in accordance with GAAP,
reflecting all financial transactions of Borrower.
6.9 Ownership of Guarantors. Continue to own and hold, directly or
indirectly, and free and clear of all liens or other encumbrances, all of the
outstanding shares of capital stock of each Guarantor.
6.10 Access to Premises and Records. At all reasonable times and as often
as Bank may reasonably request, permit any authorized representative
designated by Bank to have access to the premises, property, and financial
records of Borrower, including all records relating to the finances,
operations, and procedures of Borrower, and to make copies of or abstracts
from such records.
6.11 Notice of Events. Furnish Bank prompt written notice of:
(a) Proceedings. Any proceeding instituted by or against Borrower in
any court or before any commission or regulatory body, or any proceeding
threatened against it in writing by any governmental agency which if
adversely determined would have a material adverse effect on Borrower's
business, property, or financial condition, or where the amount involved
is $1,000,000 or more and not covered by insurance;
(b) Material Development. Any material development in any such
proceeding referred to in Subsection 6.11(a);
(c) Defaults. Any action, event, or condition which is or, with
notice or lapse of time or both, would constitute a Default, or a default
under any other agreement to which Borrower is a party; and
(d) Adverse Effect. Any other action, event, or condition of any
nature which could result in a material adverse effect on the business,
property, or financial condition of Borrower.
6.12 Payment of Debts and Taxes. Pay all Debt and perform all obligations
promptly and in accordance with their terms, and pay and discharge promptly
all taxes, assessments, and governmental charges or levies imposed upon
Borrower, its property, or revenues prior to the date on which penalties
attach thereto, as well as all lawful claims for labor, material, supplies, or
otherwise which, if unpaid, might become a lien or charge upon Borrower's
property. Borrower shall not, however, be required to pay or discharge any
such tax, assessment, charge, levy, or claim so long as its enforceability,
amount, or validity is contested in good faith by appropriate proceedings.
6.13 Environmental Matters.
-11-
<PAGE>
(a) Use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses, and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with
all applicable Environmental Laws;
(b) immediately notify Bank and provide copies upon receipt of all
written material claims, complaints, notices, or inquiries relating to the
condition of its facilities and properties or compliance with
Environmental Laws; and
(c) provide such information and certifications which Bank may
reasonably request from time to time to evidence compliance with this
Section.
6.14 Insurance. Maintain commercially adequate levels of coverage with
financially sound and reputable insurers, including, without limitation:
(a) Property Insurance. Insurance on all property of a character
usually insured by organizations engaged in the same or similar type of
business as Borrower against all risks, casualties, and losses through
extended coverage or otherwise and of the kind customarily insured against
by such organizations;
(b) Liability Insurance. Public liability insurance against tort
claims which may be asserted against Borrower; and
(c) Additional Insurance. Such other insurance as may be required by
law.
6.15 Additional Guarantors. If at any time or from time to time Borrower
shall, directly or indirectly, acquire any Subsidiary which is a Significant
Subsidiary; or if any existing Subsidiary shall become a Significant
Subsidiary, then, at such time, Borrower shall cause such Subsidiary (a) to
execute and deliver to Bank a guaranty of the Obligations, in form
satisfactory to Bank, together with a certified copy of a resolution of such
Subsidiary's board of directors, satisfactory in form to Bank, authorizing its
guaranty; and such Subsidiary shall thereafter be deemed an "Additional
Guarantor" under this Agreement.
-12-
<PAGE>
ARTICLE 7
Events and Consequences of Default
7.1 Events of Default. Any of the following events shall, at the option of
Bank and at any time without regard to any previous knowledge on the part of
Bank, constitute a default by Borrower under the terms of this Agreement, the
L/C Agreements, and all other Loan Documents ("Default"):
(a) Nonpayment. Any payment or reimbursement due or demanded under
this Agreement or any Loan Document is not made within five days of the
date when due;
(b) Breach of Warranty. Any representation or warranty made in
connection with this Agreement or any other Loan Document, or any
certificate, notice, or report furnished pursuant hereto, is determined by
Bank to be false in any respect when made, and is relied upon by Bank to
its detriment;
(c) ERISA. Borrower shall engage in any act or omission which would
make Borrower liable under ERISA to the Plan, to any of its participants,
or to the Internal Revenue Service, if such liability would materially
adversely affect Borrower's financial condition;
(d) Failure to Perform. Any other term, covenant, or agreement
contained in any Loan Document is not performed or satisfied, and, if
remediable, such failure continues unremedied for 30 days after written
notice thereof has been given to Borrower by Bank;
(e) Defaults on Other Obligations. There exists a default in the
performance of any other agreement or obligation for the payment of
borrowed money, for the deferred purchase price of property or services,
or for the payment of rent under any lease, whether by acceleration or
otherwise, which would permit such obligation to be declared due and
payable prior to its stated maturity; and such default continues for 30
days after Borrower receives written notice thereof from the creditor so
affected;
(f) Guaranties. Any guarantor of all or any portion of the
Obligations revokes or attempts to revoke such guaranty, whether with
respect to future transactions or outstanding Obligations, or otherwise
breaches the terms and conditions of such guaranty;
(g) Loss, Destruction, or Condemnation of Property. A portion of
Borrower's property is affected by any uninsured loss, damage,
destruction, theft, sale, or encumbrance other than created herein or is
-13-
<PAGE>
condemned, seized, or appropriated, the effect of which materially impairs
Borrower's financial condition or its ability to pay its debts as they
come due;
(h) Attachment Proceedings and Insolvency. Borrower or any of
Borrower's property is affected by any:
(i) Judgment lien, execution, attachment, garnishment, general
assignment for the benefit of creditors, sequestration, or
forfeiture, to the extent Borrower's financial condition or its
ability to pay its debts as they come due is thereby materially
impaired; or
(ii) Proceeding under the laws of any jurisdiction relating to
receivership, insolvency, or bankruptcy, whether brought voluntarily
or involuntarily by or against Borrower, including, without
limitation, any reorganization of assets, deferment or arrangement of
debts, or any similar proceeding, and, if such proceeding is
involuntarily brought against Borrower, it is not dismissed within 60
days;
(i) Judgments. Final judgment on claims not covered by insurance
which, together with other outstanding final judgments against Borrower,
exceeds $1,000,000, is rendered against Borrower and is not discharged,
vacated, or reversed, or its execution stayed pending appeal, within 60
days after entry, or is not discharged within 60 days after the expiration
of such stay; or
(j) Government Approvals. Any governmental approval, registration, or
filing with any governmental authority, now or later required in
connection with the performance by Borrower of its obligations under the
Loan Documents, is revoked, withdrawn, or withheld, or fails to remain in
full force and effect, except Borrower shall have 60 days after notice of
any such event to take whatever action is necessary to obtain all
necessary approvals, registrations, and filings.
7.2 Remedies Upon Default. If any Default occurs and is continuing, Bank
may at its option, by notice to Borrower:
(a) Terminate Commitments. Terminate Bank's commitment to issue new
Letters of Credit;
(b) Suspend Commitments. Refuse to issue new Letters of Credit until
any Default has been cured;
-14-
<PAGE>
(c) Setoff. Exercise its right of setoff against any cash collateral
pledged to Bank or any other deposit accounts of Borrower with Bank;
and/or
(d) All Remedies. Pursue any other available legal and equitable
remedies. All of Bank's rights and remedies in all Loan Documents shall be
cumulative and can be exercised separately or concurrently.
7.3 Alleged Default by Bank. In the event that Borrower at any time
concludes that Bank has defaulted in any respect under this Agreement or any
of the Loan Documents, Borrower shall promptly give notice thereof to Bank and
provide Bank with a period of not less than 30 days in which to cure such
alleged default; provided, however, that in no event shall this Section 7.3 or
the Borrower's giving such notice to Bank extend the time period(s) granted to
the Borrower to cure any Default under Section 7.1(d). Failure of the Borrower
to provide such notice to Bank shall waive the Borrower's right to assert a
claim against Bank for such alleged default.
ARTICLE 8
Miscellaneous
8.1 Manner of Payments.
(a) Payments on Nonbusiness Days. Whenever any event is to occur or
any payment is to be made under any Loan Document on any day other than a
Business Day, such event may occur or such payment may be made on the next
succeeding Business Day and such extension of time shall be included in
computation of interest in connection with any such payment.
(b) Payments. All payments and prepayments to be made by Borrower
shall be made to Bank when due, at Bank's office as may be designated by
Bank, without offsets or counterclaims for any amounts claimed by Borrower
to be due from Bank, in U.S. dollars and in immediately available funds.
(c) Application of Payments. All payments made by Borrower shall be
applied first against fees, expenses, and indemnities due; second, against
interest due; and third, against principal, with Bank having the right,
after a Default which is continuing, to apply any payments or collections
received against any one or more of the Obligations in any manner which
Bank may choose.
-15-
<PAGE>
(d) Recording of Payments. Bank is authorized to record on a schedule
or computer-generated statement the date and amount of each draw under a
Letter of Credit, and all payments of principal and interest. All such
schedules or statements shall constitute prima facie evidence of the
accuracy of the information so recorded.
8.2 Notices. All notices, demands, and other communications to be given
pursuant to any of the Loan Documents shall be in writing and shall be deemed
received the earlier of when actually received, or two days after being
mailed, postage prepaid and addressed as follows, or as later designated in
writing:
Bank: Borrower:
SEATTLE-FIRST NATIONAL BANK COEUR D'ALENE MINES CORPORATION
Eastern Commercial Banking 400 Coeur d'Alene Mines Building
West 601 Riverside Avenue 505 Front Avenue, P.O. Box I
Spokane, WA 99210 Coeur d'Alene, Idaho 83814
Attention: Kurt L. Walsdorf Attention: James Sabala
8.3 Documentation and Administration Expenses. Borrower shall pay,
reimburse, and indemnify Bank for all of Bank's reasonable costs and expenses,
including, without limitation, all accounting, appraisal, and report
preparation fees or expenses, all recording or filing fees, and all normal,
reasonable, and customary attorneys' fees (including the allocated cost of
in-house counsel) and legal expenses incurred in connection with the
negotiation, preparation, execution, and administration of this Agreement and
all other Loan Documents, and all amendments, supplements, or modifications
thereto, and the perfection of all security interests, liens, or encumbrances
that may be granted to Bank. Borrower acknowledges that any legal counsel
retained or employed by Bank acts solely on the Bank's behalf and not on
Borrower's behalf, despite Borrower's obligation to reimburse Bank for the
cost of such legal counsel, and that Borrower has had sufficient opportunity
to seek the advice of its own legal counsel with regard to this Agreement.
8.4 Collection Expenses. The nonprevailing party shall, upon demand by the
prevailing party, reimburse the prevailing party for all of its costs,
expenses, and reasonable attorneys' fees (including the allocated cost of
in-house counsel) incurred in connection with any controversy or claim between
said parties relating to this Agreement or any of the other Loan Documents, or
to an alleged tort arising out of the transactions evidenced by this
Agreement, including those incurred in any action, bankruptcy proceeding,
arbitration or
-16-
<PAGE>
other alternative dispute resolution proceeding, or appeal, or in the course
of exercising any judicial or nonjudicial remedies.
8.5 Waiver. No failure to exercise and no delay in exercising, on the part
of Bank, any right, power, or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power, or privilege. Further, no waiver or
indulgence by Bank of any Default shall constitute a waiver of Bank's right to
declare a subsequent similar failure or event to be a Default.
8.6 Assignment. This Agreement is made expressly for the sole benefit of
Borrower and for the protection of Bank and its successors and assigns. The
rights of Borrower hereunder shall not be assignable by operation of law or
otherwise, without the prior written consent of Bank.
8.7 Merger. The rights and obligations set forth in this Agreement shall
not merge into or be extinguished by any of the Loan Documents, but shall
continue and remain valid and enforceable. This Agreement and the other Loan
Documents constitute Bank's entire agreement with Borrower, and supersede all
prior writings and oral negotiations. No oral or written representation,
covenant, commitment, waiver, or promise of either Bank or Borrower shall have
any effect, whether made before or after the date of this Agreement, unless
contained in this Agreement or another Loan Document, or in an amendment
complying with Section 8.8. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
TO EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
8.8 Amendments. Any amendment or waiver of, or consent to any departure by
Borrower from any provision of, this Agreement shall be in writing signed by
each party to be bound thereby, and shall be effective only in the specific
instance and for the specific purpose for which given.
8.9 Mandatory Arbitration.
(a) At the request of either Bank or Borrower, any controversy or
claim between Bank and Borrower, arising from or relating to this
Agreement or any of the other Loan Documents, or arising from an alleged
tort, shall be settled by arbitration in Seattle, Washington. The United
States Arbitration Act shall apply even though this Agreement is otherwise
governed by Washington law. The proceedings shall be administered by the
American Arbitration Association under its commercial rules of
arbitration. Any controversy over whether an issue is arbitrable shall be
-17-
<PAGE>
determined by the arbitrator(s). Judgment upon the arbitration award may
be entered in any court having jurisdiction over the parties. The
institution and maintenance of an action for judicial relief or pursuit of
an ancillary or provisional remedy shall not constitute a waiver of the
right of either party, including the plaintiff, to submit the controversy
or claim to arbitration if such action for judicial relief is contested.
For purposes of the application of the statute of limitations, the filing
of an arbitration pursuant to this subsection is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated
under this subsection is subject to any applicable statute of limitations.
The arbitrator(s) will have the authority to decide whether any such claim
or controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis. The parties consent to the joinder
of any guarantor, hypothecator, or other party having an interest relating
to the claim or controversy being arbitrated in any proceedings under this
Section.
(b) Notwithstanding the provisions of subsection 8.9(a), no
controversy or claim shall be submitted to arbitration without the consent
of all parties if at the time of the proposed submission, such controversy
or claim arises from or relates to an obligation secured by real property.
(c) No provision of this subsection shall limit the right of Borrower
or Bank to exercise self-help remedies such as set-off, foreclosure,
retention or sale of any collateral, or obtaining any ancillary,
provisional, or interim remedies from a court of competent jurisdiction
before, after, or during the pendency of any arbitration proceeding. The
exercise of any such remedy does not waive the right of either party to
request arbitration.
8.10 Construction. Each term of this Agreement and each Loan Document
shall be binding to the extent permitted by law and shall be governed by the
laws of the State of Washington, excluding its conflict of laws rules. If one
or more of the provisions of this Agreement should be invalid, illegal, or
unenforceable in any respect, the remaining provisions of this Agreement shall
remain effective and enforceable. If there is a conflict among the provisions
of any Loan Documents, the provisions of this Agreement shall be controlling.
The captions and organization of this Agreement are for convenience only, and
shall not be construed to affect any provision of this Agreement.
-18-
<PAGE>
8.11 Termination of Agreement. All obligations of Borrower under this
Agreement shall remain in full force and effect until (a) no Letters of Credit
remain outstanding, (b) all Obligations have been paid in full and (c) Bank
has no further obligation to issue Letters of Credit; at which time all
obligations of both Bank and Borrower under this Agreement shall terminate,
and all security interests held by Bank shall be deemed released. Bank shall
at such time, upon demand by Borrower, execute all documents of release or
satisfaction necessary to clear title to any collateral.
DATED this 8th day of June, 1994.
Borrower: Bank:
COEUR D'ALENE MINES CORPORATION SEATTLE-FIRST NATIONAL BANK
By /s/James A. Sabala By /s/Kurt L. Walsdorf
------------------ -------------------
James A. Sabala Kurt L. Walsdorf
Title: Sr. Vice President Title: Vice President
------------------ --------------
AWS:cdam.agt
6/2/94
<PAGE>
EXHIBIT A TO CREDIT AGREEMENT
[Form of Certificate to be sent with financial reports]
[Date]
Seattle-First National Bank
Eastern Commercial Banking
West 601 Riverside Avenue
Spokane, WA 99210
Attention: Kurt L. Walsdorf
Re: Certificate of Chief Financial Officer
Ladies and Gentlemen:
With respect to that certain Credit Agreement between Coeur d'Alene Mines
Corporation ("Borrower") and Seattle-First National Bank ("Bank") dated
_____________, 1994 (the "Agreement"), we hereby represent to you the
following (capitalized terms used in this certificate shall have the same
meaning as in the Agreement):
Enclosed are financial statements required by Section 6.6 of the Agreement. As
of the date of such financial statements:
1. Borrower's Tangible Net Worth is $ .
2. Borrower's ratio of Current Assets to Current Liabilities is
.
3. Borrower's ratio of Debt to Tangible Net Worth is
.
4. Borrower's Cash Equivalents are $ .
Such financial statements are complete and correct, fairly present, without
qualification, the financial condition of Borrower for such period, and are
prepared in accordance with GAAP;
No Default exists, nor any event which, with lapse of time or upon the giving
of notice would constitute a Default under the Agreement.
Sincerely,
COEUR D'ALENE MINES CORPORATION
By
-----------------------
Chief Financial Officer
<PAGE>
SECRETARY'S CERTIFICATE
The undersigned, Secretary of Coeur d'Alene Mines Corporation, Coeur
Alaska, Inc., CDE Chilean Mining Corporation, Callahan Mining Corporation,
Coeur Gold New Zealand Limited, Coeur New Zealand, Inc. and Coeur Rochester,
Inc., hereby certifies that the Resolutions set forth below were duly adopted
at a regular meeting of the Board of Directors of Coeur d'Alene Mines
Corporation held on December 14, 1993:
RESOLVED, that Coeur d'Alene Mines Corporation and its subsidiaries' 1994
Budget presented to the Board at this meeting is hereby approved an adopted,
it being understood that said Budget specifically includes the lease financing
of certain equipment for use at the Rochester Mine.
FURTHER RESOLVED that the appropriate officers of Coeur d'Alene Mines
Corporation and its subsidiaries are authorized to take all steps,a nd to
execute all documents, including contracts, guarantees, bank and financial
institution agreements and authorizations, permits, deeds and any other
instruments which may be necessary to carry out the business of the company
and its subsidiaries as contemplated by the 1994 Budget; and such officers
shall have the authority to effect transactions that do not materially depart
from such Budget.
FURTHER RESOLVED that the Chairman, Chief Executive Officer and
President, the Senior Vice President-Chief Financial Officer, the Senior Vice
President-Operations,and the Secretary of the company and its subsidiaries are
hereby authorized to, severally or jointly as is appropriate to their
customary duties and the transactions involved, provide certificates to third
parties as evidence of the authorization by the Board to carry out the
business and affairs of Coeur d'Alene Mines Corporation and its subsidiaries
as provided in these Resolutions, which certificates may include a
representation that the particular transaction is contemplated by the 1994
Budget, and therefore authorized by the Board, it being understood that third
parties may rely upon such certificate.
It is further certified that the Letters of Credit which are the subject
of that certain Credit Agreement between Coeur d'Alene Mines Corporation and
Seattle-First National Bank dated June 8, 1994, are contemplated by the 1994
budget referred to in the foregoing resolutions, and that James A. Sabala is
the Senior Vice President- Chief Financial Officer of Coeur d'Alene Mines
Corporation and the Vice President of each of the subsidiaries listed above,
and is the officer who, as a part of his customary duties, executes bank
credit agreements and guaranties on behalf of Coeur d'Alene Mines Corporation
and its subsidiaries listed above.
It is further certified that the signature of James A. Sabala which
appears hereon is his true and accurate signature.
/s/James A. Sabala
------------------
<PAGE>
DATED this 8th day of June, 1994
/s/William F. Boyd
--------------------------
William F. Boyd, Secretary
<PAGE>
DISCLOSURE OF LITIGATION
Pursuant to Paragraph 5.6 of that certain Credit Agreement between Coeur
d'Alene Mines Corporation and Seattle-First National Bank dated June 8, 1994,
Coeur d'Alene Mines Corporation hereby discloses certain litigation, as
follows:
1. Kassover suit, where a settlement of $5,875,000 has been agreed
upon, subject to Court approval. (See page 18 of the 1993 Form
10-K.)
2. Callahan suit, where FN Enterprises claims it is due approximately
$900,000 (if interest is included) from Callahan Mining Corporation
for breach of contract. (See page 18 of the 1993 Form 10-K.)
3. Promissory note suit, where an estate seeks approximately $1,000,000
(if interest is included) from Coeur d'Alene Mines Corporation in
connection with notes claimed to be owed. (See page 19 of the 1993
Form 10-K.)
4. Bunker Hill superfund site, where a settlement has been agreed upon,
subject to Court approval, in the amount of $1,230,000. (See page 16
of the 1993 Form 10-K.)
DATED this 8th day of June, 1994
/s/William F. Boyd
--------------------------
William F. Boyd, Secretary
LOAN AGREEMENT, EXHIBIT 10(b)
dated as of April 19, 1995,
among
COMPANIA MINERA
CDE FACHINAL LIMITADA,
as the Borrower,
COEUR D'ALENE MINES CORPORATION,
as the Guarantor,
COEUR BULLION CORPORATION,
as the Finance Subsidiary
and
N M ROTHSCHILD & SONS LIMITED,
and
BAYERISCHE VEREINSBANK AG,
as the Banks,
and
N M ROTHSCHILD & SONS LIMITED,
as the Agent for the Banks.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS................................................... 2
1.1. Defined Terms................................................ 2
1.2. Use of Defined Terms......................................... 29
1.3. Cross-References............................................. 30
1.4. Accounting and Financial Determinations...................... 30
1.5. Change in Accounting Principles.............................. 30
1.6. Dollar Equivalency Determinations............................ 30
1.7. Gold or Silver Equivalency Determinations.................... 31
1.8. Project Determinations, etc.................................. 31
1.9. General Provisions as to Certificates and
Opinions, etc................................................ 32
1.10. Interpretation............................................... 32
ARTICLE 2. COMMITMENTS AND BORROWING PROCEDURE........................... 33
2.1. Commitments.................................................. 33
2.2. Procedure for Making Loans................................... 34
2.3. Loans Limit.................................................. 34
2.4. Cancellation................................................. 34
2.5. Interest Period Elections.................................... 35
2.6. Records...................................................... 35
2.7. Funding...................................................... 36
2.8. Notes........................................................ 36
ARTICLE 3. PRINCIPAL PAYMENTS; INTEREST; COMMISSIONS..................... 37
3.1. Principal Payments........................................... 37
3.2. Interest Payments............................................ 38
3.2.1. Rate......................................................... 38
3.2.2. Post-Maturity Rate........................................... 38
3.2.3. Payment Dates................................................ 38
3.2.4. Rate Determinations.......................................... 39
3.3. Commissions.................................................. 39
3.3.1. Participation Commission..................................... 39
3.3.2. Commitment Commission........................................ 39
ARTICLE 4. PROJECT ACCOUNTS.............................................. 39
4.1. Construction Account......................................... 39
4.2. Proceeds Account............................................. 41
4.3. Proceeds Sub-Account (Debt Service Reserve).................. 44
4.4. General Provisions Relating to the Project
Accounts..................................................... 45
ARTICLE 5. INCREASED COSTS; TAXES; MARKET DISRUPTIONS;
GENERAL PAYMENT PROVISIONS............................................ 47
5.1. Dollars Unavailable.......................................... 47
5.2. Increased Costs, etc......................................... 47
5.3. Funding Losses............................................... 48
5.4. Increased Capital Costs...................................... 49
5.5. Illegality................................................... 49
5.6. Taxes........................................................ 50
5.7. Mitigation................................................... 51
<PAGE>
5.8. Payments, Computations, etc.................................. 52
5.9. Proration of Payments........................................ 53
5.10. Setoff....................................................... 53
5.11. Application of Proceeds...................................... 54
5.12. Judgment Currency, etc....................................... 54
ARTICLE 6. CONDITIONS PRECEDENT TO MAKING LOANS.......................... 55
6.1. Initial Loans................................................ 55
6.1.1. Notes........................................................ 55
6.1.2. Resolutions, etc............................................. 55
6.1.3. Guaranty Agreement........................................... 56
6.1.4. Security Agreements.......................................... 56
6.1.5. Subordination Agreement; Subordination of
Certain Obligations of the Guarantor......................... 58
6.1.6. Project Documents; Approvals................................. 58
6.1.7. Hedging Agreements........................................... 59
6.1.8. Insurance.................................................... 59
6.1.9. Project Accounts............................................. 59
6.1.10. Process Agent Acceptance..................................... 59
6.1.11. Opinions of Counsel.......................................... 59
6.1.12. Independent Consultant's Certificate......................... 60
6.1.13. Transfer of Properties, etc. from CDE........................ 60
6.1.14. Closing Commissions, Expenses, etc........................... 60
6.1.15. Initial Compliance Certificate............................... 60
6.1.16. Bridge Loan Repayment........................................ 61
6.1.17. Technical Review............................................. 61
6.1.18. Title to Surface Lands....................................... 61
6.2. All Loans.................................................... 61
6.2.1. Compliance with Warranties, No Default, etc.................. 61
6.2.2. Absence of Litigation, etc................................... 61
6.2.3. Borrowing Request............................................ 62
6.2.4. Notes........................................................ 62
6.2.5. Satisfactory Legal Form...................................... 62
ARTICLE 7. REPRESENTATIONS AND WARRANTIES................................ 62
7.1. Organization, Power, Authority, etc.......................... 63
7.2. Due Authorization; Non-Contravention......................... 63
7.3. Validity, etc................................................ 64
7.4. Legal Status................................................. 64
7.5. Financial Information........................................ 64
7.6. Absence of Default........................................... 65
7.7. Litigation, etc.............................................. 65
7.8. Materially Adverse Effect.................................... 66
7.9. Burdensome Agreements........................................ 66
7.10. Taxes and Other Payments..................................... 66
7.11. Mining Rights. ............................................. 66
7.12. Ownership and Use of Properties; Liens....................... 66
7.13. Subsidiaries................................................. 67
7.14. Intellectual Property........................................ 67
7.15. Technology................................................... 67
7.16. Approvals; Project Documents................................. 67
7.17. Development Plan etc......................................... 68
7.18. Environmental Warranties..................................... 68
7.19. Pari Passu................................................... 70
- ii -
<PAGE>
ARTICLE 8. COVENANTS..................................................... 70
8.1. Certain Affirmative Covenants................................ 70
8.1.1. Financial Information, etc................................... 70
8.1.2. Compliance with Laws......................................... 75
8.1.3. Approvals.................................................... 75
8.1.4. Maintenance of Corporate Existence........................... 75
8.1.5. Foreign Qualification........................................ 75
8.1.6. Payment of Taxes, etc........................................ 76
8.1.7. Insurance.................................................... 76
8.1.8. Books and Records............................................ 79
8.1.9. Project Completion and Management............................ 79
8.1.10. Hedging Agreements........................................... 79
8.1.11. Proceeds; Project Accounts................................... 80
8.1.12. Provision of Staff........................................... 80
8.1.13. Environmental Covenant....................................... 81
8.1.14. Maintenance of Project Assets................................ 81
8.1.15. Pari Passu................................................... 81
8.1.16. After-Acquired Collateral.................................... 82
8.1.17. Accuracy of Information...................................... 83
8.1.18. Guarantor's Control of the Fachinal Project.................. 83
8.1.19. Project Agreements........................................... 83
8.1.20. Use of Proceeds.............................................. 83
8.2. Certain Negative Covenants................................... 83
8.2.1. Business Activities; Place of Business; Organic
Documents.................................................... 84
8.2.2. Indebtedness................................................. 84
8.2.3. Liens........................................................ 85
8.2.4. Financial Condition of Borrower.............................. 86
8.2.5. Capital Expenditures......................................... 87
8.2.6. Investments.................................................. 87
8.2.7. Restricted Payments, etc..................................... 87
8.2.8. Take or Pay Contracts........................................ 88
8.2.9. Consolidation, Merger, etc................................... 88
8.2.10. Asset Dispositions, etc...................................... 88
8.2.11. Transactions with Affiliates................................. 89
8.2.12. Restrictive Agreements, etc.................................. 89
8.2.13. Inconsistent Agreements...................................... 89
8.2.14. Project Documents............................................ 89
8.2.15. Actions under Project Documents.............................. 89
8.2.16. Bank Accounts................................................ 90
8.2.17. Royalty Agreements........................................... 90
ARTICLE 9. EVENTS OF DEFAULT............................................. 90
9.1. Events of Default............................................ 90
9.1.1. Non-Payment of Obligations................................... 90
9.1.2. Non-Performance of Certain Covenants......................... 90
9.1.3. Non-Performance of Other Obligations......................... 90
9.1.4. Breach of Representation or Warranty......................... 90
9.1.5. Default on other Indebtedness................................ 91
9.1.6. Bankruptcy, Insolvency, etc.................................. 91
9.1.7. Hedging Agreements........................................... 92
9.1.8. Project Documents, etc....................................... 92
9.1.9. Impairment of Loan Documents................................. 92
9.1.10. Abandonment; Mining Rights................................... 93
9.1.11. Judgments.................................................... 93
- iii -
<PAGE>
9.1.12. Expropriation, etc........................................... 93
9.1.13. Change in Control............................................ 94
9.1.14. Default, etc. by Construction Contractor..................... 94
9.1.15. Failure to Achieve Project Completion........................ 94
9.1.16. Approvals.................................................... 94
9.1.17. Materially Adverse Effect.................................... 94
9.1.18. Cease to Carry on Business................................... 94
9.1.19. Unenforceability of Loan Documents and Project
Documents.................................................... 95
9.2. Action if Bankruptcy......................................... 95
9.3. Action if Other Event of Default............................. 95
9.4. Event of Default after Project Completion
Date......................................................... 95
ARTICLE 10. THE AGENT.................................................... 95
10.1. Actions...................................................... 95
10.2. Funding Reliance, etc........................................ 97
10.3. Exculpation.................................................. 97
10.4. Successor.................................................... 97
10.5. Loans by Rothschild.......................................... 98
10.6. Rothschild as the Agent...................................... 98
10.7. Credit Decisions............................................. 98
10.8. Copies, etc.................................................. 99
ARTICLE 11. MISCELLANEOUS................................................ 99
11.1. Waivers, Amendments, etc..................................... 99
11.2. Notices..................................................... 100
11.3. Costs and Expenses.......................................... 100
11.4. Indemnification; Release of Guarantor....................... 101
11.5. Survival.................................................... 102
11.6. Severability................................................ 103
11.7. Headings.................................................... 103
11.8. Counterparts, Effectiveness, etc............................ 103
11.9. Governing Law; Entire Agreement............................. 103
11.10. Successors and Assigns...................................... 103
11.11. Sale and Transfer of Loans; Participations in
Loans....................................................... 104
11.11.1. Assignments................................................. 104
11.11.2. Participations.............................................. 105
11.12. Other Transactions.......................................... 106
11.13. Forum Selection and Consent to Jurisdiction;
Waiver of Immunity.......................................... 106
11.14. Waiver of Jury Trial........................................ 107
11.15. English Language............................................ 107
- iv -
<PAGE>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Insurance Summary
EXHIBIT A-1 - Note
EXHIBIT A-2 - Notes Operating Procedures Agreement
EXHIBIT B-1 - Borrowing Request
EXHIBIT B-2 - Interest Period Notice
EXHIBIT C-1 - Guaranty Agreement
EXHIBIT C-2 - Conditional Assignment of Contract Rights
(Foreign Investment Contract)
EXHIBIT C-3 - Finance Subsidiary Security Agreement
EXHIBIT D-1 - Borrower Security Agreement (U.S. Assets)
EXHIBIT D-2 - Mortgage Over Mining Concessions
EXHIBIT D-3(a) - Mortgage Over Real Estate (Borrower)
EXHIBIT D-3(b) - Mortgage Over Real Estate (CDE)
EXHIBIT D-4 - Mortgage Over Water Rights
EXHIBIT D-5 - Industrial Pledge
EXHIBIT D-6 - Conditional Assignment of Contract Rights
EXHIBIT D-7 - Promise to Grant Industrial Pledges
EXHIBIT D-8 - Promise to Grant Pledges Without Conveyance
EXHIBIT E-1 - Project Account Agreement (U.S.)
EXHIBIT E-2 - Project Account Agreement (Chile)
EXHIBIT F - Subordination Agreement
EXHIBIT G-1 - Opinion of Philippi, Yrarrazaval, Pulido,
Langlois & Brunner, Chilean counsel to the
Obligors
EXHIBIT G-2 - Opinion of William F. Boyd, Esq., General
Counsel to the Guarantor
EXHIBIT G-3 - Opinion of Carey y Cia., Chilean counsel
to the Bank Parties, as to general matters of
Chilean law
EXHIBIT G-4 - Opinion of Carey y Cia., Chilean counsel
to the Bank Parties, as to property title
matters
EXHIBIT H-1 - Independent Consultant's Certificate
EXHIBIT H-2 - Insurance Broker's Certificate
EXHIBIT H-3 - Project Completion Certificate
EXHIBIT I - Compliance Certificate
EXHIBIT J - Bank Assignment Agreement
EXHIBIT K - Process Agent Acceptance
EXHIBIT L-1 - Quarterly Report
EXHIBIT L-2 - Monthly Report
- v -
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 19, 1995 (this "Agreement"), among
(1) COMPANIA MINERA CDE FACHINAL LIMITADA, a limited liability company
(sociedad de responsabilidad limitada) organized and existing under the laws
of Chile (the "Borrower"), (2) COEUR D'ALENE MINES CORPORATION, an Idaho
corporation (the "Guarantor"); (3) COEUR BULLION CORPORATION, an Idaho
corporation ("the Finance Subsidiary"); (4) BAYERISCHE VEREINSBANK AG
("Bayerische Vereinsbank") and N M ROTHSCHILD & SONS LIMITED, a company
organized and existing under the laws of England ("Rothschild"; and both of
the foregoing institutions, collectively with their respective successors and
permitted assigns, the "Banks"), and (5) ROTHSCHILD in its capacity as the
agent for the Banks (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower owns the Fachinal Project comprising the Laguna
Verde, Temer and Guanaco gold and silver deposits located near Chile Chico in
Region XI Southern Chile and the Borrower proposes to construct, develop and
operate those deposits and the related facilities in accordance with the
Development Plan (such construction, development and operation, the "Fachinal
Project");
WHEREAS, the Borrower intends to engage solely in the business of
developing the ore extraction, processing and related facilities located at
the Mine and mining, producing and selling gold, silver and other minerals
contained within the deposits located at the Mine, in each such case in
accordance with the Development Plan;
WHEREAS, pursuant to the Construction Contract, the Construction
Contractor has undertaken to construct the Mine as more particularly described
therein;
WHEREAS, the Borrower has requested that the Banks provide commitments to
the Borrower to advance Loans for the purposes of financing a portion of the
construction and development costs of the Fachinal Project and its initial
working capital requirements;
WHEREAS, the Banks are willing, on the terms and conditions hereinafter
set forth to extend commitments to make the Loans to the Borrower;
WHEREAS, as security for the due and punctual payment and performance of
the Borrower's Obligations, the Borrower is willing to mortgage, charge and
otherwise encumber to the Bank Parties or, as the case may be, to the Agent
(for the ratable benefit of the Bank Parties) all of its right, title and
interest in and to the Project Assets;
<PAGE>
WHEREAS, the Guarantor owns (a) a 99.99% ownership interest in the
Borrower (the remaining 0.01% interest being owned by CDE), and (b) 100% of
the entire issued outstanding share capital of each of the Finance Subsidiary
and CDE;
WHEREAS, the Finance Subsidiary has made and/or in the future may make
intercompany advances to the Borrower for purposes of financing the
development of the Fachinal Project;
WHEREAS, in consideration of the Banks agreeing to make Loans to the
Borrower and as security for the due and punctual payment and performance of
the Borrower's Obligations, each of the Guarantor and the Finance Subsidiary
is willing to (a) in the case of the Guarantor, grant to the Bank Parties a
security interest in its rights in the Foreign Investment Contract as set
forth in the Conditional Assignment of Contract Rights (Foreign Investment
Contract), (b) in the case of the Finance Subsidiary, subordinate the
obligations owing to it from the Borrower to the obligations owing by the
Borrower to the Bank Parties under the Loan Documents and to grant to the Bank
Parties a security interest in its rights under any loans advanced to the
Borrower as set forth in the Subordination Agreement and the Finance
Subsidiary Security Agreement, respectively; and
WHEREAS, in consideration of the Banks agreeing to make the Loans to the
Borrower, the Guarantor has agreed with the Agent (for the ratable benefit of
the Bank Parties), amongst other things, to guarantee the due and punctual
payment and performance of the Obligations of the Borrower, to guarantee the
Borrower's undertaking to complete construction of the Fachinal Project and to
enter into certain other undertakings in favor of the Bank Parties, in each
case as set forth in the Guaranty Agreement (including the provisions thereof
providing for the release of such obligations after the Release Date); and
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged by each party hereto, the parties
hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings:
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any compensation, welfare or similar plan). A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power:
- 2 -
<PAGE>
(a) to vote ten percent (10%) or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors
or managing general partners of such Person; or
(b) to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
"Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Annual Loan Cover Ratio" means, on any Calculation Date, the ratio
(expressed as a percentage) of (a) the Future Net Cash Flow for the 12 month
period commencing on such Calculation Date divided by (b) the Funded Debt
Service for such 12 month period.
"Applicable Law" means, with respect to any Person or matter, any
national, federal, state, regional or local statute, law, rule, treaty,
convention, regulation, order, decree, request, determination or other
requirement (whether or not having the force of law) relating to such Person
or matter and, where applicable, any interpretation thereof by any
Governmental Agency having jurisdiction with respect thereto or charged with
the administration or interpretation thereof.
"Applicable Margin" means:
(a) at all times prior to the Project Completion Date, one point
five percent (1.5%) per annum; and
(b) at all times on or after the Project Completion Date, two point
seven five percent (2.75%) per annum.
"Approval" means each and every approval, authorization, license, permit,
consent, filing or registration by or with any Governmental Agency or other
Person necessary to authorize or permit the occurrence of Project Completion
or other development of the Mine in accordance with the Development Plan, the
execution, delivery or performance of this Agreement or any other Operative
Document (including any such approval, authorization, licence, permit,
consent, filing or registration required from the Central Bank relating to the
registration of the financial terms and conditions of this Agreement and each
other Loan Document and any such approval, authorization, licence, permit,
consent, filing or registration relating to, or necessary for, the production
and export of Project Output and the consent of any lessor or owner of any
property or assets forming part of the Mine) or for the validity or
enforceability hereof or thereof, whether or not referred to in Item 1
("Approvals") of the Disclosure Schedule.
"Approved Budget" means the construction budget incorporated into the
Development Plan containing details as to
- 3 -
<PAGE>
Project Costs to be incurred prior to Project Completion, as the same may be
amended from time to time pursuant to clause (b) of Section 1.8.
"Approved Subordinated Indebtedness" means any intercompany Indebtedness
advanced by the Finance Subsidiary to the Borrower and which is subject to the
terms and conditions of the Subordination Agreement.
"Assignee Bank" is defined in Section 11.11.1.
"Assignor Bank" is defined in Section 11.11.1.
"Authorized Representative" means, relative to any Obligor, or the
Independent Consultant, those of its officers whose signatures and incumbency
shall have been certified to the Agent pursuant to Section 6.1.2.
"Bank Assignment Agreement" means an assignment agreement, duly executed
by an Assignor Bank and an Assignee Bank, substantially in the form of Exhibit
J attached hereto.
"Bank Parties" means, collectively, the Agent and the Banks.
"Banks" is defined in the preamble.
"Borrower" is defined in the preamble.
"Borrower Security Agreement (U.S. Assets)" means that certain Security
Agreement between the Borrower and the Agent, substantially in the form of
Exhibit D-1 attached hereto.
"Borrowing Date" means any Business Day on which Loans shall be made
pursuant to Section 2.2.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Representative of each Obligor, substantially in the form of
Exhibit B-1 attached hereto.
"Bridge Loan" means that certain loan in the aggregate principal amount
of U.S.$5,000,000 made by Rothschild to the Guarantor on March 10, 1995
pursuant to the terms of a letter agreement, dated March 10, 1995, between
Rothschild and the Guarantor, as amended by a further letter agreement, dated
April 7, 1995, between Rothschild and the Guarantor.
"Business Day" means:
(a) any day which is neither a Saturday nor a Sunday nor a legal
holiday or any other day on which banks are authorized or required to be
closed in London, England or New York, New York;
- 4 -
<PAGE>
(b) relative to the making, continuing, prepaying or repaying of any
Loan or the calculation of the LIBO Rate, any day on which dealings in
Dollars are carried on in the London interbank market; and
(c) relative to the determination of the London Price or the
determination of the Gold, Silver or Dollar equivalent of any amount
based on the London Price, any day on which dealings in Gold or Silver
(as the case may be) are carried on between members of the LBMA in
London.
"Calculation Date" means each of the Project Completion Date (and, in the
event that the Release Date shall occur after the Project Completion Date, the
Release Date) and each Payment Date occurring after the Project Completion
Date (and, in the case of any calculation of any financial ratio to be
contained in any Compliance Certificate required to be delivered prior to the
Project Completion Date or the Release Date, the Project Completion Date or
the Release Date, as the case may be, for such purposes shall be deemed to be
the date on which such dates are then scheduled to occur as set forth in the
Development Plan).
"Capital Contribution" means a cash contribution made (directly or
indirectly) by one Person to the ordinary share capital or equity of another
Person.
"Capital Expenditures" means, for any period and with respect to any
Person, the sum of:
(a) the aggregate amount of all expenditures of such Person for
fixed or capital assets (including expenditure incurred in connection
with deferred development costs) made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"Capitalized Lease Liabilities" means all monetary obligations of any
Person under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, as the context may require, a Cash
Equivalent Investment (Chile) and/or a Cash Equivalent Investment (U.S.).
"Cash Equivalent Investment (Chile)" means, at any time:
- 5 -
<PAGE>
(a) obligations issued or guaranteed by the Central Bank or by the
General Treasury of Chile maturing within 90 days from the purchase
thereof (or capable of redemption within the same 90 day period through
repurchase agreements entered into with any financial institution of the
nature referred to in clause (b)); or
(b) demand deposits, time deposits, certificates of deposit or other
obligations (including bankers' acceptances and cuotas de fondos
mutuales) maturing or capable of redemption not more than 90 days after
the date of acquisition or investment which are issued, accepted or
guaranteed by a banking institution or a mutual fund in Chile and which
are classified in the risk category "A" or "B" in the "Acuerdo de
Clasificacion de Instrumentos Financieros de Oferta Publica Adoptado Por
la Comision Clasificadora de Riesgo" appearing from time to time in the
"Diario Oficial de la Republica de Chile".
"Cash Equivalent Investment (U.S.)" means, at any time:
(a) any security, maturing not more than one year after the purchase
thereof, issued by the United States Treasury that is maintained in
book-entry form on the records of a Federal Reserve Bank in the United
States;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is (i) rated at least A-l by Standard & Poor's
Rating Group, a division of McGraw Hill, Inc., and P-l by Moody's
Investors Service, Inc., (ii) issued by a corporation or company (other
than any Obligor or Affiliate thereof) and (iii) in certificated form
(including master notes held by The Depository Trust Company, a New York
limited purpose trust company, or one or more of its nominees or
custodian banks); or
(c) any negotiable certificate of deposit or bankers' acceptance (in
either case, in certificated form and denominated in U.S. Dollars),
maturing not more than one year after such time, which is issued by a
commercial banking institution organized under the laws of an OECD member
country that has a combined capital and surplus and undivided profits of
not less than U.S.$1,000,000,000 (or the equivalent thereof in any other
currency)
which in any case is purchased with funds standing to the credit of any
Project Account (U.S.).
"Cash Flow Schedule" means the schedule setting forth the projected
Future Net Cash Flow of, and containing other financial and operational data
relating to, the Fachinal Project for the period commencing on the date of
commencement of Production and ending on the last day of the Project Period,
initially, in the form set forth in the Development Plan and, thereafter, as
the
- 6 -
<PAGE>
same may be amended from time to time in accordance with clause (b) of Section
1.8.
"CDE" means CDE Chilean Mining Corporation, a Delaware corporation.
"CDE Surface Rights" means those surface rights referred to in Item 3(b)
("Mortgaged Real Estate (CDE)") of the Disclosure Schedule.
"CDE Surface Rights Statutory Easements" means easements to which the
Borrower is entitled to apply for pursuant to Articles 120 through 125 of the
Mining Code of Chile and the pertinent provisions of the Water Code of Chile
in respect of the real estate property over which CDE holds the CDE Surface
Rights (including in relation to the ownership interests of any Person other
than CDE in respect thereof) as a result of the mining concessions relating to
the Fachinal Project owned by the Borrower which easements (together with the
Mining Rights owned by the Borrower on the Effective Date) grant the Borrower
the right to:
(a) construct and operate the relevant facilities constituting the
Mine as contemplated by the Development Plan; and
(b) access the Fachinal Property (including the Mine) by each of
roads and water pipelines (including all the installations required for
the adequate extraction of water from the water boreholes).
"Central Bank" means the Central Bank of Chile.
"Change in Control" means the failure of the Guarantor to own (and to
have sole power to vote and dispose of), directly and free and clear of all
Liens, a 99.99% ownership interest in the Borrower and 100% of the issued and
outstanding share capital (however designated) of each of the Finance
Subsidiary and CDE; provided, however, that it shall not be a Change of
Control, if, at any time after the Release Date, the Guarantor shall have
disposed of not in excess of 49% of its ownership interest in the Borrower
pursuant to a public flotation of the shares of the Borrower or a private
placement of such ownership interest to any single person on terms and
conditions, in the case of any such private placement, that the portion of the
ownership interest in the Borrower so disposed of by the Guarantor shall not
be subject to any Lien in favour of any Person on or prior to the date on
which all Obligations are satisfied in full and the Commitments of the Banks
shall have terminated.
"Chile" means the Republic of Chile.
"Commitment" means, relative to any Bank, such Bank's obligation to make
and continue its Loans pursuant to the terms and subject to the conditions of
this Agreement.
- 7 -
<PAGE>
"Commitment Amount" means (a) in relation to any Bank party hereto on the
Effective Date, the amount set forth opposite its name on the signature pages
hereto as the same may be reduced pursuant to this Agreement (including
Section 2.4) and (b) in relation to an Assignee Bank which becomes a Bank
subsequent to the Effective Date, the amount assumed from the Assignor Bank
pursuant to the Bank Assignment Agreement by which such Assignee Bank became
party to this Agreement, in each case as such amount may be adjusted pursuant
to any other Bank Assignment Agreement to which such Bank or Assignee Bank, as
the case may be, is a party.
"Commitment Termination Date" means December 31, 1995 or, if earlier, the
date on which any of the following events shall occur:
(a) the occurrence of any Default occurring pursuant to any event
described in Section 9.1.4; or
(b) immediately when any other Event of Default shall have occurred
and be continuing and the Agent, acting at the direction of the Required
Banks, shall have given notice to the Borrower that the Commitments have
been terminated; or
(c) the Project Completion Date.
"Committed Hedging Agreements" is defined in Section 8.1.10.
"Compliance Certificate" means a certificate duly executed by an
Authorized Representative of the Borrower, substantially in the form of
Exhibit I attached hereto.
"Concentrate" means the product of beneficiation of gold and silver ores
through the milling process produced from the Fachinal Project.
"Concentrate Sales Agreement" means an agreement to be entered into by
the Borrower for the sale of Concentrate with a purchaser, and upon terms and
conditions, satisfactory to the Agent and the Required Banks.
"Conditional Assignment of Contract Rights" means, individually, each of
those certain Conditional Assignment of Contract Rights (Cesion condicional de
contratos importantes y/o de derechos emanados de contratos importantes),
among the Borrower and the Bank Parties executed in Spanish, substantially in
the form of Exhibit D-6 attached hereto and relating to the relevant Project
Document to which the Borrower is a party or beneficiary.
"Conditional Assignment of Contract Rights (Foreign Investment Contract)"
means that certain Conditional Assignment of Contract Rights (Foreign
Investment Contract) (Cesion
- 8 -
<PAGE>
condicional de derechos bajo el Contrato de Inversion Extranjera), among the
Borrower, the Guarantor and the Bank Parties executed in Spanish,
substantially in the form of Exhibit C-2 attached hereto.
"Construction Account" is defined in clause (a) of Section 4.1.
"Construction Contract" means the engineering, procurement, construction
and management agreement, dated 12 December, 1994, between CDE and the
Construction Contractor as assigned by CDE to the Borrower pursuant to the
requirements of clause(a)(ii) of Section 6.1.6.
"Construction Contract Guaranty" means the guaranty of Fluor Daniel, Inc.
a Californian corporation, in favour of the Borrower as it relates to the
obligations of the Construction Contractor under the Construction Contract in
the form attached to the Construction Contract as Exhibit E (as supplemented
by a letter, dated January 11, 1995, from Fluor Daniel, Inc. to the Guarantor
and as assigned by CDE to the Borrower pursuant to the requirements of clause
(a)(ii) of Section 6.1.6).
"Construction Contractor" means Fluor Daniel Chile Ingenieria y
Construccion S.A., a company organized and existing under the laws of Chile,
or such other construction company of international repute as shall be
satisfactory to the Required Banks in their reasonable discretion.
"Construction Sub-Account (Chile)" is defined in clause (b) of Section
4.1.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Contractual Obligation" means, relative to any Person, any provision of
any security issued by such Person or of any Instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Current Ratio" means, at any date, the ratio, expressed as a percentage,
of:
- 9 -
<PAGE>
(a) current assets of the Borrower at such date;
to
(b) current liabilities of the Borrower at such date.
"Custodian Bank" means Banco BICE or such other bank located in Chile as
shall be consented to from time to time by the Required Banks.
"Default" means any Event of Default or any condition or event which,
after notice, lapse of time, the making of any required determination or any
combination of the foregoing, would constitute an Event of Default.
"Development Plan" means that certain Feasibility Study containing a plan
for the development, construction and consummation of the Fachinal Project and
the operation of the Mine prepared by Fluor Daniel Wright Ltd. in the form
provided to the Borrower under cover of letter dated June 10, 1994, a copy of
which has been provided to each Bank in connection with its execution of this
Agreement and incorporating the Approved Budget and the Cash Flow Schedule,
dated June 10, 1994, together with all appendices, schedules, exhibits and
other Instruments attached thereto as reviewed by the Independent Consultant
and approved by the Agent in consultation with the other Bank Parties, as the
same may be amended from time to time pursuant to clause (b) of Section 1.8.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I.
"Discount Rate" means eight percent (8%) per annum.
"Dollar" and the sign "U.S.$" mean lawful money of the United States of
America.
"Effective Date" is defined in Section 11.8.
"encaje" means the reserve requirement on foreign loans provided for in
Chapter XIV of the Compendium of Foreign Exchange Regulations of the Central
Bank.
"Environmental Impact Statement" means the environmental impact study
(Evaluacion de Impacto Ambiental) of the Fachinal Project, dated May, 1994,
and associated documents (including the environmental baseline report)
prepared by NCL Ingenieria y Construccion S.A. in accordance with the Chilean
Foundation Law of the Environment and other Applicable Laws which was approved
by the Regional Environmental Committee (XI Region of Aysen) of COREMA on
October 21, 1994, a copy of which has been provided to the Banks in connection
with their execution of this Agreement.
- 10 -
<PAGE>
"Environmental Law" means any Applicable Law relating to or imposing
liability or standards of conduct concerning public health and safety and the
protection of the environment that is applicable to the Fachinal Project.
"Environmental Review Standards" is defined in clause (a) of Section
7.18.
"Event of Default" is defined in Section 9.1.
"Fachinal Project" is defined in the first recital.
"Final Maturity Date" means the earlier to occur of (a) the sixteenth
Payment Date or (b) any other date on which the final repayment of the Loans
is scheduled to be made as a consequence of any voluntary or mandatory
repayment or prepayment made pursuant to Section 3.1, 5.1 or 5.5.
"Finance Subsidiary" is defined in the preamble.
"Finance Subsidiary Security Agreement" means that certain Security
Agreement between the Finance Subsidiary and the Agent, substantially in the
form of Exhibit C-3 attached hereto.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means, with respect to any Obligor, any period of twelve
consecutive calendar months ending on December 31, and references to a Fiscal
Year with a number corresponding to any calendar year (e.g., the "1994 Fiscal
Year") refer to the Fiscal Year ending on the December 31 occurring during
such calendar year.
"Foreign Investment Contract" means (i) the Foreign Investment Contract
executed before the Notary Public of Santiago Mrs. Maria Gloria Acharan Toledo
pursuant to Decree Law 600) (including Article 11 bis thereof), dated January
12, 1994, initially among CDE, CDE, Agencia en Chile, and Chile for an amount
up to $52,000,000 and as subsequently amended by public deed executed before
the Notary Public of Santiago Mrs. Maria Gloria Acharan Toledo on December 27,
1994 in order to substitute the Borrower as the "Recipient Company" (as
defined therein) for the Fachinal Project in place of CDE, Agencia en Chile;
(ii) the Foreign Investment Contract executed before the Notary Public of
Santiago Mrs. Maria Gloria Acharan Toledo pursuant to Decree Law 600
(including Article 11 bis thereof), dated March 24, 1995 among CDE, the
Borrower and Chile for an amount up to $28,000,000; and (iii) the assignment
of each of the rights of CDE in, to and under the documents referred to in
paragraphs (i) and (ii) of this definition to the Guarantor executed by public
deed before the Notary Public of Santiago Mrs. Maria Gloria Acharan Toledo on
April 10, 1995.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System.
- 11 -
<PAGE>
"Funded Debt Service" means, for any period, the amount in Dollars which
will be necessary in order to pay in full all principal of and interest and
other amounts accruing in respect of Funded Indebtedness which (in the case of
all such principal, interest or other amounts) is scheduled to, or otherwise
has or is reasonably expected to, become due and payable during that period.
"Funded Indebtedness" means at any date the principal amount of all
outstanding Loans at such date.
"Future Net Cash Flow" means, for any period (and subject as provided in
the definition of Present Value of Future Net Cash Flow) the remainder of:
(a) the Dollar equivalent (calculated at the date of determination
of Future Net Cash Flow (i) in the case of any such ounces of Gold or
Silver which are covered by a Hedging Agreement (or, in the case of
Silver, a Guaranteed Price Contract) in effect on the relevant date of
calculation, at the price for delivery of Gold or Silver specified in
such Hedging Agreement (or, if no price other than a floor price for
delivery of Gold or Silver, as the case may be, is specified in such
Hedging Agreement, the minimum price for the delivery of Gold or Silver,
as the case may be, referred to therein) or at the price for delivery of
Silver specified in such Guaranteed Price Contract, as the case may be,
(ii) in the case of any such ounces of Gold scheduled to be produced
during the Required Hedging Period commencing on the date of
determination of Future Net Cash Flow, (other than ounces of Gold covered
by a Hedging Agreement of the nature referred to in clause (a)(i)), at
the average London Gold Price for the immediately previous six month
period multiplied by the aggregate of 100% plus the average Gold Contango
for the same period, and (iii) in the case of all other ounces of Gold or
Silver scheduled to be produced during that period, at the respective
average London Gold Price or London Silver Price for the immediately
previous six month period,
less
(b) Project Costs for such period (excluding, however, Funded Debt
Service for such period).
"GAAP" is defined in Section 1.4.
"Gold" means gold bullion measured in fine ounces troy weight.
"Gold Contango" means the average (rounded upwards to the nearest four
decimal places) of the London interbank forward bullion rates quoted one year
rate as quoted by the market making members of the LBMA for periods of 12
months as the same appear
- 12 -
<PAGE>
under the heading "Loco London Gold Lending Rates (vs. U.S.$)" on the Reuters'
Screen GOFO, GOFP or GOFQ Page (or such other page or service in replacement
thereof as may be utilized by banks generally from time to time for the
purposes of displaying quotes for loco London Gold Lending rates) as at 10:00
a.m. on any Business Day.
"Governmental Agency" means any national, federal, state, regional or
local government or governmental department or other entity charged with the
administration, interpretation or enforcement of any Applicable Law.
"Group" is defined in Section 10.6.
"Guaranteed Price Contract" means a contract between the Borrower and the
Guarantor, in form and substance satisfactory to the Agent, and providing for
the purchase by the Guarantor of Silver from the Borrower at a specified
minimum Dollar price per ounce of Silver.
"Guarantor" is defined in the preamble.
"Guarantor Subordinated Indebtedness" means Indebtedness of the Guarantor
evidenced by:
(a) the 6% Convertible Subordinated Debentures, due 2002, issued
pursuant to the Indenture, dated as of June 10, 1987, between the
Guarantor and Citibank, N.A., as Trustee;
(b) the 7% Convertible Subordinated Debentures, due 2002, issued
pursuant to the Indenture, dated as of December 1, 1992, between the
Guarantor and Bankers Trust Company, as Trustee; and
(c) the 6 3/8% Convertible Subordinated Debentures, due 2004, issued
pursuant to the Indenture, dated as of January 20, 1994, between the
Guarantor and Bankers Trust Company, as Trustee.
"Guaranty Agreement" means that certain Guaranty Agreement substantially
in the form of Exhibit C-1 attached hereto.
"Hazardous Material" means:
(a) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, substance or waste within the meaning of any
Environmental Law; or
(b) any petroleum product.
"Hedging Agreements" is defined in Section 8.1.10.
"Hedging Counterparties" is defined in Section 8.1.10.
- 13 -
<PAGE>
"Hedging Determination Date" is defined in Section 8.1.10.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and all other agreements,
options or arrangements designed to protect such Person against fluctuations
in interest rates, currency exchange rates or precious metals prices
(including any Hedging Agreements).
"Impermissible Qualification" means, relative to the opinion or report of
any independent certified public accountant or any independent chartered
accountant as to any financial statement of any Obligor, any qualification or
exception to such opinion or report:
(a) which is of a "going concern" or similar nature;
(b) which relates to any limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower or the Guarantor to be in default of any of its obligations
under Section 8.2.4 or clause (a) of Section 4.2 of the Guaranty
Agreement, as the case may be.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or precious
metals (including (i) in the case of such obligations, all notes payable
and drafts accepted representing extensions of credit, (ii) in the case
of any such Person which is an Obligor, such Obligor's Obligations, and
(iii) in the case of such precious metals, Gold or Silver) and all
obligations evidenced by bonds, debentures, notes, or other similar
Instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances and similar instruments, in each such case issued for the
account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) all other items (including Contingent Liabilities) which, in
accordance with GAAP, would be included as liabilities on the liability
side of the
- 14 -
<PAGE>
balance sheet of such Person as of the date at which Indebtedness is to
be determined;
(e) net payment liabilities of such Person under all Hedging
Obligations; and
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services, and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Independent Consultant" means Kilborn Engineering Pacific Ltd. a company
organized and existing under the laws of British Columbia or such other
independent mining consultant as is retained by the Agent (acting in
consultation with the Required Banks) on behalf of the Banks.
"Independent Consultant's Certificate" means a certificate duly executed
by an Authorized Representative of the Independent Consultant, substantially
in the form of Exhibit H-1 attached hereto.
"Industrial Pledge" means that certain Industrial Pledge (Prenda
Industrial), among the Borrower and the Bank Parties executed in Spanish,
substantially in the form of Exhibit D-5 attached hereto.
"Insolvency Default" means any condition or event which, after notice,
lapse of time, the making of any required determination or any combination of
the following, would constitute an Event of Default of the nature referred to
in Section 9.1.6
"Instrument" means any contract, agreement, indenture, mortgage, document
or writing (whether by formal agreement, letter or otherwise) under which any
obligation is evidenced, assumed, or undertaken, or any Lien (or right or
interest therein) is granted or perfected or purported to be granted or
perfected.
"Insurance Broker" means Sedgwick James or such other insurance broker of
international repute as shall be satisfactory to the Agent (acting in
consultation with the Required Banks) in its reasonable discretion.
- 15 -
<PAGE>
"Insurance Broker's Certificate" means a certificate duly executed by the
Insurance Broker, substantially in the form of Exhibit H-2 attached hereto.
"Insurance Summary" means the summary of the insurance requirements of,
and policies in effect for, the Fachinal Project in the form attached hereto
as Schedule II.
"Interest Period" means, relative to any Loan:
(a) initially, the period from the date such Loan is made to the day
which numerically corresponds to such date one, two, three or six months
thereafter (or such other date as may be agreed between all the Banks and
the Borrower) as the Borrower may irrevocably select in each Borrowing
Request delivered pursuant to Section 2.2;
(b) thereafter, each period from the last day of the immediately
preceding Interest Period applicable to such Loan to the day which
numerically corresponds to such date one, two, three or six months
thereafter (or such other date as may be agreed between all the Banks and
the Borrower) as the Borrower may irrevocably select in its relevant
Interest Period Notice delivered pursuant to Section 2.4;
provided, however, that:
(c) absent the timely selection of an Interest
Period for that Loan, the Borrower shall be deemed to have
selected an Interest Period of one month's or such other
duration as shall be required in order to comply with the
other provisions of this Agreement;
(d) if such Interest Period for that Loan would
otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next following Business
Day, unless such Business Day occurs in the next following
calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(e) if that Loan is or is likely to be repaid on a
Payment Date, any Interest Period relating to that portion
of that Loan scheduled to be repaid which ends later than
that Payment Date shall end on that Payment Date;
(f) the Borrower shall not be permitted to select,
and there shall not be applicable, any Interest Period for
any Loan that would end later than the Final Maturity
Date;
(g) the Agent shall be able to select Interest
Periods satisfactory to it pursuant to the terms and
conditions of Section 3.2.2 or after any Event of Default.
- 16 -
<PAGE>
"Interest Period Notice" means an interest period notice duly executed by
an Authorized Representative of the Borrower, substantially in the form of
Exhibit B-2 attached hereto.
"Investment" means, relative to any Person:
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any agreement, undertaking or arrangement by which such Person
guarantees, endorses or otherwise becomes or is contingently liable upon
(by direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss, to furnish funds
for the maintenance of net worth, working capital or earnings of any
other Person or to purchase any products, properties or services of any
other Person primarily to enable such Person to pay any obligation or to
assure any creditor against any loss) the debt, obligation, or other
liability of any other Person (other than by endorsements of instruments
in the course of collection), or guarantees the payment of dividends or
other distributions upon the shares of any other Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be (i) in the case of clauses (a) and (c),
the original principal or capital amount thereof less all returns of principal
or equity thereon (and without adjustment by reason of the financial condition
of such other Person) and shall, if made by the transfer or exchange of
property other than cash, be deemed to have been made in an original principal
or capital amount equal to the fair market value of such property, and (ii) in
the case of clause (b), subject to any limitation set forth in the relevant
agreement, etc., the outstanding principal amount (or maximum outstanding
principal amount, if larger) of the debt, obligation, or other liability
guaranteed thereby or, if such principal amount is not stated therein, or
determinable pursuant to the provisions thereof, the maximum liability
reasonably anticipated in respect thereof as determined in good faith by the
Person obligated thereunder to the reasonable satisfaction of the Agent.
"IVA" means value added tax (impuesto al valor agregado) as charged in
Chile on the sale of goods and the provision of services.
"LBMA" means The London Bullion Market Association.
- 17 -
<PAGE>
"Lending Office" means, (a) with respect to each Bank, the office of such
Bank designated as such below its signature hereto or such other office of
such Bank as may be designated from time to time by notice from such Bank to
the Agent and the Borrower, and (b) with respect to the Agent, the office of
the Agent designated as such from time to time by notice to the Borrower and
each Bank.
"LIBO Rate" means, relative to any Interest Period for any Loan the rate
of interest equal to the average (rounded upwards to the nearest four decimal
places) of the quotes for "LIBOR", as such quotes appear on the Reuters'
Screen LIBO Page (or such other page or service in replacement thereof as may
be utilized by banks generally from time to time for the purpose of displaying
quotes for London Interbank Offered Rates) as at 11:00 a.m. (London time) for
the number of months which is closest to the number of months (or different
period) comprising such Interest Period, calculated at the date which is two
Business Days prior to the first day of such Interest Period; provided,
however, that in the event that less than two such quotes appear on such
screen, page or service at such time, the Agent will request the principal
London office of each Bank to provide the Agent with its quotation for offers
of Dollar deposits to leading banks in the London interbank market for such
period and in an amount comparable to the principal amount of such Bank's
Loan, and the "LIBO Rate" shall equal the average of such quoted rates.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan Document" means any of this Agreement, the Notes, the Security
Agreements, the Subordination Agreement, the Project Account Agreements, the
Notes Operating Procedure Agreement and each other Instrument executed by any
Obligor or any Affiliate of any thereof evidencing any obligation (monetary or
otherwise) to any Bank Party in connection with and pursuant to this
Agreement, the other Operative Documents and the transactions contemplated
hereby and thereby and delivered to the Agent or any Bank (including, at any
time, any Hedging Agreement entered into between the Borrower and any Bank
which remains a Bank at the relevant time or, as the case may be, entered into
between the Guarantor and any Bank which remains a Bank at the relevant time,
and the benefit of which has been duly assigned to the Borrower), whether or
not mentioned herein.
"Loan Life Ratio" means, at any date, the ratio, expressed as a
percentage, of:
(a) the Present Value of Future Net Cash Flow for the period
commencing on such date and ending on the sixteenth Payment Date
- 18 -
<PAGE>
to
(b) Funded Indebtedness at such date.
"Loans" is defined in Section 2.1.
"London Gold Fixing" means a gold price fixing meeting among the members
for the time being of the London gold market.
"London Gold Price" means, on any day, the fixing price per fine ounce
troy (in Dollars) for Gold as announced at the afternoon London Gold Fixing
for such day; provided, however, that if the afternoon London Gold Fixing
shall not have occurred for such day, the "London Gold Price" for such day
shall be the fixing price per fine ounce troy (in Dollars) for Gold as
announced at the morning London Gold Fixing for such day or if the morning
London Gold Fixing shall not have occurred for such day, the "London Gold
Price" for such day shall be the publicly quoted price per fine ounce troy (in
Dollars) for Gold on such other accessible international gold market (allowing
for physical delivery of such Gold) as may be reasonably selected by the
Agent, unless such day is a Saturday, Sunday or other recognized holiday in
London, England, in which case the "London Gold Price" shall be the last
determined London Gold Price.
"London Silver Fixing" means a silver price fixing meeting among the
members for the time being of the London silver market.
"London Silver Price" means, on any day, the fixing price per fine ounce
troy (in Dollars) for silver as announced at the afternoon London Silver
Fixing for such day; provided, however, that if the afternoon London Silver
Fixing shall not have occurred for such day, the "London Silver Price" for
such day shall be the fixing price per fine ounce troy (in Dollars) for silver
as announced at the morning London Silver Fixing for such day or if the
morning London Silver Fixing shall not have occurred for such day, the "London
Silver Price" for such day shall be the publicly quoted price per fine ounce
troy (in Dollars) for Silver on such other accessible international silver
market (allowing for physical delivery of such Silver) as may be reasonably
selected by the Agent, unless such day is a Saturday, Sunday or other
recognized holiday in London, England, in which case the "London Silver Price"
shall be the last determined London Silver Price.
"Materially Adverse Effect" means, with respect to any Person, an effect,
resulting from any occurrence of whatever nature (including any adverse
determination in any labor controversy, litigation, arbitration or
governmental or administrative investigation or proceeding), which is
materially adverse, or is or would be reasonably likely to be materially
adverse, to the ability of such Person to make any payment (for principal,
interest, fees or otherwise) or perform any other material obligation required
under any material agreement (including, with respect to any Obligor, this
Agreement or any
- 19 -
<PAGE>
other Operative Document to which it is or may become a party) or, in the case
of the Borrower, to develop, construct and operate the Fachinal Project in
accordance with the Development Plan.
"Maturity" means, relative to the Loans, any date on which the Loans are
stated to be due and payable, in whole or in part, whether by required
repayment, prepayment, declaration, or otherwise.
"Mine" means (a) the Laguna Verde, Temer and Guanaco gold and silver
deposits at the site known as the Fachinal Project, located west of Chile
Chico in Region XI of Southern Chile, and (b) those certain associated
beneficiation facilities, together with all plant sites, waste dumps, ore
dumps, crushing circuits, abandoned heaps, power supply systems and ancillary
and infrastructure facilities located thereat which are used in connection
with the operation thereof and in each case as described in further detail in
the Development Plan and the Construction Contract.
"Mining Rights" means all interests in the surface of any lands, the
minerals in (or that may be extracted from) any lands, all royalty agreements,
water rights, patented and unpatented mining claims, fee interests, mineral
leases, mining licenses, profits-a-prendre, joint ventures and other leases,
rights-of-way, enurements, licenses and other rights and interests used by or
necessary to the Borrower to construct, develop and operate the Mine.
"Monthly Report" means a report (together with the exhibit thereto) to
the Agent and the Banks from the Independent Consultant, substantially in the
form of Exhibit L-2 attached hereto relating to the status of the construction
and development of the Mine, and relating to each consecutive calendar monthly
period occurring after the Effective Date and prior to the Project Completion
Date.
"Mortgage Over Mining Concessions" means that certain Mortgage Over
Mining Concessions (Hipoteca de Concesiones Mineras), among the Borrower and
the Bank Parties executed in Spanish, substantially in the form of Exhibit D-2
attached hereto and relating to those mining concessions referred to in Item 2
("Mortgaged Mining Concessions") of the Disclosure Schedule.
"Mortgage Over Real Estate (Borrower)" means that certain Mortgage Over
Real Estate (Hipoteca de Inmuebles), among the Borrower and the Bank Parties
executed in Spanish, substantially in the form of Exhibit D-3(a) attached
hereto and relating to that real estate referred to in Item 3(a) ("Mortgaged
Real Estate (Borrower)") of the Disclosure Schedule.
"Mortgage Over Real Estate (CDE)" means that certain Mortgage Over the
CDE Surface Rights (Hipoteca de Derechos en Inmuebles), among CDE and the Bank
Parties executed in Spanish,
- 20 -
<PAGE>
substantially in the form of Exhibit D-3(b) attached hereto and relating to
that real estate referred to in Item 3(b) ("Mortgaged Real Estate (CDE)") of
the Disclosure Schedule.
"Mortgage Over Water Rights" means that certain Mortgage Over Water
Rights (Hipoteca de Derechos de Aguas), among the Borrower and the Bank
Parties executed in Spanish, substantially in the form of Exhibit D-4 attached
hereto and relating to those water rights referred to in Item 4 ("Mortgaged
Water Rights") of the Disclosure Schedule.
"Note" means any promissory note issued by the Borrower in favor of any
Bank, substantially in the form of Exhibit A-1 attached hereto.
"Notes Operating Procedures Agreement" means that certain Notes Operating
Procedures Agreement among the Agent, the Custodian Bank and the Borrower
executed in Spanish, in substantially the same form as Exhibit A-2 hereto.
"Obligations" means, with respect to any Obligor, all obligations of such
Obligor with respect to the repayment or performance of all obligations
(monetary or otherwise) of such Obligor arising under or in connection with
this Agreement and each other Loan Document.
"Obligors" means, collectively, the Borrower, the Guarantor, the Finance
Subsidiary and CDE.
"OECD" means the Organization for Economic Cooperation and Development.
"Operative Documents" means, collectively, the Loan Documents and the
Project Documents.
"Organic Document" means with respect to (a) the Borrower, its duly
registered by-laws (Estatutos), as in effect on the Effective Date; (b) the
Guarantor, its articles of incorporation and its by-laws; (c) the Finance
Subsidiary, its articles of incorporation and its by-laws and (d) any Obligor,
all shareholder agreements, voting trusts, and similar arrangements applicable
to any of its authorized shares of capital stock or other equity interests.
"ounce of Gold" means a fine ounce troy weight of gold in a form readily
tradeable with members of the London Bullion Market Association from time to
time.
"ounce of Silver" means an ounce troy weight of silver in a form readily
tradeable with members of the London Bullion Market Association from time to
time.
"Participant" is defined in Section 11.11.2.
- 21 -
<PAGE>
"Payment Date" means each of the sixteen dates determined as follows:
(a) in the case of the first Payment Date, the earlier of (i)
January 1, 1997 and (ii) the date which is nine months after the Project
Completion Date; and
(b) in the case of each other Payment Date, each of the fifteen
consecutive dates that occur at successive intervals of three months
after the date referred to in clause (a).
"Pending Material Approvals" is defined in clause (a) of Section 7.16.
"Percentage" means, relative to any Bank and at any time, (a) if any
Loans are outstanding, the ratio (expressed as a percentage) of (i) the
principal amount of such Bank's Loans at such time to (ii) the principal
amount of all the Banks' Loans at such time or (b) if no Loans are
outstanding, the ratio (expressed as a percentage) of (i) such Bank's
Commitment Amount at such time to (ii) the Total Commitment Amount; provided,
however, that at any time when the Banks shall have no further Commitments
hereunder and all Obligations of each Obligor in connection with each Loan
Document (excluding any Hedging Agreement) shall have been paid and performed
in full then, to the extent any Hedging Agreement shall then be outstanding,
the term "Percentage" means, relative to any Bank which is a party to any such
Instrument and at any time, the ratio (expressed as a percentage) of (c) such
Bank's net exposure under all such Instruments to which it is a party, to (d)
the net exposure of all Banks under all such Instruments to which any Bank is
a party.
"Person" means any natural person, corporation, partnership firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Peso" means lawful money of Chile.
"Present Value of Future Net Cash Flow" means, for any period (a
"Calculation Period"), the aggregate of discounted Future Net Cash Flow for
such period calculated as set forth in this definition. Without prejudice to
clause (a) of Section 1.8, discounted Future Net Cash Flow for any Calculation
Period shall be determined, in respect of any Calculation Period which does
not coincide with any single period referred to in the Cash Flow Schedule, on
a pro rata basis calculated from the periods set forth in the Cash Flow
Schedule and in the case of any determination of Future Net Cash Flow made for
purposes of determining the Loan Life Ratio or the Project Life Ratio, the
Calculation Period shall be divided into consecutive periods (each a "Discount
Period") of six months (or, in the case of the last such period, the period
commencing on the last day of the
- 22 -
<PAGE>
penultimate such period and ending on the last day of the Calculation Period),
and shall be discounted, with respect to any Future Net Cash Flow scheduled to
accrue during any Discount Period, at the Discount Rate to the first day of
such Calculation Period from the day which represents the mid-point of such
Discount Period.
"Proceeds Account" is defined in clause (a) of Section 4.2.
"Proceeds Sub-Account (Chile)" is defined in clause (c) of Section 4.2.
"Proceeds Sub-Account (Collateral Collections)" is defined in clause (a)
of Section 4.2.
"Proceeds Sub-Account (Debt Service Reserve)" is defined in clause (a) of
Section 4.3.
"Proceeds Sub-Account (Other Collections)" is defined in clause (a) of
Section 4.2.
"Process Agent" is defined in Section 11.13.
"Process Agent Acceptance" means a letter from the Process Agent to the
Agent, substantially in the form of Exhibit K attached hereto.
"Production" means, for any period, the number of ounces of Gold and
Silver contained in Concentrate which have been produced, or (in the case of
any period or portion thereof to occur in the future) which are scheduled in
the Cash Flow Schedule to be produced, at the Mine during such period.
"Project Account Agreement (Chile)" means that certain Project Account
Agreement, among the Project Account Bank (Chile) and the Borrower,
substantially in the form of Exhibit E-2 attached hereto.
"Project Account Agreement (U.S.)" means that certain Project Account
Agreement, among the Project Account Bank (U.S.) and the Borrower,
substantially in the form of Exhibit E-1 attached hereto.
"Project Account Agreements" means, collectively, the Project Account
Agreement (U.S.) and the Project Account Agreement (Chile).
"Project Account Bank (Chile)" means Banco BICE or such other bank
located in Chile with which, from time to time with the consent of the Banks,
the Construction Sub-Account (Chile) and the Proceeds Sub-Account(Chile) shall
be maintained.
"Project Account Bank (U.S.)" means Citibank, N.A. or such other bank
located in New York City with which, from time to time with the consent of the
Banks, the Construction Account, the
- 23 -
<PAGE>
Proceeds Account and the Proceeds Account (Debt Service Reserve)shall be
maintained.
"Project Account Banks" means, collectively, the Project Account Bank
(Chile) and the Project Account Bank (U.S.).
"Project Accounts" means, collectively, the Construction Account, the
Construction Sub-Account (Chile), the Proceeds Account, the Proceeds
Sub-Account (Debt Service Reserve) and the Proceeds Sub-Account (Chile).
"Project Assets" means all properties, assets or other rights, whether
real or personal, tangible or intangible, now owned or hereafter acquired by
or for the benefit of the Borrower, which are used or intended for use in or
forming part of the Mine or the Fachinal Project, including all properties,
assets or other rights acquired by the Borrower with the proceeds of the
Loans.
"Project Capital Costs" means, for any period, the aggregate of all
Capital Expenditures scheduled to be, or, as the case may be, actually paid in
accordance with the Approved Budget (or, in the case of any such payment
scheduled to be, or, as the case may be, actually paid after Project
Completion, the Cash Flow Schedule) by the Borrower during such period in
respect of the Fachinal Project.
"Project Completion" means the achievement of certain production,
shipment, economic and legal criteria referred to in the Project Completion
Certificate.
"Project Completion Certificate" means a certificate (together with all
attachments thereto) duly executed in one or more counterparts by an
Authorized Representative of each of the Borrower, the Guarantor and the
Independent Consultant, substantially in the form of Exhibit H-3 attached
hereto.
"Project Completion Date" means the first Business Day immediately
following the day on which the Agent shall have received (a) counterparts of
the Project Completion Certificate executed by each Person referred to in the
definition thereof and (b) evidence satisfactory to it that the Concentrate
Sales Agreement shall have been executed and become effective in accordance
with the terms thereof and that such documentation as the Agent shall require
shall have been executed and delivered in order to grant to the Agent (for the
ratable benefit of the Bank Parties) a valid and perfected first priority Lien
over the rights of the Borrower under the Concentrate Sales Agreement.
"Project Costs" means, for any period, the Project Operating Costs and
the Project Capital Costs for such period.
"Project Documents" means, collectively, (a) the Construction Contract,
the Construction Contract Guaranty and the Foreign Investment Contract, in
each such case in the form
- 24 -
<PAGE>
provided to the Bank Parties in connection with their execution and delivery
of this Agreement, (b) all other Instruments referred to in Item 5 ("Project
Documents") of the Disclosure Schedule, in each such case in the form provided
to the Agent pursuant to clause (a) of Section 6.1.6, (c) all Hedging
Agreements not constituting Loan Documents and (d) all other Instruments
required to be provided to the Agent pursuant to clause (q) of Section 8.1.1,
in each case in the form supplied pursuant to such clause.
"Project Life Ratio" means, at any date, the ratio, expressed as a
percentage, of:
(a) the Present Value of Future Net Cash Flow for the period
commencing on such date and ending on the last day of the Project Period,
to
(b) Funded Indebtedness at such date.
"Project Operating Costs" means, for any period, the aggregate of all
payments scheduled to be, or, as the case may be, actually paid by the
Borrower to any Person (excluding, however, any payment to any Affiliate of
the Borrower permitted to be made pursuant to of Section 8.2.7) during such
period in accordance with the Cash Flow Schedule (or, in the case of any such
payment scheduled to be, or, as the case may be, actually paid prior to
Project Completion, the Approved Budget) together with any applicable income
taxes scheduled to be, or, as the case may be, actually paid during such
period, in each such case to the extent that such payments are scheduled to be
paid in connection with the operation of the Mine, including:
(a) the cash costs scheduled to be, or, as the case may be, actually
paid in accordance with the Cash Flow Schedule during such period in
connection with the operation, maintenance and reclamation of the Mine in
order to mine, mill, leach, refine and deliver Project Output for sale;
(b) all profit, income, property and other taxes (including encaje)
imposed by any Governmental Agency, in each such case scheduled to be,
or, as the case may be, actually paid during such period;
(c) all payments scheduled to be, or as the case may be, actually
paid under any royalty agreements during such period (excluding, however,
payments by way of production royalties calculated and payable as a
percentage of Gold and Silver produced and sold in connection with the
Mine); and
(d) Funded Debt Service for such period.
- 25 -
<PAGE>
"Project Output" means all products from the Mine including Concentrate.
"Project Period" means the period commencing on the Effective Date and
continuing until the earlier of:
(a) December 31, 2003; and
(b) the date on which the Proven and Probable Reserves of the Mine
have been extracted, milled, refined and sold in accordance with the
Development Plan.
"Promise to Grant Industrial Pledges" means that certain Promise to Grant
Industrial Pledges (Promera de Prenda Industrial) among the Borrower and the
Bank Parties executed in Spanish, substantially in the form of Exhibit D-7
attached hereon.
"Promise to Grant Pledges Without Conveyance" means that certain Promise
to Grant Pledges Without Conveyance (Prenda sin Desplazamiento) among the
Borrower and the Bank Parties executed in Spanish, substantially in the form
of Exhibit D-8 attached hereto.
"Proven and Probable Reserves" means the Borrower's interest in the
aggregate of economically and legally recoverable (determined by the
Independent Consultant at the Reserve Price) (a) reserves of Gold and Silver
at the Mine for which (i) quantity is computed from dimensions revealed in
outcrops, trenches, workings, or drill holes, (ii) grade and/or quality are
computed from the results of detailed sampling, and (iii) the sites for
inspections, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well established ("Proven Reserves"), and (b) reserves of Gold
and Silver at the Mine for which quantity and grade and/or quality are
computed from information similar to that used to establish Proven Reserves,
and with respect to which sites for inspections, sampling and measurement,
although farther apart or otherwise less adequately spaced than for Proven
Reserves, provide a degree of assurance which is high enough to assume
continuity between points of observation ("Probable Reserves").
"Quarterly Payment Date" means each March 31, June 30, September 30 or
December 31 occurring in each calendar year.
"Quarterly Report" means a report to the Agent and the Banks from the
Independent Consultant substantially in the form of Exhibit L-1 attached
hereto and relating to the status of the Mine and the progress of the Fachinal
Project (including, in the case of each Quarterly Report prepared with respect
to the period ending on March 31 of each calendar year, a full environmental
audit in connection therewith), the Borrower's compliance with this Agreement
(including Section 8.2.4) and each other Operative Document to which it is a
party and such other matters in
- 26 -
<PAGE>
connection therewith as the Agent (or any Bank acting through the Agent) may
reasonably request, and relating to each consecutive three-monthly period
ending on March 31, June 30, September 30 and December 31 of each calendar
year occurring after the Effective Date and or prior to the Project Completion
Date.
"Quoted Interest Period" means any Interest Period having a duration of
one, two, three or six months.
"Recoverable Reserves" means, at any time, the number of ounces of Gold
and Silver referred to in the Development Plan (calculated on the basis of
Proven and Probable Reserves at such time) which remain to be recovered from,
and produced at, the Mine.
"Regulatory Change" means the occurrence after the Effective Date of any
change in or abrogation of, or introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in of any:
(a) statute, law, rule, or regulation applicable to any Bank Party,
or
(b) guideline, interpretation, directive, consent decree,
administrative order, request or determination (whether or not having the
force of law) applicable to such Bank Party of any court, central bank or
governmental or regulatory authority charged with the interpretation or
administration of any statute, law, rule or regulation referred to in
clause (a) or of any fiscal, monetary, or other authority having
jurisdiction over such Bank Party.
"Release Date" means the date which is the earlier of (a) the first date
following the Project Completion Date on which the Borrower shall have been
granted either (i) pursuant to a binding non-appealable judgment, full right
and title in and to the CDE Surface Rights Statutory Easements, or (ii) such
other Mining Rights with respect to the real estate property over which CDE
holds the CDE Surface Rights as all the Banks, in their reasonable discretion,
shall have determined (on the basis of legal advice from counsel in Chile and
such other evidence (including evidence as to the availability of financial
resources) as the Banks shall deem appropriate) are sufficient to enable the
Borrower to operate the Mine without any adverse effect on the development of
the Fachinal Project as contemplated by the Development Plan or (b) the date
of payment in full of the Borrower's Obligations; provided, however, that the
Release Date may not occur on any date on which a Default shall have occurred
and be continuing.
"Required Banks" means, at any time, Banks having, in the aggregate, a
Percentage of more than 66.66%.
"Required Debt Service Reserve Balance" is defined in clause (b) of
Section 4.3.
- 27 -
<PAGE>
"Required Hedging Period" means, on any day, the period commencing on
that day and ending on the earlier of (a) three calendar years after that day;
and (b) the day which is twelve calendar months after the scheduled Final
Maturity Date.
"Requirement of Law" means, as to any Person, its Organic Documents and
any Applicable Law or Contractual Obligation binding on or applying to such
Person.
"Reserve Price" means, in connection with the determination of Proven and
Probable Reserves of Gold or Silver, the price per ounce of Gold or Silver, as
the case may be, selected by the Borrower for the purposes of determining and
calculating reserves of Gold and Silver for inclusion in the most recent
statement or other document filed with the Securities and Exchange Commission;
provided, however, that if at any time the Independent Consultant shall, in
its reasonable opinion, disagree with the Reserve Price with respect to Gold
or Silver as determined as aforesaid then "Reserve Price" with respect to Gold
or Silver, as the case may be, shall mean such price as shall be determined by
the Independent Consultant.
"Reserve Value Cover" means, in relation to a Calculation Date, the
ratio, expressed as a percentage, of (a) the product of the Proven and
Probable Reserves on that date multiplied by the London Gold Price and the
London Silver Price (as applicable) as in effect on such date, divided by (b)
Funded Indebtedness on such date.
"Rothschild" is defined in the preamble.
"Security Agreements" means, collectively, the Mortgage Over Mining
Concessions, the Mortgage Over Real Estate (Borrower), the Mortgage Over Real
Estate (CDE), the Mortgage Over Water Rights, the Industrial Pledge, the
Promise to Grant Pledges Without Conveyance, the Promise to Grant Industrial
Pledges, Conditional Assignments of Contract Rights with respect to each
Project Document to which the Borrower is a party or a beneficiary, the
Conditional Assignment of Contract Rights (Foreign Investment Contract), the
Borrower Security Agreement (U.S. Assets), the Finance Subsidiary Security
Agreement and all Instruments delivered pursuant to Section 8.1.16.
"Silver" means silver bullion measured in ounces troy weight.
"Subordination Agreement" means the Subordination Agreement among the
Guarantor, the Finance Subsidiary, the Borrower and the Agent, substantially
in the form of Exhibit F attached hereto.
"Subsidiary" means, with respect to any Person, any corporation at least
a majority or more of the outstanding shares of capital stock of which having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
- 28 -
<PAGE>
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Tangible Net Worth" means, with respect to the Borrower, the net worth
of the Borrower, after subtracting therefrom the aggregate book value of any
intangible assets of the Borrower, computed on a consolidated basis, if
applicable, including goodwill, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names.
"Tax Credit" is defined in clause (b) of Section 5.7.
"Tax Payment" is defined in clause (b) of Section 5.7.
"Taxes" is defined in Section 5.6.
"Technical Review" means the review of the technical aspects of the
Fachinal Project and the Mine, dated April, 1995 prepared by the Independent
Consultant and approved by the Agent (acting in consultation with the Banks).
"Total Commitment Amount" means,at any time, subject to the terms and
conditions of this Agreement, the excess of (a) U.S.$24,000,000, less (b) the
aggregate principal amount of Loans repaid or prepaid on or prior to such time
pursuant to Section 3.1 or any other provision of any Loan Document, less (c)
any reduction to the Total Commitment Amount effected pursuant to Section 2.4
"United States" or "U.S." means the United States of America, its 50
States and the District of Columbia.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule, each
Borrowing Request, Interest Period Notice, Compliance Certificate and other
Loan Document and each notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and unless otherwise specified, references in
any Article, Section or definition to any clause are references to such clause
of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. All accounting
terms used herein or in any other Loan Document shall be interpreted, all
accounting determinations and
- 29 -
<PAGE>
computations hereunder or thereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared
in accordance with, generally accepted accounting principles in the United
States ("GAAP").
SECTION 1.5. Change in Accounting Principles. If, after the Effective
Date, there shall be any change to any Obligor's Fiscal Year, or in the
application of the accounting principles used in the preparation of the
financial statements referred to in Section 7.5 as a result of the
promulgation of rules, regulations, pronouncements, or opinions by the U.S.
Securities and Exchange Commission or the U.S. Financial Accounting Standards
Board (or agencies with similar functions) which changes result in a change in
the method of calculation of financial covenants, standards, or terms
applicable to such Obligor found in this Agreement or any other Loan Document,
the parties hereto agree promptly to enter into negotiations in order to amend
such financial covenants, standards or terms so as to reflect equitably such
changes with the desired result that the evaluations of such Obligor's
financial condition shall be the same after such changes as if such changes
had not been made; provided, however, that until the Banks have given their
consent to such amendments, such Obligor's financial condition shall continue
to be evaluated on the same principles as those used in the preparation of the
financial statements of such Obligor referred to in Section 7.5.
SECTION 1.6. Dollar Equivalency Determinations. Except as otherwise
expressly set forth in this Agreement or any other Loan Document, all
calculations or determinations to be made from time to time under this
Agreement or any other Loan Document in connection with the Dollar equivalent
of any amount denominated in Gold or Silver shall be calculated by
multiplying:
(a) the amount of ounces of such Gold or Silver;
by
(b) the London Gold Price or the London Silver Price, as the case
may be, on the date which is two Business Days prior to the date on which
such calculation is to be made.
SECTION 1.7. Gold or Silver Equivalency Determinations. Except as
otherwise expressly set forth in this Agreement or any other Loan Document,
all calculations or determinations to be made from time to time under this
Agreement or any other Loan Document in connection with the Gold or Silver
equivalent of any amount denominated in Dollars shall be calculated by
dividing:
(a) such Dollar denominated sum;
by
- 30 -
<PAGE>
(b) the London Gold Price or the London Silver Price (as the case
may be) on the date which is two Business Days prior to the date on which
such calculation is to be made.
SECTION 1.8. Project Determinations, etc.
(a) All determinations and calculations relating to the Fachinal
Project (including the determination or calculation, as the case may be,
of Project Completion, Annual Loan Cover Ratio, Funded Debt Service,
Funded Indebtedness, Future Net Cash Flow, Loan Life Ratio, Present Value
of Future Net Cash Flow, Production, Project Capital Costs, Project
Costs, Project Life Ratio, Project Operating Costs, Project Output,
Proven and Probable Reserves and Reserve Value Cover) shall be:
(i) in the case of any such projected determination or
calculation, made in accordance with the Development Plan as in
effect from time to time; and
(ii) determined to the reasonable satisfaction of the Banks.
(b) The Borrower shall from time to time after the Effective Date
upon not less than thirty (30) Business Days notice to the Banks, and in
conjunction with the Independent Consultant, modify the Development Plan
as a result of, and to reflect any, change in any fact, event or
circumstance which renders the Development Plan as currently in effect
materially inaccurate; provided, however, that (i) the Borrower shall
give immediate notice to the Banks of any such change which it believes
is likely to result in a modification to the Development Plan, (ii) the
Borrower shall furnish the Banks with details as to any proposed
modification no later than 30 Business Days prior to the proposed
effectiveness thereof and shall furnish each Bank with a copy of the
Development Plan as modified following the effectiveness of such
modification, and (iii) in the event that the Banks determine that any
proposed modification to the Development Plan would, or would reasonably
be likely to, adversely affect either (i) the Borrower's ability to
comply with its obligations under Section 8.2.4, (ii) Production for any
current or future period, (iii) the target date for the achievement of
Project Completion (as then set forth in the Development Plan) or (iv)
the availability of funds to develop, construct and operate the Mine in
accordance with the Development Plan as currently in effect (including
the availability of funds to make any payments scheduled to be made under
the Construction Contract), no such modification or supplement shall be
effective unless and until approved by the Banks. As a condition
precedent to the effectiveness of any
- 31 -
<PAGE>
modification to the Development Plan the Borrower will furnish to the
Agent a Compliance Certificate calculated as of the effective date of
such modification, together with such information concerning the
calculations and assumptions used by the Borrower in delivering such
Compliance Certificate as the Agent shall have requested. In the event
that the Independent Consultant shall have determined that any change in
any fact, event or circumstance shall require a modification to the
Development Plan it may so notify the Borrower and the Development Plan
shall thereafter be modified pursuant to the provisions of this clause.
SECTION 1.9. General Provisions as to Certificates and Opinions, etc.
Whenever the delivery of a certificate is a condition precedent to the taking
of any action by the Agent or any Bank hereunder, the truth and accuracy of
the facts and the diligent and good faith determination of the opinions stated
in such certificate shall in each case be conditions precedent to the right of
any Obligor to have such action taken, and any certificate executed by any
Obligor shall be deemed to represent and warrant that the facts stated in such
certificate are true and accurate.
SECTION 1.10. Interpretation. Unless a clear contrary intention appears,
this Agreement and each other Loan Document shall be construed and interpreted
in accordance with the provisions set forth below:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors,
substitutes and assigns but, if applicable, only if such successors,
substitutes and assigns are permitted by this Agreement or such other
Loan Document, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement and the
Schedules and Exhibits hereto and any other Loan Document), document
(including the Approved Budget, Development Plan, Cash Flow Schedule and
the Insurance Summary) or Instrument means such agreement, document or
Instrument as amended, supplemented, novated, refinanced, replaced,
waived, restated or modified, and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms hereof;
(e) reference to any promissory note (including the Notes) includes
any promissory note which is an extension
- 32 -
<PAGE>
or renewal thereof or a substitute or replacement therefor;
(f) reference to any Applicable Law means such Applicable Law as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder;
(g) "hereunder", "hereof", "hereto", "herein" and words of similar
import shall be deemed references to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular
Article, Section, clause or other provision hereof or thereof;
(h) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(i) relative to the determination of any period of time, "from"
means "from (and including)" and "to" means "to (but excluding)";
(j) reference to a "corporation" shall be construed as a reference
to the analogous form of business entity used in any relevant
jurisdiction; and
(k) when an expression is defined, another part of speech or
grammatical form of that expression has a corresponding meaning.
ARTICLE 2. COMMITMENTS AND BORROWING PROCEDURE
SECTION 2.1. Commitments. Subject to the terms and conditions of this
Agreement (including Article 6), each Bank severally and for itself alone
agrees that it will make loans from time to time (relative to each such Bank,
collectively its "Loans") to the Borrower as set forth in this Article.
SECTION 2.2. Procedure for Making Loans. By delivering a Borrowing
Request to the Agent on or before 10:00 a.m., London time, the Borrower may
request on any Business Day occurring prior to the Commitment Termination
Date, on not less than three nor more than five Business Days' notice
(counting the date on which such Borrowing Request is given), that Loans in an
aggregate principal amount of not less than U.S.$500,000 and in a multiple of
U.S.$100,000 be made by all Banks on the Business Day set forth in the
Borrowing Request in the principal amount specified in the Borrowing Request.
Upon receipt of the Borrowing Request, the Agent shall promptly notify each
Bank of the contents thereof and of such Bank's Percentage of the requested
Loans, and such Borrowing Request shall not thereafter be revocable by the
Borrower. No more than two Borrowing Requests may be submitted during each
calendar month.
- 33 -
<PAGE>
Subject to the terms and conditions of this Agreement (including Article
6), the Loans requested to be made in the Borrowing Request shall be made on
the Business Day specified therein. On such Business Day and subject to such
terms and conditions, each Bank shall, on or before 11:00 a.m., London time,
credit such Dollar account of the Agent at its Lending Office as the Agent may
notify to the Banks with an amount of Dollars, equal to such Bank's Percentage
of the aggregate principal amount of the Loans to be made pursuant to Section
2.1. To the extent funds are received by the Agent from the Banks in respect
of the Loans requested by the Borrowing Request, the Agent shall make such
funds available to the Borrower by crediting the principal amount of such
Loans to the Construction Account. No Bank's obligation to make its Loan as
aforesaid shall be affected by any other Bank's failure to make its Loan.
SECTION 2.3. Loans Limit. The Borrower may not deliver a Borrowing
Request if as a result, the principal amount of the Loans to be made pursuant
to that Borrowing Request together with the aggregate principal amount of the
Loans then made under this Agreement would exceed the Total Commitment Amount
as then in effect and no Bank shall be permitted or required to make any Loan
if, after giving effect thereto, the aggregate principal amount of all Loans
made:
(a) by all Banks on the proposed Borrowing Date would exceed the
Total Commitment Amount as then in effect; or
(b) by that Bank on the Borrowing Date would exceed such Bank's
Percentage of the Total Commitment Amount as then in effect.
SECTION 2.4. Cancellation.
(a) The Borrower may cancel the unutilized portion of the Total
Commitment Amount in whole or in part on giving not less than 30 Business
Days prior written notice thereof to the Agent. Cancellation of any
portion of the Total Commitment Amount shall be in a multiple of
U.S.$1,000,000. Effective upon the cancellation of a portion of the Total
Commitment Amount each Bank's Commitment Amount will immediately be
reduced by an amount equivalent to its Percentage of the amount of such
cancellation.
(b) Any notice given under clause (a) shall be irrevocable. The
Borrower may give a notice pursuant to clause (a) only if the Agent is
satisfied that Project Completion will be achieved from that part of the
Total Commitment Amount as will remain available and/or from other funds
available to the Borrower.
SECTION 2.5. Interest Period Elections. By delivering an Interest Period
Notice to the Agent on or before 10:00 a.m.,
- 34 -
<PAGE>
London time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three nor more than five Business Days' notice
(counting the date on which such Interest Period Notice is given) prior to the
expiration of any Interest Period with respect to any then outstanding Loans
that all or a portion of such Loans be, upon the expiration of such Interest
Period, continued as Loans for the Interest Period or Interest Periods
specified in such Interest Period Notice.
In the absence of delivery of an Interest Period Notice with respect to
any Loans at least three Business Days before the last day of the then current
Interest Period with respect thereto, such Loans shall, on such last day,
automatically be deemed to be continued as Loans having an Interest Period
with a duration equal to that of the Interest Period then expired (if such
Interest Period was a Quoted Interest Period) or one month (in all other
cases).
SECTION 2.6. Records. Without limiting the provisions of Section 2.7,
each Bank's Loans shall be evidenced by a dollar loan account maintained by
such Bank. The Borrower hereby irrevocably authorizes each Bank to make (or
cause to be made) appropriate account entries, which account entries, if made,
shall evidence inter alia the date of, the principal amount of, any repayments
of, the interest rate on, and the Interest Period applicable to, the Loans
then outstanding to such Bank pursuant hereto. Any such account entries
indicating the outstanding principal amount of Loans outstanding to such Bank
shall be prima facie evidence of the principal amount thereof owing and
unpaid, but the failure to make any such entry shall not limit or otherwise
affect the obligations of the Borrower hereunder to make payments of the
amount of, or interest on, such Loans when due. Not later than the date which
is five (5) Business Days following each Quarterly Payment Date the Agent
shall furnish the Borrower with a statement showing the principal amount of
the Loans outstanding on, and interest accrued and unpaid thereon to, such
Quarterly Payment Date but failure by the Agent to provide such statement
shall not affect the Obligations of the Obligors hereunder or under any other
Loan Document.
SECTION 2.7. Funding. Each Bank may, if it so elects, fulfil its
obligation to make or maintain any portion of the principal amount of its
Loans by causing a foreign branch, Affiliate or international banking facility
of such Bank to make such Loans; provided, however, that in such event any
Loans shall be deemed to have been made by such Bank, and the obligation of
the Borrower to repay such Loans, and pay interest thereon, shall nevertheless
be to such Bank and shall be deemed to be held by it, to the extent of such
Loans, for the account of such foreign branch, Affiliate or international
banking facility.
- 35 -
<PAGE>
SECTION 2.8. Notes.
(a) The Notes shall serve as additional evidence of the Borrower's
obligation to pay the principal amount of the Loans and interest thereon,
but shall not limit, reduce or otherwise affect the Obligations of the
Borrower under this Agreement and each other Loan Document to which it is
a party. In addition, the rights of the Banks under this Agreement and
each other Loan Document shall not be limited, reduced or otherwise
affected by the existence of, or any action with respect to, the Notes.
Any reduction (by repayment, prepayment or otherwise) in the principal
amount of the Loans hereunder or repayment or prepayment of the face
amount of the Notes, as the case may be, shall discharge pro tanto the
equivalent face amount of the Notes or, as the case may be, the
corresponding principal amount of Loans hereunder.
(b) Upon the payment and performance in full of the Borrower's
Obligations hereunder and under each other Loan Document to which it is a
party, the Agent shall instruct the Custodian Bank to cancel and return
the Notes to the Borrower.
(c) The Banks agree that they will not demand payment of the face
amount of any Note until a principal amount of the Loans corresponding to
such face amount shall have become due and payable pursuant to this
Agreement.
(d) The Borrower agrees that the Banks' exercise of their rights and
remedies with respect to the Notes before a competent court in Chile
shall not require evidence from the Borrower or any other Person to the
effect that any Note represents the Borrower's Obligations under this
Agreement and each other Loan Document to which it is a party or that any
condition precedent to the payment of such Note or any such Obligation
has been met.
ARTICLE 3. PRINCIPAL PAYMENTS; INTEREST; COMMISSIONS
SECTION 3.1. Principal Payments. The Borrower will make payment in full
of the unpaid principal amount of all Loans at the Final Maturity Date. Prior
thereto, the Borrower:
(a) may, from time to time on any Business Day which is (x) a
Payment Date and (y) the last day of the Interest Period for the Loans to
be prepaid or (subject to Section 5.3)on any other Business Day, make a
voluntary prepayment, in whole or in part, of the then outstanding
principal amount of all Loans; provided, however, that:
(i) the Borrower shall give the Agent not less than five
Business Days' prior written notice
- 36 -
<PAGE>
(counting the date on which such notice is given) of any such
voluntary prepayment, which notice, once given, shall be
irrevocable;
(ii) all such partial voluntary prepayments shall, be in an
aggregate principal amount of a whole multiple of U.S.$1,000,000;
(iii) the Borrower shall, simultaneously with providing the
notice referred to in clause (a)(i), provide the Agent with
certified copies of relevant Approvals from Chile (including the
Central Bank) and such other evidence as the Agent may reasonably
require in connection with any Approval required or advisable in
connection with such prepayment; and
(iv) no such partial prepayment shall be made prior to the
Project Completion Date unless, in connection with such prepayment,
the Agent shall have received prior to such partial repayment a
Compliance Certificate calculated as of the date of the proposed
partial repayment together with such information concerning the
calculations and assumptions used by the Borrower in delivering such
Compliance Certificate as the Agent shall have requested.
(b) shall, on each Payment Date prior to the Final Maturity Date,
make a mandatory repayment of the Loans outstanding on such date in a
principal amount equal to one sixteenth (1/16) of the principal amount of
the Loans outstanding on the first Payment Date (without giving effect to
the principal amount of the Loans required to be repaid on such Payment
Date).
(c) shall, on the Project Completion Date, to the extent there are
balances standing to the credit of the Construction Account or the
Construction Sub-Account (Chile), make a mandatory prepayment of the
Loans outstanding on such date in a principal amount equal to each such
balance.
(d) shall, on each date of receipt of proceeds of any insurance
policy which are required by the terms of clause (c)(i) or (c)(iv) of
Section 8.1.7 to be applied against the Loans, make a mandatory
prepayment of the Loans outstanding on such date in a principal amount
equal to the amount of such proceeds.
Any amount prepaid under clause (a) shall be applied against the
repayments required to be made pursuant to clause (b) in the order of maturity
thereof. Any amount prepaid under clause (c) or (d) shall be applied against
repayments required to be made pursuant to clause (b) in the inverse order of
maturity thereof. Each prepayment or repayment of the principal amount of any
Loans made pursuant to this Section shall be
- 37 -
<PAGE>
without premium or payment of any other additional amount, except as may be
required pursuant to Section 5.3. Any prepayment or repayment of the principal
amount of any Loans shall include accrued interest on the date of prepayment
on the principal amount being prepaid. Amounts prepaid or repaid may not be
re-borrowed.
SECTION 3.2. Interest Payments. The Borrower shall make payments of
interest in accordance with this Section.
SECTION 3.2.1. Rate. The Borrower shall pay interest on the principal
amount of the Loans outstanding from time to time prior to and at Maturity at
a rate per annum equal to the sum of the LIBO Rate for such Loans as in effect
from time to time plus the Applicable Margin as in effect from time to time.
SECTION 3.2.2. Post-Maturity Rate. After the Maturity of all or any
portion of the principal amount of the Loans or after any other Obligations
shall have become due and not been paid, the Borrower shall pay interest
(after as well as before judgment) on the principal amount of any Loans so
matured or on any such other Obligations due and payable at a rate per annum
equal to the sum of (a) the LIBO Rate for such Interest Periods as the Agent
may from time to time select; (b) the Applicable Margin as then in effect; and
(c) two percent (2%).
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication, on:
(a) the last day of each Interest Period with respect to such Loan
(and, in addition to such day, if such Interest Period shall exceed three
months, on each date which is the last day of each successive three-
monthly period occurring during such Interest Period commencing with the
first three month period commencing on the first day of such Interest
Period);
(b) the Maturity of such Loan; and
(c) with respect to any portion of any Loan repaid or prepaid
pursuant to Section 3.1, 5.1 or 5.5, the date of such repayment or
prepayment, as the case may be.
Interest accrued on each Loan after the Maturity thereof and interest on other
overdue amounts, shall be payable upon demand. The amount of accruing interest
on any Loans shall be calculated during each Interest Period applicable
thereto by the Agent on the daily outstanding principal amount of such Loans.
SECTION 3.2.4. Rate Determinations. All determinations by the Agent of
the rate of interest applicable to any Loan shall be conclusive unless it can
be shown to be incorrect.
- 38 -
<PAGE>
SECTION 3.3. Commissions. The Borrower confirms and agrees that it will
pay the commissions set forth in this Section. All commissions once paid shall
be non-refundable.
SECTION 3.3.1. Participation Commission. To the Agent for the account of
each Bank, a participation commission in the amount equal to the excess of (a)
one and one-half percent (1.50%) of such Bank's Percentage of the Total
Commitment Amount, less (b) the amount of the good faith commission, if any,
paid by the Borrower to such Bank prior to the Effective Date in connection
with the Commitment of such Bank contemplated by this Agreement. Such
participation commission shall be paid by the Borrower to the Agent for the
account of each Bank on the Effective Date.
SECTION 3.3.2. Commitment Commission. To the Agent for the account of
each Bank, for the period (including any portion thereof when its Commitment
is suspended by reason of any Obligor's inability to satisfy any condition of
Article 6) commencing on the Effective Date and continuing through the
Commitment Termination Date, a commitment commission at the rate of
three-eighths of one percent (0.375%) per annum on such Bank's Percentage of
the daily average unused portion of the Total Commitment Amount. The
commitment commission described in this Section shall be payable in arrears on
each Quarterly Payment Date and on the Commitment Termination Date.
ARTICLE 4. PROJECT ACCOUNTS
SECTION 4.1. Construction Account.
(a) The Borrower shall promptly deposit all the proceeds of all
Loans, Approved Subordinated Indebtedness, Capital Contributions and
other proceeds into a single purpose account (the "Construction Account")
established by the Borrower in New York City in its name with the Project
Account Bank (U.S.). In addition, the Borrower shall promptly deposit all
monies received by it pursuant to the provisions of Section 3.2 of the
Guaranty Agreement into the Construction Account.
(b) For the purposes of facilitating the remission of Dollars from
the Construction Account and the payment of invoices in respect of
Project Costs denominated in Pesos the Borrower may establish a single
purpose account denominated in Pesos (the "Construction Sub-Account
(Chile)"), in Santiago in the Borrower's name with the Project Account
Bank (Chile). For the purposes of the foregoing, and to the extent
permitted by Applicable Law and the Foreign Investment Contract, the
Project Account Bank (U.S.) may on the first day of each calendar month
remit Dollars contained in the Construction Account to the Project
Account Bank (Chile) (for immediate conversion by the Project Account
Bank (Chile) into Pesos and the deposit of such Pesos into the
Construction Sub-Account
- 39 -
<PAGE>
(Chile)) in an amount not in excess of the Dollar equivalent (calculated
at the then prevailing market rates) of any Peso-denominated Project Cost
scheduled to be paid during such month pursuant to the Approved Budget.
(c) No amount other than bona fide Project Costs (and, to the extent
permitted by Applicable Law, repayment of the Bridge Loan pursuant to
Section 6.1.16) may be disbursed on the instructions of the Borrower or
otherwise from the Construction Account or the Construction Sub-Account
(Chile); provided, however, that any Project Costs which are scheduled,
pursuant to the Development Plan, to be incurred in any one calendar
month may be incurred and paid for in any prior calendar month; provided,
further, however, that the aggregate amount of such accelerated Project
Costs incurred in any one calendar month may not exceed 50% of the
aggregate Project Costs scheduled to be incurred during such calendar
month as set forth in the Development Plan.
(d) To the extent there are balances standing to the credit of the
Construction Account and/or the Construction Sub-Account (Chile) at the
Project Completion Date, such balances will be applied in prepayment of
the principal amount of the Loans as set forth in clause (c) of Section
3.1.
(e) At any time when any Default shall have occurred and be
continuing but prior to the occurrence of an Event of Default or
Insolvency Default, the Borrower may only request or direct the relevant
Project Account Bank to disburse funds (including Dollars remitted from
the Construction Account to the Construction Sub-Account (Chile) pursuant
to clause (b)) from the Construction Account and the Construction
Sub-Account (Chile) for the purpose of payment of costs referred to below
and shall be paid in the following order of priority:
(i) first, for payment of those Project Costs otherwise
permitted by clause (c) (other than Project Costs referred to in
clauses (e)(ii) and (e)(iii)) which are necessary to permit the
achievement of Project Completion; provided, however, that no such
amount may be disbursed in respect of the payment of any such
Project Cost which, in the reasonable opinion of the Required Banks
(acting in consultation with the Independent Consultant), are not
necessary to permit the achievement of Project Completion;
(ii) second, for payment of the principal amount of Loans, all
interest accrued thereon and other payment Obligations (other than
as referred to in clause (e)(iii)) of the Borrower then due and
owing; and
- 40 -
<PAGE>
(iii) third, for payments in respect of Hedging Agreements
entered into directly by the Borrower in accordance with Section
8.1.10.
(f) For the avoidance of doubt, references in this Agreement to the
Construction Account shall not, and shall not be deemed to, include a
reference to the Construction Sub-Account (Chile).
SECTION 4.2. Proceeds Account.
(a) The Borrower shall promptly deposit all proceeds (or such
proportion thereof as shall then be permitted by Applicable Law but, in
any event, not less than 99.99% of the proceeds) of the export and sale
of Project Output, all proceeds derived from the exercise of any Hedging
Agreement and (to the extent required pursuant to Section 8.1.7) all
proceeds payable in a currency other than Pesos under policies of
insurance maintained by the Borrower relating to loss or damage to the
Project Assets or Production into a sub-account (the "Proceeds
Sub-Account (Collateral Collections)) of a single purpose offshore
account (the "Proceeds Account") established by the Borrower in New York
City in its name with the Project Account Bank (U.S.). The Borrower shall
promptly deposit (i) to the extent required pursuant to Section 8.1.7,
all proceeds payable in a currency other than Pesos under policies of
insurance maintained by the Borrower relating to matters other than the
loss or damage to the Project Assets or Production, and (ii) to the
extent permitted by Applicable Law, all other amounts received by it in
connection with the Fachinal Project into a second sub-account of the
Proceeds Account (the "Proceeds Sub-Account (Other Collections)"). The
Borrower shall not deposit or transfer any funds other than the amounts
referred to in the first sentence of this clause into the Proceeds Sub-
Account (Collateral Collections). To the extent not permitted by
Applicable Law to deposit any amounts received by it in connection with
the Fachinal Project into the Proceeds Sub-Account (Other Collections),
the Borrower shall promptly deposit all such amounts (together with any
amounts received by way of refund of IVA) into the Proceeds Sub-Account
(Chile).
(b) No amount other than amounts referred to in this clause shall be
disbursed on the instructions of the Borrower or otherwise from either
the Proceeds Account or the Proceeds Sub-Account (Chile); provided,
however, that any Project Costs which are scheduled, pursuant to the
Development Plan, to be incurred in any one calendar month may be
incurred and paid for in any prior calendar month; provided, further,
however, that the aggregate amount of such accelerated Project Costs
incurred in any one calendar month may not exceed 25% of the aggregate
Project Costs scheduled to be incurred during such calendar month
- 41 -
<PAGE>
as set forth in the Development Plan. On the terms and subject to the
conditions of this Agreement (including Section 4.4), the Project Account
Bank (U.S.) shall, on instructions of the Borrower, disburse funds from
the Proceeds Account for application in the following order of priority:
(i) for payment of bona fide Project Costs (excluding, however,
Project Costs of the nature referred to in clauses (b)(ii) and
(b)(iii)) then payable by the Borrower (and for which moneys have
not been previously or are not being simultaneously disbursed from
the Proceeds Account or any other Project Account) and not otherwise
restricted from being paid pursuant to the terms of this Agreement
or any other Loan Document;
(ii) for payment of the principal amount of Loans, all interest
accrued thereon and other payment Obligations (other than as
referred to in clause (b)(iii)) of the Borrower then due and owing;
(iii) for payments in respect of Hedging Agreements entered
into directly by the Borrower in accordance with Section 8.1.10;
(iv) for deposit to the Proceeds Sub-Account (Debt Service
Reserve) to the extent necessary to ensure that the amount standing
to the credit thereof is not less than the Required Debt Service
Reserve Balance; and
(v) for payment of amounts as and when permitted to be made
pursuant to Section 8.2.7.
(c) For the sole purpose of facilitating the remission of Dollars
from the Proceeds Account to Chile in order to fund the payment of
invoices in respect of Project Costs denominated in Pesos pursuant to
clause (b)(i), the Borrower may establish a single purpose account
denominated in Pesos (the "Proceeds Sub-Account (Chile)") in Santiago in
the Borrower's name with the Project Account Bank (Chile). For the
purposes of the foregoing, and to the extent permitted by Applicable Law
and the Foreign Investment Contract, the Project Account Bank (Chile) and
the Borrower shall obtain all Approvals, and take all action, as the
Agent reasonably deems necessary or advisable to comply with Applicable
Law and to protect the Bank Parties' interests in all balances standing
to the credit of the Proceeds Sub-Account (Chile). All amounts received
by the Borrower in respect of the proceeds of any disposition of Project
Assets (subject always to the provisions of this Agreement and the
Security Agreements and excluding proceeds from the sale of Project
Output) together with any amounts received
- 42 -
<PAGE>
by the Borrower in connection with the expropriation or other taking of
any Project Assets as a result of any action of the nature referred to in
Section 9.1.12, shall be deposited into the Proceeds Sub-Account
(Collateral Collections) or, to the extent such deposit is not permitted
by Applicable Law, into the Proceeds Sub-Account (Chile). The amount of
Dollars that may be remitted from the Proceeds Account to the Proceeds
Account Bank (Chile) for conversion into Pesos and deposit into the
Proceeds Sub-Account (Chile) during any one calendar month may not exceed
the excess, if any, of (i) the Dollar equivalent (calculated at the then
prevailing market rates) of those Peso-denominated Project Costs
described in clause (b)(i) scheduled to be paid during such month
pursuant to the Cash Flow Schedule, less (ii) balances standing to the
credit of the Proceeds Sub-Account (Chile) on such day which are not then
expected to be required to fund the payment of Project Costs already
incurred or expected to be incurred. Any Dollars so remitted shall
immediately be converted by the Project Account Bank (Chile) into Pesos
and deposited into the Proceeds Sub-Account (Chile).
(d) At any time when any Default shall have occurred and be
continuing but prior to the occurrence of an Event of Default or
Insolvency Default and subject to the provisions of clause (c)(ii) of
Section 4.4, the Borrower may instruct the relevant Project Account Bank
only to disburse funds (including Dollars remitted from the Proceeds
Account to the Proceeds Sub-Account (Chile) pursuant to clause (c)) from
the Proceeds Account and the Proceeds Sub-Account (Chile) for the purpose
of payment of costs referred to below and shall be paid in the following
order of priority:
(i) first, for payment of such Project Costs (other than
Project Costs referred to in clauses (d)(ii) and (d)(iii)) which are
necessary in order to maintain the Mine in normal working condition;
provided, however, that no such amount may be disbursed in respect
of the payment of any such Project Cost which, in the reasonable
opinion of the Required Banks (acting in consultation with the
Independent Consultant) shall not be necessary to maintain the Mine
in normal working condition;
(ii) second, for payment of the principal amount of Loans, all
interest accrued thereon and other payment Obligations (other than
as referred to in clause (d)(iii)) of the Borrower then due and
owing; and
(iii) third, for payments in respect of Hedging Agreements
entered into directly by the Borrower in accordance with Section
8.1.10.
- 43 -
<PAGE>
(e) For the avoidance of doubt, references in this Agreement to the
Proceeds Account shall not, and shall not be deemed to, include a
reference to any of the Proceeds Sub-Account (Chile) or the Proceeds
Sub-Account (Debt Service Reserve).
SECTION 4.3. Proceeds Sub-Account (Debt Service Reserve).
(a) The Borrower shall establish a third single purpose sub-account
(the "Proceeds Sub-Account (Debt Service Reserve") of the Proceeds
Account with the Project Account Bank (U.S.) .
(b) On all dates commencing with the Project Completion Date the
balance standing to the credit of the Proceeds Sub-Account (Debt Service
Reserve) shall be in excess of the sum (such sum, the "Required Debt
Service Reserve Balance") of (i) the aggregate principal amount of Loans
scheduled to be repaid pursuant to clause (b) of Section 3.1) during the
three month period commencing on such date, and (ii) the aggregate amount
of interest scheduled to accrue on the Loans during such period
(calculated, with respect to any Loan in the case of any portion of such
period which shall occur after the termination of any Interest Period
then applicable to such Loan, on the basis of an Interest Period of three
months' duration).
(c) On the terms and subject to the conditions of this Agreement,
the Borrower may instruct the Project Account Bank (U.S.) to disburse
funds from the Proceeds Sub-Account (Debt Service Reserve) for
application for payment of the principal amount of Loans and all interest
accrued thereon then due and owing.
(d) If on the last Business Day of any calendar month the balance of
the Proceeds Sub-Account (Debt Service Reserve) exceeds the Required Debt
Service Reserve Balance calculated on such date and if no Default shall
then have occurred and be continuing, the Borrower may instruct the
Proceeds Account Bank (U.S.) to transfer such excess on such date to the
Proceeds Account.
(e) No amounts other than amounts referred to in clauses (c) and (d)
may be disbursed from the Proceeds Sub-Account (Debt Service Reserve).
(f) Without prejudice to any provision of any Security Agreement, at
any time when any Default shall have occurred and be continuing, no
withdrawal may be directed by the Borrower from the Proceeds Sub-Account
(Debt Service Reserve).
- 44 -
<PAGE>
SECTION 4.4. General Provisions Relating to the Project Accounts.
(a) The Borrower shall deposit moneys to, and moneys shall be
disbursed from, the Project Accounts solely for the purposes described in
this Article. Without prejudice to the provisions of Section 8.1.11, the
Borrower shall not deposit into any Project Account any moneys other than
moneys derived from, or received in connection with, the Fachinal
Project.
(b) Without prejudice to any provision of any Security Agreement, at
any time when any Event of Default or Insolvency Default shall have
occurred and be continuing, no withdrawal may be made from any Project
Account without the prior written consent of the Required Banks.
(c) (i) Any repayment of the principal amount of any Loans to be
made from any Project Account shall (without prejudice to the right of
the Agent or any Bank to obtain such repayment or prepayment of any
Obligation from any other source, including the other Project Accounts)
be made in Dollars by disbursing from the relevant Project Account to the
Agent an amount sufficient to provide for such repayment or prepayment.
(ii) If there are insufficient funds in the Proceeds Account or
the Proceeds Sub-Account (Debt Service Reserve) for any repayment or
prepayment of the principal amount of any Loans required to be made
with balances standing to the credit thereof, the Proceeds Account
and the Proceeds Sub-Account (Debt Service Reserve) shall each be
disbursed in full to the Agent and the Borrower shall pay any
remainder of such repayment or prepayment in accordance with the
relevant provisions of Section 3.1.
(d) At any time when no Default shall then have occurred and be
continuing and subject to the terms and conditions of the Foreign
Investment Contract, the Borrower shall, to the extent practicable in
order to perform its obligations under each Operative Document to which
it is a party and to develop the Fachinal Project in accordance with the
Development Plan, direct the relevant Project Account Bank to invest
amounts held in any Project Account in the appropriate type of Cash
Equivalent Investments; provided, however, that (i) such Cash Equivalent
Investments are pledged to or otherwise encumbered in favor of the Agent
as security for the Obligations pursuant to the relevant Security
Agreement or other documentation satisfactory to the Agent, (ii) in the
case of the Proceeds Account and the Proceeds Sub-Account (Debt Service
Reserve), an aggregate amount of such Cash
- 45 -
<PAGE>
Equivalent Investments (U.S.) equal to or in excess of the next
succeeding repayment of the principal amount of the Loans scheduled to be
made pursuant to clause (b) of Section 3.1 shall mature on or prior to
the date of such scheduled payment set forth in such clause, (iii) upon
the occurrence of an Event of Default or Insolvency Default, the Agent
shall be entitled to direct the relevant Project Account Bank to
liquidate such Cash Equivalent Investments, it being expressly understood
and agreed that any breakage or other costs arising from such liquidation
shall be for the account of the Borrower, and (iv) upon maturity of any
Cash Equivalent Investment acquired pursuant to this clause the proceeds
thereof (and upon receipt of any interest or other payment in respect of
any such Cash Equivalent Investment, the amount of such payment) shall
immediately be either deposited into the relevant Project Account or,
subject to the other provisions of this Article, invested in other
appropriate Cash Equivalent Investments.
(e) The Project Accounts (Chile) and the Project Accounts (U.S.)
shall be operated, as set forth in this Article, by the relevant Project
Account Bank acting at the request of the Agent and pursuant to the terms
and conditions of the Project Account Agreement (Chile) and Project
Account Agreement (U.S.), respectively, and of this Agreement. The
Borrower shall not terminate the appointment of either Project Account
Bank. The Borrower shall not consent to any amendment, modification or
waiver to, or in connection with, either Project Account Agreement.
ARTICLE 5. INCREASED COSTS; TAXES; MARKET DISRUPTIONS;
GENERAL PAYMENT PROVISIONS
SECTION 5.1. Dollars Unavailable.
(a) If, prior to the date on which the Agent shall make any
determination of the LIBO Rate for any Interest Period, the Agent shall
have determined or shall have been notified (for any reason whatsoever)
that either (i) Dollar certificates of deposit or Dollar deposits, as the
case may be, in the relevant amount and for the relevant Interest Period
are not available to the Banks in the London interbank market, or (ii) by
reason of circumstances affecting the Banks in the London interbank
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to the relevant Loans, then the Agent shall promptly
give telephonic notice of such determination confirmed in writing to the
Borrower (which determination shall, in the absence of manifest error, be
conclusive and binding on the Borrower).
- 46 -
<PAGE>
(b) As soon as practicable following the giving of any notice
described in clause (a), the Agent, the Banks and the Borrower shall
negotiate for a period not exceeding 30 days with a view to agreeing an
alternative basis for making or maintaining the Loans affected by the
circumstances described in clause (a). During such time period interest
shall accrue on the principal amount of each affected Loan at the rate
applicable to each such Loan immediately prior to the giving of such
notice. If no such alternative basis is agreed within such time period,
each Bank's affected Loans shall bear interest at a rate per annum equal
to the sum of (i) the cost to such Bank of funding such Loans (as
determined by such Bank which determination shall, in the absence of
manifest error, be conclusive and binding on the Borrower) plus (ii) the
Applicable Margin as in effect from time to time.
(c) As an alternative to clause (b), the Borrower may at any time
elect that the principal amount of and interest on all of the Banks' then
outstanding Loans which are affected by the circumstances described in
clause (a) be immediately repaid in full (subject, however, to Section
5.3).
SECTION 5.2. Increased Costs, etc.
(a) The Borrower agrees to reimburse each Bank for any increase
(other than as specifically covered in any other Section of this Article)
in the cost to such Bank of making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Loans, and for any
reduction (other than as specifically covered in any other Section of
this Article) in the amount of any sum receivable by such Bank hereunder
in respect of making, continuing or maintaining any portion of any such
Loans in either case, from time to time by reason of any Regulatory
Change (including with respect to Regulation D of the F.R.S. Board). In
the event of the incurrence of any such increased cost or reduced amount,
such Bank shall promptly notify the Agent and the Borrower thereof
stating in reasonable detail the reasons therefor and the additional
amount required fully to compensate such Bank for such increased cost or
reduced amount. Such notice shall, in the absence of manifest error, be
conclusive and binding on the Borrower.
(b) As soon as practicable following the giving of any notice
described in clause (a), the affected Bank, the Agent and the Borrower
shall negotiate for a period not exceeding 30 days with a view to
avoiding or minimizing the circumstances described in clause (a). If no
steps mutually agreeable to the affected Bank, the Agent and the Borrower
are decided within such 30 day period, the Borrower may elect either to
prepay the principal amount of and interest on such affected Bank's then
outstanding
- 47 -
<PAGE>
Loans (subject, however, to Section 5.3) or pay, within five days after
the expiry of such 30 day period, any additional amount required fully to
compensate such affected Bank for the increased cost or reduced amount
described in clause (a).
SECTION 5.3. Funding Losses. In the event any Bank shall incur any loss
or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of Dollar deposits or other funds acquired by such
Bank to make, continue, or maintain any portion of the principal amount of a
Loan) as a result of:
(a) any payment or prepayment of the principal amount of a Loan on a
date other than the scheduled last day of the Interest Period applicable
thereto, whether pursuant to Section 3.1 or otherwise; or
(b) any action of the Borrower resulting in any Loans not being made
or maintained in accordance with the Borrowing Request or the Interest
Period Notice, as the case may be, given therefor,
then, upon the request of such Bank to the Borrower (with a copy to the
Agent), the Borrower shall pay to the Agent for the account of such Bank such
amount as will (in the reasonable determination of such Bank) reimburse such
Bank for such loss or expense. A statement as to any such loss or expense
(including calculations thereof in reasonable detail) shall be submitted by
such Bank to the Agent and the Borrower and shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
SECTION 5.4. Increased Capital Costs.
(a) If any Regulatory Change affects or would affect the amount of
capital required or expected to be maintained by any Bank or any Person
controlling such Bank, and such Bank determines (in its reasonable
discretion) that the rate of return on its or such controlling Person's
capital is reduced to a level below that which such Bank or such
controlling Person could have achieved but for the occurrence of any such
Regulatory Change, then, in any such case upon notice from time to time
by such Bank to the Borrower, the Borrower may, at its option (i) within
five days of receipt of such notice, pay directly to such Bank additional
amounts sufficient to compensate such Bank or such controlling Person for
such reduction in rate of return or (ii) prepay the principal amount of
and interest on such affected Bank's then outstanding Loans (subject,
however, to Section 5.3). A statement of such Bank as to any such
additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be conclusive
and binding on the Borrower. In determining such amount, such Bank may
use any method of averaging and
- 48 -
<PAGE>
attribution that it (in its absolute discretion) shall deem applicable.
(b) Notwithstanding clause (a), the Borrower shall not be obligated
to pay any amount to any Bank in respect of any such reduction in the
rate of return or increased cost which arises as a consequence of (i) any
law or directive implementing the proposals for international convergence
of capital measurement and capital standards published by the Basle
Committee on Banking Regulations and Supervisory Practices in July 1988
and/or (ii) the Council of the European Communities Directive of 17 April
1989, on the own funds of credit institutions (89/299/EC) and the Council
of the European Communities Directive of 18 December 1989, on a solvency
ratio for credit institutions (89/647/EC) to the extent that the impact
of any such law or directive can reasonably be calculated at the
Effective Date. In addition, no Bank may make any claim for compensation
in respect of any such reduction in return increased cost to the extent
that a notification of the event leading to such reduction in the rate or
return or increased cost is not given to the Borrower within six months
of such Bank's obtaining knowledge thereof.
SECTION 5.5. Illegality.
(a) If, as the result of any Regulatory Change, any Bank shall
determine (which determination, in the absence of manifest error, shall
be conclusive and binding on the Borrower) that it is unlawful for such
Bank to make a Loan, the obligations of such Bank to make any portion of
the principal amount of such Loan shall, upon such determination (and
telephonic notice thereof confirmed in writing to the Agent and the
Borrower), forthwith be suspended until such Bank shall become aware that
the circumstances causing such suspension no longer exist and shall have
notified the Agent and the Borrower to such effect, at which time the
obligation of such Bank to make Loans shall be reinstated.
(b) If, as the result of any Regulatory Change, any Bank shall
determine (which determination, in the absence of manifest error, shall
be conclusive and binding on the Borrower) that it is unlawful for such
Bank to continue to maintain a Loan, then, upon notice by such Bank to
the Agent and the Borrower, such Bank shall consult with the Borrower and
the Agent for a period of up to 30 days from the date of such notice,
with a view to agreeing upon a mutually acceptable alternative
arrangement which will avoid or minimize such illegality. If no steps
mutually agreeable to the affected Bank, the Agent and the Borrower are
decided within such 30 day period, the Borrower may, at its option
(except to the extent otherwise mandated by such Regulatory Charge), to
the extent not prohibited from doing so by the relevant illegality or
unlawfulness,
- 49 -
<PAGE>
continue such Bank's then outstanding Loans which are affected by the
circumstances described in clause (a) or prepay, within five days after
the expiry of such 30 day period (or on such earlier date as may be
required by the relevant Regulatory Change) the principal amount of and
interest on such affected Bank's then outstanding Loans (subject,
however, to Section 5.3).
SECTION 5.6. Taxes. All payments by the Borrower or any other Obligor of
principal of, and interest on, the Loans and all other amounts payable
pursuant to this Agreement or any other Loan Document to the Agent or any Bank
shall be made free and clear of, and without deduction for any, present or
future income, excise, stamp or other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed (a) in the case of the
Borrower, by Chile (including encaje) or by any taxing authority of any other
jurisdiction, and (b) in the case of any other Obligor by any taxing
authority, in each case other than franchise taxes and taxes imposed on or
measured by the recipient's net income or receipts (such items referred to as
"Taxes"). In the event that any withholding or deduction from any payment to
be made by any Obligor hereunder or under any other Loan Document is required
in respect of any Taxes pursuant to any Applicable Law, then such Obligor
will:
(c) to the extent that any such Taxes are payable by an Obligor, pay
directly to the relevant authority the full amount to be so withheld or
deducted;
(d) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(e) pay to the Agent for the account of the Person or Persons
entitled thereto such additional amount or amounts as is necessary to
ensure that the net amount actually received by such Person will be equal
to the full amount such Person would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Bank Party with
respect to any payment received by such Bank Party hereunder or under any
other Loan Document, such Bank Party may pay such Taxes and the relevant
Obligor will promptly pay such additional amounts (including any penalties,
interest or expenses) as is or are necessary in order that the net amount
received by such Person after the payment of such Taxes (including any Taxes
on such additional amount) shall equal the amount such Person would have
received had such Taxes not been asserted.
If any Obligor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for its own account and/or, as the
case may be, the account of the relevant Banks, the required receipts or other
required
- 50 -
<PAGE>
documentary evidence, such Obligor shall indemnify the Agent or the relevant
Banks, as the case may be, for any incremental Taxes, interest or penalties
that may become payable by any such Person as a result of any such failure.
For purposes of this Section, a distribution hereunder or under any other Loan
Document by the Agent or any Bank to or for the account of any Bank shall be
deemed a payment by the relevant Obligor.
The Bank Parties agree to cooperate with each Obligor in completing and
delivering or filing tax-related forms which would reduce or eliminate any
amount of taxes of the nature referred to in the first paragraph of this
Section required to be deducted or withheld on account of payment made by such
Obligor under this Agreement or any other Loan Document; provided, however,
that no Bank Party shall be under any obligation to execute and deliver any
such form if, in the opinion of such Bank Party, completion of any such form
could result in an adverse consequence with respect to the business or tax
position of such Bank Party.
For the avoidance of doubt and without affecting any of the Obligations
of any Obligor hereunder, nothing in this Section shall, or shall be deemed
to, affect the ability of any Obligor to challenge any ruling made by any
taxing authority that Taxes are payable in respect of any payment obligation
of any Obligor hereunder or under any other Loan Document.
SECTION 5.7. Mitigation.
(a) In the event that any Obligor makes payment of any amount
pursuant to Section 5.4 or 5.6 or that any Bank seeks payment of an
amount pursuant to Section 5.4 or 5.6 (including as a result of such Bank
no longer qualifying as a "registered financial institution" with the
Central Bank) or because of circumstances resulting in the 30 day
negotiation period described in clause (b) of any of Section 5.1, 5.2, or
5.5, such affected Bank agrees that it will take such reasonable steps as
may reasonably be open to it to mitigate the effects of the circumstances
described in the foregoing Sections (including the transfer of such
Bank's Lending Office); provided, however, that no Bank shall be
obligated to (i) take any such steps if, in its opinion, such steps would
require it to achieve less than its expected return under this Agreement
or would have an adverse effect upon its assets or financial condition or
(ii) achieve any particular result or incur any liability to the Borrower
by virtue of any such steps resulting in less than complete mitigation of
the relevant circumstances.
(b) If, pursuant to clause (a), any Bank effectively obtains a
refund of tax or credit (a "Tax Credit") against a payment made by the
Borrower pursuant to Section 5.6 (a "Tax Payment"), and such Bank is able
to identify such Tax Credit as being attributable to such Tax Payment,
then such Bank, after actual receipt of such Tax Credit, shall
- 51 -
<PAGE>
reimburse the Borrower for such amount as such Bank shall reasonably
determine to be the proportion of such Tax Credit as shall be reasonably
attributable to such Tax Payment; provided, however, that no Bank shall
be required to make any such reimbursement which would cause it to lose
the benefit of such Tax Credit or would otherwise adversely affect any
matter relating to such Bank in connection with the assessment or payment
of any Taxes. Each Bank shall have absolute discretion as to whether to
claim any Tax Credit, and if it does so claim, the extent, order and
manner in which it does so. No Bank shall be obliged to disclose
information regarding its tax affairs or computations to the Borrower.
SECTION 5.8. Payments, Computations, etc. All payments by any Obligor
pursuant to this Agreement or any other Loan Document, whether in respect of
principal amount, interest or otherwise, shall be paid in Dollars. All such
payments shall be made by such Obligor to the Agent for the account of each
Bank Party entitled thereto, by delivery of Dollars in immediately available
funds to an account of the Agent at the Agent's Lending Office, which account
shall be designated from time to time by notice to the Borrower from the
Agent, for the pro rata benefit of each Bank Party entitled thereto in
accordance with its respective portion of the aggregate unpaid principal
amount of the Loans as to which any such payment is made. All such payments
shall be made, without setoff, deduction, or counterclaim, not later than
11:00 a.m., New York time, on the date when due. Any payments received
hereunder after the time and date specified in this Section shall be deemed to
have been received by the Agent on the next following Business Day. The Agent
shall promptly remit to each Bank its share (calculated as aforesaid), if any,
of such payments. Such remittance shall be to an account designated by such
Bank to the Agent by notice from time to time and maintained at its Lending
Office. All interest and commissions shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or commission is payable
over a year comprised of 360 days. Subject to clause (d) of the definition of
"Interest Period", whenever any payment to be made shall otherwise be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest, if any, in connection with such payment.
SECTION 5.9. Proration of Payments. If any Bank shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff,
or otherwise) on account of the principal amount of or interest on any Loan in
excess of its pro rata share of payments then or therewith obtained by all
Banks entitled thereto upon the principal amount of and interest on all Loans,
such Bank shall purchase from the other Banks such participations in Loans
held by them as shall be necessary to cause such purchasing Bank to share the
excess payment or other
- 52 -
<PAGE>
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Each Obligor
agrees that any Bank so purchasing a participation from another Bank pursuant
to this Section may, to the fullest extent permitted by Applicable Law,
exercise all its rights of payment (including pursuant to Section 5.10) with
respect to such participation as fully as if such Bank were the direct
creditor of such Obligor in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Bank receives a
secured claim in lieu of a setoff to which this Section applies, such Bank
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks entitled
under this Section to share in the benefit of any recovery on such secured
claim. For the avoidance of doubt, each Bank shall participate in the making
of or continuation of any Loans to the extent of its Percentage of the
principal amount of such Loans to be outstanding immediately following the
making or continuation of such Loans.
SECTION 5.10. Setoff. In addition to and not in limitation of any rights
of any Bank Party under Applicable Law, each Bank Party (or any branch
thereof) shall, upon the occurrence of any Default described in Section 9.1.6
or any Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due), and (as
security for such Obligations, but not to the exclusion of the other rights
such Bank Party may have) each Obligor hereby grants to each Bank Party a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of such Obligor then or thereafter maintained with such
Bank Party, as the case may be, in whatever currency; provided, however, that
any such appropriation and application shall be subject to the provisions of
Section 5.9. The rights of each Bank Party under this Section are in addition
to any other rights and remedies (including other rights of setoff under
Applicable Law or otherwise) which such Bank Party may have.
SECTION 5.11. Application of Proceeds. If at any time any amount received
by the Agent is less than the amount then due and payable pursuant to this
Agreement or any other Loan Document (including any proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon,
all or any part of any collateral security subject to any Security Agreement)
such amount may, in the discretion of the Agent (after consultation with the
Banks), be held by the Agent as additional collateral security under the
relevant Security Agreement for, or then or at any time thereafter be applied
(after payment of any amounts payable to the Agent pursuant to Sections 11.3
and 11.4 and similar provisions contained in the other Loan Documents) in
whole or in part by the Agent against, all or any part of the Obligations in
the following order:
- 53 -
<PAGE>
(a) first, to amounts outstanding to the Bank Parties (or any of
them) under any Loan Document (excluding, however, any Hedging Agreement)
in respect of any amount other than interest on, or the principal amount
of, any Loan;
(b) secondly, to amounts outstanding to the Bank Parties (or any of
them) under any Loan Document (excluding, however, any Hedging Agreement)
in respect of interest on any Loan;
(c) thirdly, to amounts outstanding to the Bank Parties (or any of
them) under any Loan Document (excluding, however, any Hedging Agreement)
in respect of the principal amount of any Loan; and
(d) fourthly, pro rata to net payment obligations of the Borrower to
any Bank under any Loan Document which is a Hedging Agreement.
Any surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Obligations, and the termination of all
Commitments (if not then already terminated), shall be paid over to or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 5.12. Judgment Currency, etc.
(a) If, for the purposes of obtaining judgement in any court, it is
necessary to convert a sum due hereunder in Dollars into another
currency, such Obligor agrees, to the fullest extent permitted by
Applicable Law, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase
dollars with such other currency on the Business Day preceding that on
which final judgment is given.
(b) The obligation of each Obligor in respect of any sum due from it
to any Bank Party shall, notwithstanding any judgment in a currency other
than Dollars, be discharged only to the extent that on the Business Day
following receipt by such Bank Party, as the case may be, of any sum
adjudged to be so due in such other currency, such Bank Party, as the
case may be, may in accordance with normal banking procedures, purchase
Dollars with such other currency. In the event that the Dollars so
purchased are less than the sum originally due to such Bank Party in
Dollars, such Obligor, as a separate obligation and notwithstanding any
such judgment, hereby indemnifies and holds harmless such Bank Party
against such loss, and if the Dollars so purchased exceed the sum
originally due to such Bank Party, such Bank Party shall remit to such
Obligor such excess.
ARTICLE 6. CONDITIONS PRECEDENT TO MAKING LOANS
- 54 -
<PAGE>
SECTION 6.1. Initial Loans. The obligations of the Banks to make the
initial Loans shall be subject to the prior or concurrent satisfaction of each
of the conditions precedent set forth in this Section. Unless specifically
stated to the contrary, each document, certificate, and other Instrument
delivered pursuant to this Article shall be dated on, or prior to, and shall
be in full force and effect on, the initial Borrowing Date.
SECTION 6.1.1. Notes. The Agent shall have received counterparts of the
Notes Operating Procedures Agreement, duly executed by the Custodian Bank and
an Authorized Representative of the Borrower.
SECTION 6.1.2. Resolutions, etc. The Agent shall have
received:
(a) from each Obligor a certificate of its Secretary or similar
officer as to:
(i) resolutions of its Board of Directors, Management Committee
or similar body then in full force and effect authorizing the
execution, delivery and performance of this Agreement and each other
Operative Document or other document to be executed by it in
connection with the transactions contemplated hereby and thereby,
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement and each other
Operative Document or other document executed or to be executed by
it, and
(iii) its Organic Documents as then in effect,
upon which certificates each Bank Party may conclusively rely until it
shall have received a further certificate of the Secretary or similar
officer of the relevant Obligor cancelling or amending such prior
certificate;
(b) from the Independent Consultant, a certificate of its Secretary
or similar officer as to the incumbency and signature of those of its
officers authorized to act with respect to the Project Completion
Certificate and each Loan Document or other document to be executed by it
and each other matter contemplated hereby, upon which certificate each
Bank Party may conclusively rely until it shall have received a further
certificate of the Secretary or similar officer of the Independent
Consultant cancelling or amending such prior certificate; and
(c) such other documents (certified if requested) as the Agent may
request from any Obligor or the Independent Consultant, as the case may
be, with respect to any
- 55 -
<PAGE>
Organic Document, Contractual Obligation, Operative Document or Approval.
SECTION 6.1.3. Guaranty Agreement. The Agent shall have received
counterparts of the Guaranty Agreement duly executed by an Authorized
Representative of the Guarantor.
SECTION 6.1.4. Security Agreements.
(a) The Agent shall have received (i) counterparts of the Borrower
Security Agreement (U.S. Assets), duly executed by an Authorized
Representative of the Borrower, and (ii) counterparts of the Finance
Subsidiary Security Agreement, duly executed by an Authorised
Representative of the Finance Subsidiary, together with, in each case,
evidence that all filings, stampings, registrations, recordings and other
actions necessary or in the opinion of counsel to the Bank Parties,
advisable or desirable, in order to create in favor of the Agent (for the
ratable benefit of the Bank Parties) a valid and perfected first-
priority Lien over all of the collateral purported to be covered by
(and/or as defined in) the Borrower Security Agreement (U.S. Assets) and
the Finance Subsidiary Security Agreement, respectively, have been taken
and are effective.
(b) The Agent shall have received counterparts of each of the
Security Agreements referred to below, in each case duly executed by the
Banks and an Authorized Representative of the relevant Obligor (or
Obligors), together with:
(i) in the case of the Conditional Assignment of Contract
Rights (Foreign Investment Contract), evidence of the prior
notification of the conditional assignment of rights under the
Foreign Investment Contract pursuant to the Conditional Assignment
of Contract Rights (Foreign Investment Contract) to the Central Bank
and the Foreign Investment Committee of Chile and notarization of
the relevant public deed thereof before a Chilean notary public;
(ii) in the case of the Mortgage Over Mining Concessions,
evidence of the notarization of the relevant public deed before a
Chilean notary public and the filing thereof in the Register of
Mortgages and Encumbrances of the relevant Registrar of Mines in
Chile Chico, Chile;
(iii) in the case of the Mortgage Over Real Estate (Borrower),
the Mortgage Over Real Estate (CDE) and the Mortgage Over Water
Rights, evidence of the notarization of the relevant public deed
before a Chilean notary public and the filing thereof in the
Register of Mortgages and Encumbrances of the
- 56 -
<PAGE>
relevant Real Estate Registrar in Chile Chico, Chile;
(iv) in the case of the Industrial Pledge, evidence of the
notarization of the relevant public deed before a Chilean notary
public and the registration thereof in the Special Industrial Pledge
Register of the relevant Real Estate Registrar in Chile Chico,
Chile;
(v) in the case of both the Promise to Grant Industrial Pledges
and the Promise to Grant Pledges Without Conveyance, evidence of the
notarization of each of the relevant public deeds before a Chilean
notary public;
(vi) in the case of each Conditional Assignment of Contract
Rights relating to a Project Document required to be delivered
pursuant to clause (a)(i) of Section 6.1.6 evidence of the
notarization of the relevant public deed before a Chilean notary
public and of acknowledgement and agreement by all relevant
counterparties to the conditional assignment of the relevant
contract conditionally assigned pursuant to such Conditional
Assignment of Contract Rights; and
(vii) in the case of each of the foregoing Security Agreements,
evidence that all filings, stampings, registrations, recordings,
notifications and other actions necessary or, in the opinion of
counsel to the Bank Parties, advisable or desirable, in order to
create in favor of the Bank Parties a valid and perfected
first-priority Lien over all of the Collateral purported to be
covered by (and as defined in) each such Security Agreement have
been taken and are effective.
SECTION 6.1.5. Subordination Agreement; Subordination of Certain
Obligations of the Guarantor.
(a) The Agent shall have received counterparts of the Subordination
Agreement, duly executed by Authorized Representatives of each Obligor.
(b) The Agent shall have received evidence satisfactory to it to the
effect that the payment Obligations of the Guarantor under the Guaranty
Agreement and each other Loan Document to which the Guarantor is a party
rank in payment in priority to, and are otherwise senior to, in each case
in all respects, the payment obligations of the Guarantor in respect of
Guarantor Subordinated Indebtedness.
SECTION 6.1.6. Project Documents; Approvals. The following conditions
shall have been met:
- 57 -
<PAGE>
(a) (i) all Project Documents executed on or prior to the initial
Borrowing Date shall have been executed and delivered by the parties
thereto, all Project Documents executed subsequent to the Effective Date
but on or prior to the initial Borrowing Date (including the transfer
from CDE to the Borrower of the Construction Contract and the
Construction Contract Guaranty, as referred to in clause (a)(ii)) shall
be satisfactory in form and substance to all the Banks, and all of the
foregoing Project Documents shall be in full force and effect, and a copy
thereof (certified by an Authorized Representative of each relevant
Obligor party thereto) shall have been delivered to the Agent; and
(ii) the Agent shall have received evidence satisfactory to it
that the rights and benefits of CDE under each of the Construction
Contract and the Construction Contract Guaranty, in each case as
originally executed, have been transferred to the Borrower; and
(b) the Agent shall have received a certificate of an Authorized
Representative of the relevant Obligor, to the effect that (i) all
Approvals of the nature referred to in the first sentence of clause (a)
of Section 7.16 have been obtained, all such Approvals are listed on Part
A of Item 1 ("Current Approvals") of the Disclosure Schedule and each
such Approval is in full force and effect as of the date listed on Part A
("Current Approvals") or, as the case may be, Part B ("Pending
Approvals") of Item 1 of the Disclosure Schedule and (ii) a true,
correct, and complete copy of each such Approval is attached to such
certificate.
SECTION 6.1.7. Hedging Agreements. The Agent shall have received such
evidence as it shall require in connection with the implementation by or
transfer to the Borrower of Hedging Agreements which are required by Section
8.1.10 to be in effect on the Borrowing Date.
SECTION 6.1.8. Insurance. The terms of and policies of insurance required
to be maintained by the Borrower pursuant to Section 8.1.7 (including as to
amount, risks covered and deductibles) shall be on terms satisfactory to the
Agent and the Agent shall have received a schedule detailing all policies of
insurance maintained in connection with the Fachinal Project as at the
Borrowing Date. In addition, the Agent shall have received copies of all
policies and binders or brokers' letters of undertaking regarding such
policies. The Agent shall also received (a) the Insurance Summary (which shall
be satisfactory in form and substance to the Banks), (b) the Insurance
Broker's Certificate and (c) evidence satisfactory to it that all premiums
- 58 -
<PAGE>
required to be paid in connection with such policies have been paid and that
all such policies are in full force and effect.
SECTION 6.1.9. Project Accounts. The Agent shall have received:
(a) evidence that the Project Accounts have been established;
(b) counterparts of the Project Account Agreements duly executed by
each relevant Project Account Bank and an Authorized Representative of
the Borrower;
(c) a copy of irrevocable instructions duly executed by an
Authorized Representative of the Borrower in favor of the Project Account
Bank (U.S.) authorizing the Project Account Bank (U.S.) to submit all
necessary information to the Central Bank and take all necessary actions
to ensure compliance with the Foreign Investment Contract and all
Applicable Laws; and
(d) evidence that the Construction Account shall have been funded
with Capital Contributions and/or Approved Subordinated Indebtedness in
an amount aggregating not less than U.S.$24,000,000.
SECTION 6.1.10. Process Agent Acceptance. The Agent shall have received a
counterpart of the Process Agent Acceptance, duly executed by the Process
Agent.
SECTION 6.1.11. Opinions of Counsel. The Agent shall
have received opinions from:
(a) Philippi, Yrarrazaval, Pulido, Langlois & Brunner, Chilean
counsel to the Obligors, substantially in the form of Exhibit G-1
attached hereto;
(b) William F. Boyd, Esq., General Counsel to the Guarantor,
substantially in the form of Exhibit G-2 attached hereto;
(c) Carey y Cia, Chilean counsel to the Bank Parties, as to general
matters of Chilean law, substantially in the form of Exhibit G-3 attached
hereto;
(d) Carey y Cia, Chilean counsel to the Bank Parties, as to property
title matters, substantially in the form of Exhibit G-4 attached hereto;
and
(e) Mayer, Brown & Platt, counsel to the Bank Parties in form and
substance satisfactory to the Bank Parties.
- 59 -
<PAGE>
The relevant Obligors hereby instruct counsel referred to in clauses (a)
and (b) to deliver the opinions referred to in such clauses to the Bank
Parties.
SECTION 6.1.12. Independent Consultant's Certificate. The Banks shall
have received counterparts of the Independent Consultant's Certificate duly
certified or acknowledged by each party referred to therein.
SECTION 6.1.13. Transfer of Properties, etc. from CDE. Without prejudice
to the provisions of Section 7.12, the Agent shall have received such evidence
as it shall reasonably request in order to evidence that (a) the transfer to
the Borrower of those properties previously owned by CDE (excluding, however,
the CDE Surface Rights) and necessary for the development of the Fachinal
Project has been completed, and (b) the Borrower and Guarantor have acceded to
and been granted each of the rights and obligations originally granted to and
incurred by CDE, Agencia en Chile, and CDE, respectively, pursuant to the
Foreign Investment Contract.
SECTION 6.1.14. Closing Commissions, Expenses, etc. The Agent
shall have received (including, to the extent necessary, from the proceeds of
the initial Loans) for its own account, or for the account of the relevant
Bank Parties, as the case may be, all commissions due and payable on or prior
to the Borrowing Date and all fees and expenses payable pursuant to Section
11.3 to the extent then invoiced.
SECTION 6.1.15. Initial Compliance Certificate. The Agent shall have
received a Compliance Certificate calculated as of the date of the making of
the initial Loans, together with such information concerning the calculations
and assumptions used by the Borrower in delivering such Compliance Certificate
as the Agent shall have requested.
SECTION 6.1.16. Bridge Loan Repayment. All amounts in respect of
principal, interest and all other sums outstanding in connection with the
Bridge Loan shall have been repaid (and, to the extent permitted by Applicable
Law, repayment of such amounts may be made from the proceeds of the initial
Loans).
SECTION 6.1.17. Technical Review. The Banks shall have received from the
Independent Consultant in form and substance satisfactory to them, the
Technical Review.
SECTION 6.1.18. Title to Surface Lands. The Agent shall have received
evidence in form and substance satisfactory to it that (i) the Borrower has
good and valid title as the owner of the whole of the real estate referred to
in Item 3(a) of the Disclosure Schedule, and (ii) CDE, Agencia en Chile has
good and valid title to its ownership interest in the real estate referred to
in Item 3(b) of the Disclosure Schedule, in each case free and clear of all
Liens or claims except as permitted pursuant to
- 60 -
<PAGE>
Section 8.2.3 or as disclosed in Item 7 of the Disclosure Schedule.
SECTION 6.2. All Loans. The obligations of the Banks to make any Loans
(including the initial Loans) shall be subject to the satisfaction of each of
the additional conditions precedent set forth in this Section.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. The
representations and warranties of the Obligors set forth in Article 7 and
those of each Obligor set forth in each other Loan Document to which it is a
party shall be true and correct as of the date initially made, and both
immediately before and immediately after the making of the Loans proposed to
be made on the relevant proposed Borrowing Date (but, if any Default of the
nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness (excluding, however, the Bridge Loan), without giving
effect to the application, directly or indirectly, of the proceeds of such
Loans to such other Indebtedness):
(a) such representations and warranties (excluding Section 7.7)
shall be true and correct with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date); and
(b) no Default shall have then occurred and be continuing.
SECTION 6.2.2. Absence of Litigation, etc. On the date of making of such
Loans:
(a) except as disclosed in Item 6 ("Litigation") of the Disclosure
Schedule, no labor controversy, litigation, arbitration or governmental
investigation or proceeding shall be pending against or, to the knowledge
of any Obligor, threatened against any Obligor or any Subsidiary
affecting any of their respective consolidated businesses, operations,
assets, revenues or prospects the outcome of which might, in the
reasonable opinion of the Agent, have a Materially Adverse Effect with
respect to any Obligor: and
(b) no development shall have occurred in any such labor
controversy, litigation, arbitration or governmental investigation or
proceeding so disclosed, which might, in the reasonable opinion of the
Agent, have a Materially Adverse Effect with respect to any Obligor.
SECTION 6.2.3. Borrowing Request. The Agent shall have received the
Borrowing Request. Each of the delivery of the Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans shall constitute a
representation and
- 61 -
<PAGE>
warranty by the Borrower on the Borrowing Date (both immediately before and
immediately after giving effect to such Loans as are proposed to be made on
the relevant proposed Borrowing Date and the application of the proceeds
thereof) that the statements made in Sections 6.2.1 and 6.2.2 are true and
correct.
SECTION 6.2.4. Notes. The Agent shall have received:
(a) Notes, duly executed by an Authorized Representative of the
Borrower and duly notarized before a Chilean notary public, payable to
the order of each Bank, in a face amount equal to such Bank's Percentage
of the principal amount of the requested Loans; and
(b) evidence of the deposit of such Notes, duly executed and
notarized as aforesaid, with the Custodian Bank and payment of all stamp
tax imposed by any relevant Governmental Authority in connection with
such execution and notarization;
SECTION 6.2.5. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Person shall be satisfactory
in form and substance as to legal matters to the Bank Parties and their
counsel and the Agent shall have received all information, and such
counterpart originals or such certified or other copies of such Instruments
related to the conditions precedent described in this Article, as the Agent or
its counsel may reasonably request.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank Parties to enter into this Agreement and, in
the case of the Banks, to make or continue Loans hereunder, each Obligor which
is a party hereto, individually for itself and with respect to matters
hereinafter relating to it (and, in the case of the Borrower, with respect to
CDE), represents and warrants unto each Bank Party as set forth in this
Article. The representations and warranties set forth in this Article shall be
made upon the delivery of a Borrowing Request and each Interest Period Notice,
on each Borrowing Date (both immediately before and immediately after the
application of the proceeds of the Loans), the Project Completion Date and
after the Project Completion Date, on any date on which an Obligor grants
further security to any Bank Party pursuant to Section 8.1.16; provided,
however, that except as set forth in any other Loan Document (and except in
the case of any representation or warranty in this Article 7 in connection
with any Operative Document to which it is a party) the Guarantor shall not be
deemed to have made any new representation or warranty at any time following
the Release Date.
SECTION 7.1. Organization, Power, Authority, etc. The Borrower is a
limited liability company (sociedad de responsabilidad limitada) validly
organized and existing under the laws of Chile. The Guarantor is a corporation
validly
- 62 -
<PAGE>
organized and existing and in good standing under the laws of the State of
Idaho. CDE is a corporation validly organized and existing and in good
standing under the laws of Delaware (and, in the case of CDE, Agencia en
Chile, under the laws of Chile). Each Obligor is duly qualified to do business
and is in good standing (where such concept is applicable) as a foreign
company in each jurisdiction where the nature of its business makes such
qualification necessary and where the failure to so qualify would have a
Materially Adverse Effect with respect to such Obligor and has full power and
authority, and holds all requisite Approvals, to own and hold under lease its
property and to conduct its business substantially as currently conducted by
it. Each Obligor has full power and authority to enter into and perform its
obligations under this Agreement and the other Operative Documents executed or
to be executed by it and, in the case of the Borrower, to obtain Loans
hereunder.
SECTION 7.2. Due Authorization; Non-Contravention. The execution and
delivery by each Obligor of this Agreement and each other Operative Document
executed or to be executed by it and the performance by each Obligor of its
obligations hereunder and thereunder, and the receipt of the Loans hereunder
by the Borrower, have been duly authorized by all necessary corporate action
on its part, do not require any Approval (other than (in the case of the
Project Documents only) those Approvals referred to in Item 1 ("Approvals") of
the Disclosure Schedule), do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of any
Requirement of Law or Approval binding on it, and will not result in or
require the creation or imposition of any Lien on any of its properties
pursuant to the provisions of any Contractual Obligation (other than pursuant
to this Agreement and the Security Agreements).
SECTION 7.3. Validity, etc.
(a) This Agreement constitutes, and each other Operative Document
executed or to be executed by any Obligor constitutes, or on the due
execution by each party thereto and delivery thereof will constitute, the
legal, valid, and binding obligation of such Obligor enforceable in
accordance with its terms, subject as to enforceability, to Applicable
Laws relating to bankruptcy and the enforceability of creditors' rights
generally and by the fact that the availability of equitable remedies is
discretionary and, in the case of any such Instrument executed by or on
behalf of, or relating to, the Borrower or expressed to be governed by
the laws of Chile, is in proper form for enforcement in Chile.
(b) Upon taking of the various actions described in Section 6.1.4,
each Security Agreement will create in favor of the Agent (for the
ratable benefit of the Bank Parties) or in favor of the Bank Parties (in
the case of those Security Agreements governed by the laws of Chile),
- 63 -
<PAGE>
a valid and perfected first-priority Lien on all of the assets,
properties, rights and revenues referred to in each such Security
Agreement as security for the relevant obligations expressed to be
covered thereby, subject to no Liens, except (i) for mandatory provisions
of Applicable Law, and (ii) as specifically permitted by this Agreement
or such Security Agreement.
SECTION 7.4. Legal Status. Neither any Obligor nor any of its properties
or revenues enjoys any right of immunity from suit, set-off, attachment prior
to judgment or in aid of execution, or execution on a judgment in respect of
their respective obligations under any of the Loan Documents to which it is a
party.
SECTION 7.5. Financial Information. All balance sheets and all statements
of operations, shareholders' equity and cash flows and all other financial
information of the Borrower and the Guarantor which have been furnished by or
on behalf of such Obligor to the Agent for the purposes of or in connection
with this Agreement or any transaction contemplated hereby, including:
(a) the consolidated balance sheet at December 31, 1994, and the
related consolidated statements of operations, shareholders' equity and
cash flows for the Fiscal Year then ended, of the Guarantor and its
Subsidiaries certified by Ernst & Young;
(b) the consolidated balance sheet at March 31, 1995, and the
related consolidated statements of operations, shareholders' equity and
cash flows for the Fiscal Quarter then ended, of the Guarantor and its
Subsidiaries, certified by the principal financial or accounting
Authorized Representative of the Guarantor;
(c) the balance sheet at December 31, 1994, and related statements
of operations, shareholders' equity and cash flows for the Fiscal Year
then ended, of the Borrower certified by the principal financial or
accounting Authorized Representative of the Borrower; and
(d) the balance sheet at March 31, 1995, and the related statements
of operations, shareholders' equity and cash flows for the Fiscal Quarter
then ended, of the Borrower, certified by the principal financial or
accounting Authorized Representative of the Borrower;
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as disclosed therein) and do present fairly the
financial position of such Obligor as at the dates thereof and the results of
its operations for the periods then ended. None of the Obligors has on the
date hereof any material Contingent Liability or liability for taxes,
long-term leases or unusual forward or long-term commitments
- 64 -
<PAGE>
which are not reflected in its financial statements described in this Section
or in the notes thereto.
SECTION 7.6. Absence of Default.
(a) The Borrower is not in default in the payment of (or in the
performance of any material obligation applicable to) any Indebtedness or
in default under any Project Document, any Requirement of Law or the
terms or conditions upon which any Approval has been granted.
(b) No other Obligor is in default in the payment of (or in the
performance of any material obligation applicable to) any material
Indebtedness or in default under any Project Document, any Requirement of
Law or the terms or conditions upon which any Approval has been granted.
SECTION 7.7. Litigation, etc. Except as disclosed in Item 6
("Litigation") of the Disclosure Schedule there is no pending or, to
the knowledge of any Obligor, threatened labor controversy, litigation,
arbitration or governmental investigation or proceeding against such Obligor
or to which any of its business, operations, properties, assets (including, in
the case of the Borrower, the Mine), revenues or prospects is subject which,
if adversely determined, will or might have a Materially Adverse Effect with
respect to such Obligor. In the case of any litigation so disclosed, there has
been no development in such litigation which will or might have a Materially
Adverse Effect with respect to the relevant Obligor. All pending or threatened
labor controversies, litigation, arbitration and governmental investigations
and proceedings against any Obligor or to which any of its business,
operations, properties, assets (including, with respect to the Borrower, the
Mine), revenues or prospects is subject as of the date of the delivery of the
initial Borrowing Request are disclosed in Item 6 ("Litigation") of the
Disclosure Schedule.
SECTION 7.8. Materially Adverse Effect. Since the date of each relevant
Obligor's most recent audited financial statements referred to in Section 7.5,
there have been no occurrences which, individually or in the aggregate, have
or may have a Materially Adverse Effect with respect to such Obligor.
SECTION 7.9. Burdensome Agreements. No Obligor is a party or subject to
any Contractual Obligation or Organic Document which has or may have a
Materially Adverse Effect with respect to such Obligor.
SECTION 7.10. Taxes and Other Payments. Each Obligor has filed all tax
returns (including all property tax returns and other similar tax returns
applicable to the Mine) and reports required by Applicable Law to have been
filed by it and has paid all taxes and governmental charges thereby shown to
be owing and all claims for sums due for labor, material, supplies, personal
- 65 -
<PAGE>
property and services of every kind and character provided with respect to, or
used in connection with its business (including, with respect to the Borrower,
the Fachinal Project) and no claim for the same exists except as permitted
hereunder, except any such taxes, charges or amounts which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on the
books of the relevant Obligor.
SECTION 7.11. Mining Rights. The Borrower (or, in the case of the CDE
Surface Rights, CDE) has acquired all Mining Rights, and has obtained such
other surface and other rights as are necessary for access rights, water
rights, plant sites, tailings disposal, waste dumps, ore dumps, abandoned
heaps or ancillary facilities which are required in connection with the
Fachinal Project in accordance with the Development Plan. All such Mining
Rights and other rights are sufficient in scope and substance for the
development of the Fachinal Project as contemplated by the Development Plan
and no part of the purchase price (other than any royalty payments, if any
payable by the Borrower or CDE in connection with its acquisition of such
Mining Rights and other rights remain unpaid.
SECTION 7.12. Ownership and Use of Properties; Liens.
(a) The Borrower has good title to all of the Project Assets it owns
or purports to own, free and clear of all Liens or claims (including
infringement claims with respect to patents, trademarks, copyrights and
the like) except as permitted pursuant to Section 8.2.3 or as disclosed
in Item 7 ("Assets; Properties") of the Disclosure Schedule.
(b) The Borrower owns no assets and properties other than those used
in connection with the Fachinal Project and those incidental to the
operation of the Mine.
(c) The Borrower has complied with all Contractual Obligations
relating to any asset or property leased, operated, licensed or used (but
not owned) by the Borrower; all of the Borrower's interests in such
assets and properties are free and clear of all Liens or claims
(including infringement claims with respect to patents, trademarks,
copyrights and the like) except as permitted pursuant to Section 8.2.3 or
as disclosed in Item 7 ("Assets; Properties") of the Disclosure Schedule;
and all Instruments pursuant to which the Borrower is entitled to lease,
operate, licence or use such properties and assets are in full force and
effect.
SECTION 7.13. Subsidiaries. The Borrower has no Subsidiaries. No other
Obligor has any Subsidiaries, except those Subsidiaries which are identified
in Item 8 ("Subsidiaries") of the Disclosure Schedule.
- 66 -
<PAGE>
SECTION 7.14. Intellectual Property. Each Obligor owns and possesses all
such patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights and copyrights as such Obligor
considers necessary for the conduct of the businesses of such Obligor as now
conducted without, individually or in the aggregate, any infringement upon
rights of other Persons which might have a Materially Adverse Effect with
respect to such Obligor, and there is no individual patent or patent license
the loss of which would have such a Materially Adverse Effect except as may be
disclosed in Item 9 ("Material Patents and Trademarks") of the Disclosure
Schedule.
SECTION 7.15. Technology. The Borrower owns or has the right to use all
technologies and processes required to consummate the Fachinal Project and
operate the Mine as contemplated by the Development Plan. There are no
material license agreements granting the Borrower or any other Person rights
in any patented process or the right to use technical or secret know-how that
are required for the consummation of the Fachinal Project or the operation of
the Mine.
SECTION 7.16. Approvals; Project Documents.
(a) The Borrower or the Guarantor on behalf and for the benefit of
the Borrower has entered into all Instruments and obtained all Approvals
(other than those identified in Part B of Item 1 ("Pending Material
Approvals") of the Disclosure Schedule as being scheduled to be obtained
after the date the representation referred to in this clause is made or
repeated) required or advisable to effect the Fachinal Project and
facilitate the operation of the Mine in accordance with the Development
Plan. All Approvals necessary or advisable for the Borrower to obtain in
connection with the consummation of the Fachinal Project and the
operation of the Mine in accordance with the Development Plan, are listed
on Item 1 ("Approvals") of the Disclosure Schedule.
(b) Each of the Project Documents is in full force and effect, is
enforceable against each relevant Obligor (and, to the best of the
knowledge and belief of such Obligor after due enquiry, by such Obligor
against all other parties thereto) in accordance with its terms, subject
to Applicable Laws relating to bankruptcy and the enforceability of
creditors' rights generally and by the fact that the availability of
equitable remedies is discretionary, is in the form previously delivered
to the Agent pursuant to this Agreement, all material performance
required thereunder of each party thereto has occurred (except
performance required by the Project Documents to be performed at a later
date), and no default or event or condition which with notice, lapse of
time or both could constitute a default thereunder has occurred and is
continuing.
- 67 -
<PAGE>
SECTION 7.17. Development Plan etc. The statements contained in the
Development Plan, the Environmental Impact Statement, the Technical Review,
and the Insurance Summary, based upon the assumptions stated therein, are true
and correct in all material respects. The Development Plan contains summary
descriptions of the Fachinal Project, the Project Assets and the operation of
the Mine as proposed to be conducted throughout the Project Production Period.
The Environmental Impact Statement, the Technical Review and the Insurance
Summary contain summary descriptions of the environmental, technical, taxation
and insurance aspects of the Fachinal Project, the Project Assets and the
operation of the Mine as now conducted and as proposed to be conducted
throughout the Project Production Period. The financial projections, estimates
and other expressions of view as to future circumstances contained in the
Development Plan are fair and reasonable and, to the best of the Borrower's
knowledge, have been arrived at after reasonable inquiry and have been made in
good faith by the Persons responsible therefor.
SECTION 7.18. Environmental Warranties. Except as set forth in Item 10
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned, operated, leased or utilized by any Person acting in connection
with the Project Assets and the Mine have been, and continue to be,
owned, operated, leased or utilized by such Person in compliance with the
standards set out in, referred to or utilised by the Environmental Impact
Statement (the "Environmental Review Standards"), and except to the
extent that the Environmental Review Standards require or permit
otherwise, in compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or threatened;
(i) claims, complaints, notices or requests for information
received by any Person acting in connection with the Project Assets
and the Mine with respect to any alleged violation of Environmental
Review Standards or any Environmental Law, or
(ii) complaints, notices or inquiries to such Person regarding
potential liability under any Environmental Review Standard or
Environmental Law;
(c) there have been no releases or emissions of Hazardous Materials
at, on or under any property now or previously owned, operated or leased
by any Person acting in connection with the Project Assets and the Mine
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Materially Adverse Effect with respect to any Obligor;
- 68 -
<PAGE>
(d) each Person acting in connection with the Project Assets and the
Mine has been issued with, and is in material compliance with, all
Environmental Review Standards and Approvals relating to environmental
matters and necessary or advisable for its business;
(e) no property now or previously owned, operated or leased by any
Person acting in connection with the Project Assets and the Mine is
listed or proposed for listing on any governmental or regulatory list of
sites requiring investigation or clean-up;
(f) there are no underground or above-ground storage tanks, active
or abandoned, including petroleum storage tanks, on or under any property
now or previously owned, operated or leased by any Person acting in
connection with the Project Assets and the Mine that, singly or in the
aggregate, have, or may reasonably be expected to have, a Materially
Adverse Effect with respect to any Obligor;
(g) no Person acting in connection with the Project Assets and the
Mine has directly transported or directly arranged for the transportation
of any Hazardous Material which may lead to material claims against any
Obligor for any remedial work, damage to natural resources or personal
injury;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned, operated or leased by
any Person acting in connection with the Project Assets and the Mine
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Materially Adverse Effect with respect to any Obligor; and
(i) no conditions exist at, on or under any property now or
previously owned, leased, operated, licensed or used by any Person acting
in connection with the Project Assets and the Mine which, with the
passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Review Standard or Environmental Law
that, individually or in the aggregate, has, or may reasonably be
expected to have, a Materially Adverse Effect with respect to any
Obligor.
SECTION 7.19. Pari Passu. The payment Obligations of each Obligor under
this Agreement and each other Loan Document to which it is a party rank at
least pari passu in right of payment with all of such Obligor's other
Indebtedness, other than any such Indebtedness which is preferred by mandatory
provisions of Applicable Law.
- 69 -
<PAGE>
ARTICLE 8. COVENANTS
SECTION 8.1. Certain Affirmative Covenants. Each of the Borrower and the
Finance Subsidiary agrees with each Bank Party that, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower and the Finance Subsidiary, as the case may be, will perform its
respective obligations set forth in this Article. The Guarantor agrees with
each Bank Party that, at all times on or prior to the Release Date, (and, in
the case of the Guarantor's obligations under clause (h) of Section 8.1.1.,
clause (c) of Section 8.1.3, and Section 8.1.19 with respect to any Operative
Document to which it is a party at all times until all Commitments have been
terminated and all Obligations have been paid and performed in full), the
Guarantor will perform its respective obligations set forth in this Section.
SECTION 8.1.1. Financial Information, etc. The relevant Obligors
will furnish, or will cause to be furnished, to the Agent copies (with
sufficient copies for each other Bank Party) of the following financial
statements, reports and information:
(a) the Borrower and Guarantor will furnish, promptly when
available, and in any event within 90 days after the close of each Fiscal
Year of such Obligor:
(i) in the case of the Guarantor, the consolidated balance
sheet at the close of such Fiscal Year and the related consolidated
statements of operations, shareholders' equity and cash flows of the
Guarantor and its Subsidiaries; and
(ii) in the case of the Borrower, its balance sheet at the
close of such Fiscal Year and its related statements of operations,
shareholders' equity and cash flows,
in each case (with comparable information at the close of and for the
prior Fiscal Year) and reported on without Impermissible Qualification by
an independent certified public or chartered accountant of recognized
international standing, together with a certificate from such accountants
to the effect that, in making the examination necessary for the signing
of such annual report by such accountants, they have not become aware of
any Default that has occurred and is continuing, or, if they have become
so aware, describing such Default and the steps, if any, being taken to
cure it;
(b) the Borrower and the Guarantor will furnish, promptly when
available, and in any event within 45 days after the close of each of the
first three Fiscal Quarters of each Fiscal Year of such Obligor:
- 70 -
<PAGE>
(i) in the case of the Guarantor, the consolidated balance
sheet at the close of such Fiscal Quarter and the related
consolidated statements of operations, shareholders' equity and cash
flows of the Guarantor and its Subsidiaries; and
(ii) in the case of the Borrower, its balance sheet at the
close of such Fiscal Quarter, and its related statements of
operations, shareholders' equity and cash flows,
in each case, for such Fiscal Quarter and for the period commencing at
the close of the previous Fiscal Year and ending with the close of such
Fiscal Quarter (with comparable information at the close of and for the
corresponding Fiscal Quarter of the prior Fiscal Year and for the
corresponding portion of such prior Fiscal Year) and certified by an
accounting or financial Authorized Representative of such Obligor;
(c) the Borrower will promptly furnish within 15 Business Days after
each of the close of each calendar quarter, and on the Project Completion
Date and the Release Date, a Compliance Certificate calculated as of the
last date of such calendar quarter or the Project Completion Date, as the
case may be, indicating, inter alia, compliance with each of the ratios
set forth in clauses (a), (b) and (c) of Section 8.2.4 on each
Calculation Date scheduled to occur thereafter, together with such
information concerning the calculations and assumptions used by the
Borrower in delivering such Compliance Certificate as the Agent may
request;
(d) the Borrower will furnish promptly upon receipt thereof copies
of all detailed financial and management reports submitted to the
Borrower by a certified public accountant in connection with each annual
or interim audit made by such certified public accountant of the books of
the Borrower;
(e) the Borrower will furnish annually, on or before each
anniversary of the first Borrowing Date, a memorandum prepared by the
Borrower summarizing the then outstanding insurance coverage with respect
to the Mine and a certificate or certificates of insurance prepared by
the Insurance Broker confirming that: (i) all such insurance coverage is
in full force and effect and all premiums payable in connection therewith
have been paid; (ii) in the opinion of the Insurance Broker, such
insurance is sufficient for the purposes of the Mine and is responsive to
the requirements of Section 8.1.7; (iii) the Agent is named as the first
loss payee under all policies of property insurance and as an additional
insured under all policies of liability insurance; and (iv) the insurers
under such insurance policies have
- 71 -
<PAGE>
undertaken in writing not to amend or terminate such policies without at
least 30 days' prior written notice thereof to the Agent and have entered
into such undertakings as are required pursuant to the provisions of
Section 8.1.7; it being agreed that such certificate shall be conclusive
as against the Borrower both as to the amount of insurance required and
the perils against which coverage is required and the Borrower shall
immediately insure in accordance with such certificate;
(f) the Borrower will furnish to the Agent as promptly as
practicable details as to any: (i) material disputes with its insurance
carriers; (ii) failure by the Borrower to pay any insurance premium as
and when required that might result in the cancellation of the relevant
policy; (iii) material reduction in the amount of, or any other material
change in, insurance or reinsurance coverage maintained; (iv) failure to
comply with its obligations under Section 8.1.7, in each case stating the
reasons therefor, together with any other information concerning the
insurance and reinsurance coverage required to be maintained by it as the
Agent shall have reasonably requested; (v) occurrence of any actual or
potential casualty or loss which is covered by the terms of any policy of
insurance maintained by or on behalf of the Borrower; and (vi) notices
received from any of its insurance carriers with respect to the
cancellation of or proposed cancellation of any policy of insurance;
(g) each of the Obligors will furnish promptly upon the occurrence
thereof a detailed report of any change or (without prejudice to the
provisions of Section 8.2.14, 8.2.15 or 9.1.8) modification to any
Project Document to which it is a party;
(h) each of the Obligors will furnish notice of the occurrence of
any default or event of default (however denominated) by any party under,
or any other material change in or circumstance affecting, any of the
Project Documents to which it is a party;
(i) the Borrower will furnish annual (and, if so reasonably
requested by the Required Banks on a more frequent basis, promptly upon
request) forecasts of mining production, mill throughput, ore grades,
recovery rates, operating costs, on-going capital expenditures, water
uses and sources and all other technical information reasonably requested
by the Agent (including any progress schedules or work account reports or
similar reports or schedules supplied to the Borrower pursuant to the
Construction Contract);
(j) as soon as possible and in any event within three Business Days
after the occurrence of any Default with respect to any Obligor such
Obligor will furnish a
- 72 -
<PAGE>
statement of its chief financial Authorized Representative setting forth
details of such Default and the action which such Obligor has taken and
proposes to take with respect thereto;
(k) as soon as possible and in any event within three Business Days
after (i) the occurrence of any adverse development with respect to any
labor controversy, litigation, arbitration or governmental investigation
or proceeding described in Section 7.7 which will or might have a
Materially Adverse Effect with respect to such Obligor or (ii) the
commencement of any labor controversy, litigation, arbitration or
governmental investigation or proceeding of the type described in
Section 7.7, the relevant Obligor will furnish notice thereof and copies
of all documentation relating thereto;
(l) each Obligor will furnish notice of the occurrence as soon as
possible and in any event within three Business Days after such Obligor
knows or has reason to know of any circumstance which has a reasonable
likelihood of having a Materially Adverse Effect with respect to such
Obligor;
(m) not more than five Business Days after the close of each
calendar month, the Borrower shall deliver to the Agent and the
Independent Consultant a balance sheet as at the close of such calendar
month and a statement of income and expenditure for such calendar month,
in each case in form and substance satisfactory to the Agent and the
Required Banks and, in any event, consistent with the Approved Budget or,
as the case may be, the Cash Flow Schedule;
(n) ten Business Days after the end of each calendar month, the
Borrower shall deliver to the Agent a statement showing in detail all
credits to, debits from, and balances standing to the credit of the
Project Accounts for such calendar month and copies of all documents
submitted by the Borrower to the Central Bank or any other Governmental
Authority in connection with the Project Accounts;
(o) (i) the Guarantor will furnish, promptly after the sending or
filing thereof, copies of all reports that it sends to its public
shareholders and copies of registration statements and material filings
made with the U.S. Securities Exchange Commission or any national
securities exchange; and (ii) each other Obligor will furnish copies of
each material filing and report or document made to or filed with, or
received from, any securities exchange, any securities commission or any
Governmental Authority, and of each communication from such Obligor to
shareholders or creditors generally, in
- 73 -
<PAGE>
each case promptly upon the making, filing or receipt thereof;
(p) the Borrower will immediately notify the Agent upon becoming
aware of any fact or circumstance giving rise to (or likely to give rise
to) any cost overrun which might oblige the Guarantor to make a
contribution pursuant to Section 3.2 of the Guaranty Agreement. Such
notice shall include information in reasonable detail as to the amount of
such cost overrun, the circumstances giving rise thereto and any further
possible cost overruns as may then be likely to occur;
(q) the Borrower will furnish the Agent with copies of all material
Instruments entered into by or in connection with the Fachinal Project or
the operation of the Mine (including the Concentrate Sales Agreement), in
each case promptly upon having entered into the same and will immediately
notify the Agent of its intention to enter into any such Instrument;
(r) each Obligor will furnish such other information with respect to
the financial condition, business, property, assets, revenues and
operations of such Obligor as the Agent or any Bank (acting through such
Agent) may from time to time reasonably request (including copies of any
correspondence and/or documentation relating to any change orders
contemplated under the Construction Contract); and
(s) the Borrower shall give or cause to be given to the Agent no
later than 14 days prior to the commencement of each Fiscal Year a draft
budget for the Borrower and a draft operating plan in respect of the
Fachinal Project, in each case, for that Fiscal Year, and in form and
substance satisfactory to the Agent.
SECTION 8.1.2. Compliance with Laws. Each Obligor will comply in all
material respects with all Applicable Laws.
SECTION 8.1.3. Approvals.
(a) Each Obligor will obtain, maintain in full force and effect, and
comply in all respects with, all Approvals (including those identified in
Item 1 ("Approvals") of the Disclosure Schedule) as may be required or
advisable from time to time for such Obligor to (i) execute, deliver,
perform and preserve its rights under any of the Operative Documents
executed or to be executed by it, (ii) grant and perfect the Liens
granted or purported to be granted and perfected by it pursuant to any
Security Agreement and (iii) in the case of the Borrower, own, lease, use
or licence the Project Assets in which it holds any interest and operate
the Mine in accordance with sound mining and business practice.
- 74 -
<PAGE>
(b) Without limiting clause (a), each Obligor will obtain all
Approvals identified in Part B of Item 1 ("Pending Material Approvals")
of the Disclosure Schedule by the date set forth in the Disclosure
Schedule opposite such Approval and, within five (5) Business Days of
obtaining any such Approval deliver to the Agent certified copies (or
originals where requested by the Agent) of all such Approvals as then in
effect.
(c) The Guarantor will, at all times, comply with its obligations
under and take all actions necessary to maintain in good standing the
Foreign Investment Contract.
(d) The Guarantor shall ensure that all Investments made by the
Guarantor or any of its Affiliates in the Borrower by way of Approved
Subordinated Indebtedness shall only be made directly by an entity which
is an Institucion Financiera Extranjera Registrada con el Banco Central
para los fines del Artieulo 59 de la Ley sabre Impuesto a la Renta under
the laws of Chile.
SECTION 8.1.4. Maintenance of Corporate Existence. Each Obligor will do
and will cause to be done at all times all things necessary to maintain and
preserve its corporate existence.
SECTION 8.1.5. Foreign Qualification. Each Obligor will do and cause to
be done at all times all things necessary to be duly qualified to do business
and be in good standing (where such concept is relevant) as a foreign
corporation, in each jurisdiction where the nature of its business makes such
qualification necessary.
SECTION 8.1.6. Payment of Taxes, etc. Each Obligor will pay and
discharge, as the same may become due and payable, all taxes, assessments,
fees and other governmental charges or levies against it or on any of its
property, as well as claims of any kind or character (including claims for
sums due for labor, material, supplies, personal property and services);
provided, however, that the foregoing shall not require any Obligor to pay or
discharge any such tax, assessment, fee, charge, levy or claim so long as it
shall be diligently contesting the validity or amount thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate
reserves in accordance with GAAP with respect thereto.
SECTION 8.1.7. Insurance.
(a) The Borrower will maintain, or ensure that the Construction
Contractor maintains, with insurance companies satisfactory to the
Required Banks: (i) insurance as required under this Agreement, the
Security Agreements and any other Operative Document, and (ii) such other
insurance (including business interruption insurance) with respect to the
properties and business of
- 75 -
<PAGE>
the Borrower against such casualties and contingencies and of such types
and in such amounts as is customary in the case of similar businesses
similarly situated and such other insurance as may be required by any
Applicable Law or the Agent and the Borrower will, upon request of the
Agent, furnish to the Agent at reasonable intervals a certificate of the
Insurance Broker setting forth the nature and extent of all insurance
maintained by the Borrower in accordance with this Section and confirming
its adequacy and sufficiency. The Agent shall (unless otherwise consented
to by the Banks) solicit the services of the Insurance Broker to assess
the adequacy and sufficiency of the insurance coverage required to be
maintained by the Borrower hereunder and evaluate the contents of the
foregoing certificate. The Borrower will immediately notify the Agent of
any proposed change of any insurance company providing insurance coverage
of the nature referred to in this Section, and any such change shall
require the consent of the Agent which consent will not be unreasonably
withheld. The Borrower will ensure that the Insurance Summary is complete
and accurate at all times and will from time to time provide the Agent
with amendments thereto when necessary to ensure that the Insurance
Summary is so complete and accurate, together with copies of all
insurance policies as in effect from time to time.
(b) All of the Borrower's insurance policies will, in each case, in
accordance with standard practice in the mining industry:
(i) specify the Agent (for the ratable benefit of the Bank
Parties) as an additional insured (in all cases, other than with
respect to any such insurance taken out by the Construction
Contractor under the Construction Contract) and as a loss payee (in
all cases other than in the case of any liability insurance
(excluding, however, with respect to any such insurance taken out by
the Construction Contractor under the Construction Contract)), and
contain such endorsements in favor of the Agent as the Agent shall
require;
(ii) not be cancellable (or subject to a material decrease in
the scope or amount of coverage (including by way of increase in any
deductible)) as against the Agent (including for failure to pay
premiums) or subject to material alteration of any kind without at
least 30 days' (or less in case of war and kindred risks) prior
written notice to the Agent;
(iii) in the case of insurance covering loss or damage to any
of the Project Assets, contain a lender loss payable provision for
the benefit of the
- 76 -
<PAGE>
Agent on behalf of itself and the Banks (including that the policy
shall not be invalidated as against the Agent by reason of any
action or failure to act of the Borrower or any other Person),
provide for waiver of any right of set-off, recoupment, subrogation,
counterclaim or any other deduction, by attachment or otherwise,
with respect to any liability of the Borrower, and shall provide
that all amounts payable by reason of loss or damage to any of the
Project Assets shall be payable to the Agent for replacement;
(iv) provide for payments of claims thereunder in U.S. Dollars;
and
(v) otherwise be in form and substance satisfactory to the
Agent.
(c) The Borrower will cause proceeds, if any, of all insurances
maintained with respect to the Fachinal Project and the Mine to be
applied as follows:
(i) all amounts received in respect of (x) the partial or total
nationalization, expropriation, compulsory purchase or requisition
of the Mine or the Project Assets, or any interest therein, (y) any
release, inhibition, modification, suspension or extinguishment of
any Mining Rights, or the imposition of any restriction affecting
the Mine or the Project Assets or the grant of any Mining Right and
(z) the suspension or material modification of any Approval required
or advisable in connection with the Fachinal Project or the
operation of the Mine shall be applied as set forth in clause (d) of
Section 3.1;
(ii) prior to an Event of Default, all amounts received in
respect of any liability insurance may be paid directly to the
Person entitled thereto and after an Event of Default all such
amounts shall be deposited into the Proceeds Sub-Account
(Collateral Collections) or Proceeds Sub-Account (Other
Collections), as may be required pursuant to clause (a) of Section
4.2 (it being understood that, without prejudice to clause (b)(iv)
or any other provision of this Agreement, all proceeds denominated
in Pesos shall be deposited into the Proceeds Sub-Account (Chile));
(iii) all amounts received in respect of any business
interruption insurance or delay in start-up insurance shall be
deposited into the Proceeds Account; and
- 77 -
<PAGE>
(iv) prior to an Event of Default, all proceeds from casualty
or property insurance received for any single repair, replacement or
restoration costing less than U.S.$1,000,000 (or the equivalent
thereof in any other currency) may be applied to the repair,
replacement or restoration of the assets in respect of which the
relevant proceeds were received or for reimbursement of the Person
which effected such repair, replacement or restoration and after an
Event of Default all such proceeds, to the extent received in a
currency other than Pesos, shall be deposited into the Proceeds
Account (it being understood that, without prejudice to clause
(b)(iv) or any other provision of this Agreement, all proceeds
denominated in Pesos shall be deposited into the Proceeds
Sub-Account (Chile)). All such proceeds received for any such single
repair, etc. costing an amount which is equal to or in excess of
U.S.$1.000,000 (or the equivalent thereof in any other currency)
shall, with the consent of the Required Banks (which consent shall
be granted within 10 Business Days unless a Default shall have then
occurred and be continuing or the Required Banks determine in good
faith that repair, replacement or restoration of the asset in
question would not be economical or that the insurance proceeds,
together with funds available from other sources, are insufficient
to repair, replace or restore such asset) be applied to the prompt
payment of the cost of the repair, replacement or restoration of
such damaged or destroyed asset. In the event that the consent of
the Required Banks shall not be granted pursuant to the provisions
of the immediately preceding sentence, then all such proceeds shall
be applied to make a mandatory prepayment of the principal amount of
the Loans pursuant to clause (d) of Section 3.1.
SECTION 8.1.8. Books and Records. Each Obligor will keep financial
records and statements reflecting all of its business affairs and transactions
in accordance with GAAP. On not less than 3 days prior written notice where no
Default has occurred and on not less than 24 hours prior notice where a
Default has occurred, each Obligor will permit the Independent Consultant, the
Insurance Broker, the Agent and the Banks or any of their respective
representatives to inspect any and all of the properties and operations of
such Obligor (including the Mine in the case of the Borrower), to visit all of
its offices or any other location where relevant personnel or records are
located, to discuss its financial matters with its officers, banks and
independent chartered accountants and certified public accountants, as the
case may be, (and hereby authorizes such independent chartered accountants or
certified public accountants, as the case may be, to discuss its financial
matters with any of the foregoing Persons or its representatives whether
- 78 -
<PAGE>
or not any representative of such Obligor is present) and to examine (and
photocopy extracts from) any of its books or other corporate records or any of
the Project Documents. Without limiting the generality of the foregoing, the
relevant Obligor or Obligors shall provide all relevant and necessary
assistance to the Independent Consultant and the Insurance Broker in
connection with the performance of the duties of the Independent Consultant
and the Insurance Broker contemplated hereby (including the preparation of
each Semi-Annual Report and Monthly Report by the Independent Consultant). The
Borrower shall pay any fees of such chartered accountant or certified public
accountant and the Independent Consultant, the Agent and the Insurance Broker
incurred in connection with the exercise of their rights pursuant to this
Section. It is expressly understood that none of the Independent Consultant,
the Insurance Broker or any Bank Party assumes any obligation to any Obligor
or any other party in respect of the operation, development, exploration and
production of the Mine in accordance with the Development Plan or otherwise.
SECTION 8.1.9. Project Completion and Management. The Borrower will use
its best efforts to consummate the Fachinal Project in accordance with the
Development Plan, Applicable Laws and sound mining and business practice, and
will ensure that the Mine is operated, maintained and developed and that
Project Output is produced and processed, all substantially in accordance with
the Development Plan, Applicable Laws and sound mining and business practice
so as to achieve Project Completion no later than January 1, 1997.
SECTION 8.1.10. Hedging Agreements. On each date (a "Hedging
Determination Date") occurring on or after the initial Borrowing Date, the
Borrower shall have entered into Guaranteed Price Contracts (or the Guarantor
shall have entered into and duly assigned the benefit to the Borrower pursuant
to documentation satisfactory to the Agent (including with respect to the
obtaining of any Approvals from the Central Bank or pursuant to Applicable
Law)) net forward sale, put or call options, spot deferred sales or other
contracts providing for a binding commitment to buy or sell Gold and Silver
acceptable to the Agent (the "Committed Hedging Agreements") or put or call
options or other similar uncommitted transactions with respect to the purchase
or sale of Gold and Silver (together with the Guaranteed Price Contracts and
the Committed Hedging Agreements, collectively, the "Hedging Agreements")
which are in effect with counterparties (the "Hedging Counterparties")
satisfactory to the Required Banks such that the proceeds thereof (both as to
the amount and to the timing) are sufficient to discharge in full all Project
Costs (excluding however, Project Costs scheduled to be incurred in connection
with the Mine prior to January 1, 1997) for the Required Hedging Period
commencing on such Hedging Determination Date and all principal of and
interest occurring in respect of Funded Indebtedness scheduled to, or
otherwise reasonably expected to become due and payable during that Required
Hedging Period; provided, however, that for any 12 month
- 79 -
<PAGE>
period, the sum of the number of ounces of Gold and Silver required to be
delivered during such 12 month period under Committed Hedging Agreements (and
any Guaranteed Price Contract providing for a binding commitment on behalf of
the Guarantor to purchase Silver at the price set forth therein) shall not
exceed an amount equal to fifty percent (50%) of the number of ounces of Gold
and Silver respectively scheduled to be produced by the Mine during such 12
month period, as set forth in the Cash Flow Schedule. The Borrower shall
provide (or previously have provided) to the Agent, on each Hedging
Determination Date, evidence of its compliance with this Section 8.1.10.
SECTION 8.1.11. Proceeds; Project Accounts. The Borrower shall apply the
proceeds of the Loans strictly in accordance with this Agreement and, without
limiting the foregoing, deposit such proceeds and proceeds of Capital
Contributions and Approved Subordinated Indebtedness (including any such
proceeds received pursuant to the provisions of Section 3.2 of the Guaranty
Agreement) to the Construction Account for application to the payment of those
Project Costs reflected in the Approved Budget. To the extent required by
clause (a) of Section 4.2, the Borrower will deposit or cause to be deposited
all gross revenues of, and all other payments received with respect to, the
Fachinal Project or the Mine to the Proceeds Account. The Borrower will not
instruct any disbursements out of any Project Account except as permitted by
Article 4.
SECTION 8.1.12. Provision of Staff. The Borrower shall ensure that there
are sufficient competent technical and management employees engaged in
connection with the Mine and the Fachinal Project in order to enable the
occurrence of Project Completion on or prior to January 1, 1997 and the
operation, development and maintenance of the Mine substantially in accordance
with the Development Plan.
SECTION 8.1.13. Environmental Covenant. The Borrower and the Guarantor
will, and will ensure that each other Person will:
(a) use and operate the Mine, the Project Assets and all of its
facilities and properties related thereto in compliance with, keep all
Approvals relating to environmental matters in effect and remain in
compliance with and handle all Hazardous Materials in compliance with the
Environmental Review Standards and, except to the extent the
Environmental Review Standards require or permit otherwise, with all
applicable Environmental Laws;
(b) immediately notify the Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with the
Environmental Review Standards or Environmental Laws, and shall promptly
cure and have dismissed with prejudice any actions and proceedings
relating to compliance with the Environmental Review Standards or
Environmental Laws; and
- 80 -
<PAGE>
(c) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section.
SECTION 8.1.14. Maintenance of Project Assets. The Borrower will
maintain, preserve, protect and keep (and, in the case of the CDE Surface
Rights, will cause CDE to maintain, preserve, protect and keep):
(a) all of its (and, in the case of the CDE Surface Rights, CDE's)
ownership, lease, use, licence and other interests in the Project Assets
(including all Mining Rights) as are necessary or advisable for the
Borrower to be able to operate the Mine substantially in accordance with
sound mining and business practice and in a manner such that the
requirements of, and projections contained in, the Development Plan, can
be achieved; and
(b) all of the Project Assets in good repair, working order, and
condition, and make necessary and proper repairs, renewals, and
replacements so that its business carried on in connection therewith may
be properly conducted at all times, unless the continued maintenance of
any of such Project Assets is no longer necessary or economically
desirable for the operation of the Mine, such operation to be
substantially in accordance with sound mining and business practice.
SECTION 8.1.15. Pari Passu.
(a) The Borrower will ensure that its payment Obligations under this
Agreement and each other Loan Document to which it is a party rank at
least pari passu in right of payment with all of the Borrower's other
Indebtedness, other than any such Indebtedness which is preferred by
mandatory provisions of Applicable Law;
(b) Each other Obligor will ensure that its payment obligations
under this Agreement and each other Loan Document to which it is a party
rank at least pari passu in right of payment with all of such Obligor's
other unsecured and unsubordinated Indebtedness, other than any such
Indebtedness which is preferred by mandatory provisions of Applicable
Law.
SECTION 8.1.16. After-Acquired Collateral. Upon the acquisition or
production of any Project Assets (excluding any Project Documents) of the type
over which any Lien has been granted pursuant to any Security Agreement but in
respect of which no Lien has been granted pursuant to any such Security
Agreement and which either constitute (a) CDE Surface Rights Statutory
Easements or (b) assets having an aggregate fair market value of U.S.$500,000
(in the case of inventory) or U.S.$250,000 (in all other cases) (or, in each
such case, the equivalent thereof in any other currency), the relevant Obligor
shall (and,
- 81 -
<PAGE>
in the case of CDE, the Borrower will ensure that CDE shall), to the extent
permitted by Applicable Law, (x) enter into Instruments similar to the
relevant Security Agreement, (y) simultaneously therewith, effect all relevant
notarizations and registrations or obtain the acknowledgement and agreement of
all relevant counterparties, as the case may be, and (z) take all other
actions necessary or advisable or, in the reasonable opinion of counsel to the
Bank Parties, desirable in order to (i) create in favor of the Bank Parties a
valid and perfected first-priority Lien over all of such newly acquired
Project Assets, and (ii) evidence of the creation of such Lien (including
opinions of counsel). In addition, if during any three month period, ending on
any of March 31, June 30, September 30 or December 31, the Borrower shall
acquire any Project Asset and such Project Asset shall not be encumbered
pursuant to any Security Agreement on the last day of any such period, the
Borrower shall take the steps described in the previous sentence with respect
to such Project Asset.
Each Obligor will ensure that, promptly upon the effectiveness of any
Project Document of the nature described in clause (d) of the definition
thereof to which such Obligor is a party (including the Concentrate Sales
Agreement), the Bank Parties shall be granted a conditional assignment of
rights (in the case of any Project Document expressed to be governed by the
laws of Chile) or (in the case of each other Project Document), a first
priority perfected Lien over such Obligor's rights thereunder, in each such
case as security for the Obligations of the Borrower and/or such Obligor, as
the case may be.
SECTION 8.1.17. Accuracy of Information. All factual
information hereafter furnished by or on behalf of any Obligor in writing to
any Bank Party for the purposes of or in connection with this Agreement or any
transaction contemplated hereby will be true and accurate in every respect on
the date as of which such information is dated or certified and such
information shall not be incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 8.1.18. Guarantor's Control of the Fachinal Project. The
Guarantor shall (a) exercise, and shall cause the Finance Subsidiary, the
Borrower and any Affiliate of either one or more of them to exercise, its
rights under each Project Document in a prudent and businesslike manner and so
as to ensure (to the extent such rights permit) the direction of all
operational and production aspects of the Mine and the Fachinal Project; and
(b) ensure that no Change in Control occurs.
SECTION 8.1.19. Project Agreements. Each of the Borrower and the
Guarantor undertakes to ensure that:
(a) it and any relevant Obligor observes their respective
obligations under all Project Documents to which it is a party in all
respects;
- 82 -
<PAGE>
(b) it does not abandon, settle, compromise or discontinue or become
non-suited in respect of proceedings against any party in connection with
a Project Document;
(c) it does not waive any of its rights or release any person
including a third party, from that person's obligations in connection
with a Project Document, without the Agent's prior consent; and
(d) it takes the action that a prudent, diligent and reasonable
person would take to cause each party to a Project Document to observe
its obligations in connection with that Project Document, and if that
party defaults in the performance of those obligations to take the action
that a prudent, diligent and reasonable person would take or cause that
party to pay an amount equal to the loss or damage it suffers which is
caused or contributed to by that default, unless the Agent agrees
otherwise.
SECTION 8.1.20. Use of Proceeds. The Borrower will use the proceeds of
the Loans for the purposes set forth in the fourth recital and as otherwise
set forth in this Agreement.
SECTION 8.2. Certain Negative Covenants. Each of the Borrower and the
Finance Subsidiary agrees with each Bank Party that, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower and the Finance Subsidiary, as the case may be, will perform its
respective obligations set forth in this Section. The Guarantor agrees with
each Bank Party that, at all times on or prior to the Release Date (and, in
the case of the Guarantor's obligations under Sections 8.2.14, but with
respect only to the Foreign Investment Contract, and 8.2.15 generally, with
respect to any Operative Document to which it is a party, in each case, at all
times until all Commitments have been terminated and all Obligations have been
paid and performed in full), the Guarantor will perform its respective
obligations set forth in this Section.
SECTION 8.2.1. Business Activities; Place of Business; Organic Documents;
Fiscal Year. The Borrower will not:
(a) engage in any business activity other than the consummation of
the Fachinal Project and the operation of the Mine and any activity
incidental thereto;
(b) maintain any place of business in the United States or elsewhere
(other than the location of the Mine, Chile Chico or Santiago, Chile)
without first taking (to the satisfaction of the Agent) all actions
necessary to protect the Lien granted pursuant to the relevant Security
Agreements;
(c) amend its Organic Documents or change its corporate name; or
- 83 -
<PAGE>
(d) change its Fiscal Year.
SECTION 8.2.2. Indebtedness. The Borrower will not create, incur, assume,
or suffer to exist or otherwise become or be liable in respect of any
Indebtedness other than:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) Indebtedness in respect of the Hedging Agreements;
(c) at any date (i) unsecured Indebtedness outstanding at such
date incurred in the ordinary course of business in connection with
Project Costs (by way of open accounts of less than ninety (90) days
extended by suppliers, or letters of credit opened for the amount of
suppliers, on normal trade terms in connection with purchases of
goods and services (and excluding, for the avoidance of doubt,
Indebtedness incurred through the borrowing of money or Contingent
Liabilities), (ii) Indebtedness not in excess of U.S.$1,000,000 at
any one time outstanding (or the equivalent thereof in any other
currency) incurred to suppliers of equipment constituting Project
Capital Costs (other than pursuant to the Construction Contract) in
respect of the deferred purchase price of such equipment and on
terms and conditions acceptable to the Required Banks, and (iii)
Indebtedness evidenced by the Project Documents;
(d) Indebtedness in respect of taxes, assessments or
governmental charges, and Indebtedness in respect of claims for
labor, materials or supplies to the extent that payment thereof
shall not at the time be required to be made in accordance with the
provisions of Section 8.1.6;
(e) Indebtedness in respect of judgments or awards, enforcement
of which has not been stayed by reason of a pending appeal or
otherwise, for a period of more than 10 days, which do not, in the
aggregate, exceed U.S.$500,000 (or the equivalent thereof in any
other currency); and
(f) Approved Subordinated Indebtedness.
SECTION 8.2.3. Liens. The Borrower will not create, incur, assume or
suffer to exist any Lien upon any of its properties, revenues or assets,
whether now owned or hereafter acquired, except:
(a) Liens in favor of the Agent (for the ratable benefit of the Bank
Parties) or in favor of the Bank Parties granted pursuant to any Loan
Document;
(b) Liens in respect of deferred import duties imposed by any
Governmental Authority of the Republic of
- 84 -
<PAGE>
Chile, such Liens to secure equipment having a maximum fair market value
of U.S.$5,000,000 (or the equivalent thereof in any other currency) in
aggregate purchased during any Fiscal Year;
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty
or being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on
its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen,
suppliers and landlords incurred in the ordinary course of business for
sums not overdue or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;
(e) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(f) judgment Liens in existence less than 10 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
(g) Liens securing Indebtedness permitted to be incurred pursuant to
clause (c)(ii) of Section 8.2.2; provided, however, that any such Lien
shall attach only to the equipment in respect of which such Indebtedness
is incurred;
(h) any other Lien disclosed in Item 11 ("Liens") of the Disclosure
Schedule.
For the purposes of this Section the obligations secured by any Lien
created or incurred in the ordinary course of business (other than any Liens
of the nature referred to in clause (a) or (b)) may not exceed U.S.$1,000,000
in the aggregate at any one time outstanding.
SECTION 8.2.4. Financial Condition of Borrower. The Borrower will not
permit:
(a) the Annual Loan Cover Ratio (calculated on the date of
preparation of each Compliance Certificate with respect to each
consecutive twelve-month period commencing
- 85 -
<PAGE>
on all Calculation Dates which are Payment Dates scheduled to occur on or
after such date of preparation (and, in the case of a Calculation Date
which is the Project Completion Date or the Release Date, calculated with
respect to the twelve-month period ending on the next succeeding
scheduled Calculation Date which is a Payment Date (and in calculating
Future Net Cash Flow in connection with the determination of the Annual
Loan Cover Ratio for any such period, such calculation shall be made on
the first day of such period and the Dollar equivalent of any Gold or
Silver from Production actually sold during the portion of such period
commencing on the first day of such period and ending on the Project
Completion Date or the Release Date, as the case may be, shall be the
amount of Dollars actually realized from such sale)), to be less than one
hundred and twenty-five percent (125%);
(b) the Loan Life Ratio (calculated on each Calculation Date with
respect to such Calculation Date and all Calculation Dates scheduled to
occur thereafter), to be less than or equal to one hundred and fifty
percent (150%);
(c) the Project Life Ratio (calculated on each Calculation Date with
respect to such Calculation Date and all Calculation Dates scheduled to
occur thereafter), to be less than or equal to two hundred percent
(200%);
(d) the Current Ratio to be at any time after the Release Date less
than one hundred percent (100%);
(e) the Reserve Value Cover to be at any time less than four hundred
percent (400%);
(f) on the sixteenth Payment Date, the Proven and Probable Reserves
to be less, or to be scheduled to be less, than thirty percent (30%) of
the Proven and Probable Reserves as at the Effective Date (and for
purposes of making this calculation, Proven and Probable Reserves of
Silver shall be converted into Proven and Probable Reserves of Gold using
the ratio 1:75).
SECTION 8.2.5. Capital Expenditures. The Borrower will not make or commit
to make any costs in respect of Capital Expenditure other than such costs
which are identified in the Development Plan and shall not make or commit to
make any such costs if, at the time, or as a consequence of, incurring any
such item of expenditure any Default shall have occurred and be continuing.
SECTION 8.2.6. Investments. The Borrower will not acquire all or
substantially all of the assets of any other Person and will not make, incur,
assume or suffer to exist any Investment in any other Person, except Cash
Equivalent
- 86 -
<PAGE>
Investments permitted to be made with balances standing to the credit of the
Project Accounts pursuant to Article 4.
SECTION 8.2.7. Restricted Payments, etc. The Borrower will not:
(a) declare, pay or make any distribution (in cash, property or
obligations) on any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower or on any ownership interest of
the Borrower or on any warrants, options or other rights with respect to
any shares of any class of capital stock or other interest (now or
hereafter outstanding) of the Borrower or apply any of its funds,
property or assets to the purchase, redemption or other retirement of any
shares of any class of capital stock or other interest (now or hereafter
outstanding) of the Borrower, or warrants, options or other rights with
respect to any shares of any class of capital stock or other interest
(now or hereafter outstanding) of the Borrower;
(b) repay, redeem, purchase or otherwise defease any Indebtedness
owing to, or make any other payment to, any Affiliate (including all
Approved Subordinated Indebtedness); and
(c) make any deposit for any of the foregoing purposes or otherwise
discharge any Indebtedness incurred by any Affiliate;
provided, however, that the Borrower may make any payment or take any other
action for any of the foregoing purposes so long as: (i) no Default shall have
occurred and be continuing or would result from any such payment or other
action and (ii) any such payment or other action may be made or taken only (x)
on (or within 10 Business Days after) a Payment Date occurring on or after the
Project Completion Date and (y) after giving effect to all payments required
to be made on such Payment Date pursuant to Section 3.2; and provided,
further, however, that the Borrower may not make any payment or take any other
action for any of the foregoing purposes at any time when the balance standing
to the credit of the Proceeds Sub-Account (Debt Service Reserve) shall be less
than the Required Debt Service Reserve Balance; and provided, further,
however, that nothing in this Section shall, or shall be deemed to be,
prohibit the Borrower from making a repayment or prepayment of Approved
Subordinated Debt on the date of making of the initial Loans in an amount
sufficient to finance repayment of the Bridge Loan.
SECTION 8.2.8. Take or Pay Contracts. Except as set forth in Item 12
("Take or Pay Contracts") of the Disclosure Schedule, the Borrower will not
enter into or be a party to any arrangement for the purchase of materials,
supplies, other property or services if such arrangement by its express terms
requires that payment be made by the Borrower regardless of whether or not
such materials, supplies, other property or services are delivered or
furnished to it. For the avoidance of
- 87 -
<PAGE>
doubt, nothing in this Section shall prohibit the Borrower from entering into
any Hedging Agreement.
SECTION 8.2.9. Consolidation, Merger, etc. The Borrower will not
liquidate or dissolve, consolidate with, or merge into or with, any other
corporation, or purchase or otherwise acquire all or substantially all of the
assets of any Person (or of any division thereof).
SECTION 8.2.10. Asset Dispositions, etc. The Borrower will not sell,
transfer, lease or otherwise dispose of any of, or grant options, warrants or
other rights with respect to, any of its assets (including accounts
receivable) to any Person, unless:
(a) such disposition is of Concentrate made in the ordinary course
of business pursuant to the Concentrate Sales Agreement;
(b) such disposition is of obsolete or replaced assets, which are no
longer used or useful to the Borrower; or
(c) the net book value of all assets disposed of by the Borrower
(excluding, however, assets disposed of pursuant to clauses (a) and (b))
in the same Fiscal Year does not exceed U.S.$250,000 (or the equivalent
thereof in any other currency) and fair value in cash is received
therefor.
SECTION 8.2.11. Transactions with Affiliates. The Borrower will not enter
into, or cause, suffer or permit to exist:
(a) any arrangement or contract pursuant to which any Indebtedness
is extended by the Borrower to any Affiliate as obligor;
(b) any arrangement or contract with any of its Affiliates of a
nature customarily entered into by Persons which are Affiliates of each
other (including management or similar contracts or arrangements relating
to the allocation of revenues, taxes and expenses or otherwise) requiring
any payments to be made by the Borrower to any Affiliate unless such
arrangement is fair and equitable to the Borrower; and
(c) any other transaction, arrangement or contract with any of its
other Affiliates which would not be entered into by a prudent Person in
the position of the Borrower with, or which is on terms which are less
favorable to the Borrower than are obtainable from, any Person which is
not one of its Affiliates.
- 88 -
<PAGE>
SECTION 8.2.12. Restrictive Agreements, etc. The Borrower will not enter
into any agreement (excluding this Agreement and the Loan Documents)
prohibiting the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability of
the Borrower to amend or otherwise modify this Agreement or any other
Operative Document.
SECTION 8.2.13. Inconsistent Agreements. No Obligor will enter into any
agreement (including any Loan Document) containing any provision which would
be violated or breached by the Loans hereunder or by the performance by such
Obligor of its obligations hereunder or under any Loan Document.
SECTION 8.2.14. Project Documents. No Obligor will (a) amend, modify or
waive, or (b) terminate or replace, any Project Document to which it is a
party, except as expressly permitted pursuant to any Loan Document or with the
prior written consent of the Required Banks.
SECTION 8.2.15. Actions under Project Documents. No Obligor will take or
refrain from taking any action under any of the Project Documents which would
have a material adverse effect on (a) the ability of the Borrower to
consummate the Fachinal Project and operate the Mine in accordance with the
Development Plan and achieve Project Completion no later than January 1, 1997,
(b) any collateral subject to any Security Agreement and the perfection and
priority of the Liens granted or purported to be granted therein, or (c) the
ability of such Obligor to pay and perform its Obligations.
SECTION 8.2.16. Bank Accounts. The Borrower shall not open any bank
account or maintain any similar deposit arrangement or maintain any balance in
any bank account or in respect of such arrangement without the prior consent
of the Agent other than the Project Accounts.
SECTION 8.2.17. Royalty Agreements. The Borrower will not enter into any
agreement relating to the granting of royalties or net profits interests in
connection with the Fachinal Project other than as set forth in the royalty
agreements listed in Item 13 ("Royalty Agreements") of the Disclosure
Schedule, if any.
ARTICLE 9. EVENTS OF DEFAULT
SECTION 9.1. Events of Default. The term "Event of Default" shall mean
any of the events set forth in this Section.
SECTION 9.1.1. Non-Payment of Obligations. The Borrower or the Guarantor:
(a) shall default in the payment or prepayment when due of any
principal amount of or interest on any Loan
- 89 -
<PAGE>
(and such default shall continue unremedied for a period of five Business
Days); or
(b) shall default in the payment when due of any other Obligation
(and such default shall continue unremedied for a period of five Business
Days).
SECTION 9.1.2. Non-Performance of Certain Covenants. Any Obligor shall
default in the due performance and observance of any of its obligations under
Sections 8.1.4, 8.1.11, 8.1.15 or 8.2.
SECTION 9.1.3. Non-Performance of Other Obligations. Any Obligor shall
default in the due performance or observance of any term, condition, covenant
or agreement contained herein or in any other Loan Document executed by it
(other than a default arising pursuant to Section 9.1.1 or 9.1.2), and, if
capable of cure or remedy, such default shall continue unremedied for a period
of 10 Business Days after notice thereof shall have been given to such Obligor
by the Agent.
SECTION 9.1.4. Breach of Representation or Warranty. Any representation
or warranty of any Obligor hereunder or in any other Loan Document executed by
it or in any other writing furnished by or on behalf of such Obligor to any
Bank Party for the purposes of or in connection with this Agreement or any
such Loan Document is or shall be incorrect when made.
SECTION 9.1.5. Default on other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of any Obligor having a principal amount,
individually or in the aggregate, in excess of US$1,000,000 (or the equivalent
thereof in any other currency), or a default shall occur in the performance or
observance of any obligation or condition with respect to such Indebtedness if
the effect of such default is to permit (after the passage of time, the giving
of notice, the making of any required determination or any combination of the
foregoing) the acceleration of the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior
to its expressed maturity.
SECTION 9.1.6. Bankruptcy, Insolvency, etc. Any Obligor shall:
(a) become insolvent or generally fail to pay, or admit in writing
its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other
- 90 -
<PAGE>
custodian for such Obligor, or any property of any thereof, or make a
general assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for such Obligor or for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 30 days,
provided that each Obligor hereby expressly authorizes the Agent and each
Bank to appear in any court conducting any relevant proceeding during
such 30-day period to preserve, protect and defend their rights under the
Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of any Obligor and, if such case or
proceeding is not commenced by such Obligor, such case or proceeding
shall be consented to or acquiesced in by such Obligor or shall result in
the entry of an order for relief or shall remain for 30 days undismissed,
provided that each Obligor hereby expressly authorizes the Agent and each
Bank to appear in any court conducting any relevant proceeding during
such 30-day period to preserve, protect and defend their rights under the
Loan Documents;
(e) suffer any comparable event to any of the foregoing in any
jurisdiction; or
(f) take any corporate action authorizing, or in furtherance of, any
of the foregoing.
SECTION 9.1.7. Hedging Agreements. Any default shall occur under any of
the Hedging Agreements or any of the Hedging Agreements shall terminate or
cease in whole or in part to be the legal, valid and binding obligation of the
Hedging Counterparty thereunder or the assignment by the Guarantor of the
benefit of any of the Hedging Agreements to the Borrower shall terminate or
cease in whole or in part to transfer the benefits of such Hedging Agreements
to the Borrower.
SECTION 9.1.8. Project Documents, etc.
(a) Any of the Project Documents shall terminate or for any reason
cease to be in full force and effect, except for (i) any expiration at
the end of the term thereof, (ii) any termination or replacement
consented to by the Required Banks pursuant to clause (b) of Section
8.2.14, or (iii) if replacement is effected as provided in Section
9.1.14; or
- 91 -
<PAGE>
(b) a default under any of the Project Documents (excluding,
however, to the extent referred to in Section 9.1.14, the Construction
Contract and the Construction Contract Guaranty) shall occur, and such
default is, in the reasonable opinion of the Required Banks, likely to
have a Materially Adverse Effect with respect to the Finance Subsidiary
or the Borrower (or, at any time on or prior to the Release Date, the
Guarantor) and the Borrower fails to obtain a satisfactory alternative
agreement or alternative arrangements to satisfactorily mitigate (in the
reasonable opinion of the Required Banks) the effect of such termination
or default within 30 days of such termination or default.
SECTION 9.1.9. Impairment of Loan Documents. This Agreement or any other
Loan Document shall terminate or cease in whole or part to be the legal,
valid, binding and enforceable obligation of the relevant Obligor party
thereto; the relevant Obligor or any other party shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature
or enforceability; or any Lien securing any Obligation shall, in whole or in
part, cease to be a perfected Lien which, except as permitted by Section
8.2.3, ranks first in priority; provided, however, that no Event of Default
under this Section shall occur in respect of the invalidity or imperfection of
any Lien created pursuant to any Security Agreement in respect of any Project
Assets if the net book value of those Project Assets is not more than five
percent (5%) of the total net book value of all tangible Project Assets.
SECTION 9.1.10. Abandonment; Mining Rights.
(a) The Borrower (or, in the case of the CDE Surface Rights, CDE)
shall abandon all or any significant portion of its interest in the Mine
or the Project Assets or surrender, cancel or release, or suffer any
termination or cancellation of any of its rights, right or interest in
the Mine or the Project Assets, other than as specifically permitted by
this Agreement and each other Loan Document or other than as the Borrower
shall have evidenced to all the Banks are not required in connection with
the Fachinal Project.
(b) Any Person other than the Borrower (or, in the case of the CDE
Surface Rights, CDE and the other co-owners thereof as disclosed to the
Agent on or prior to the Effective Date) shall acquire Mining Rights in
respect of all or any portion of properties owned by the Borrower or CDE
in connection with the Fachinal Project.
SECTION 9.1.11. Judgments. Any judgment or order for the payment of money
in excess of US$1,000,000, (or the equivalent thereof in any other currency),
shall be rendered against any Obligor and either:
- 92 -
<PAGE>
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 9.1.12. Expropriation, etc. Any Governmental Agency or other
Person purporting to be, or acting as, any Governmental Agency (a) condemns,
nationalizes, seizes or otherwise expropriates all or any substantial part of
the property or other assets of the Borrower or of its share capital or other
ownership interests, or assumes custody or control of such property or other
assets or of the business or operations of the Borrower if such action
(together with any prior similar action) would prevent the Borrower from
carrying on its obligations under the Operative Documents where, in the case
of any such property, or assets, the same cannot be replaced by equivalent
property or assets, or (b) condemns, nationalizes, seizes or otherwise
expropriates all or any substantial part of the property or other assets of
the Borrower or its share capital or other ownership interests, or assumes
custody or control of such property or other assets or of the business or
operations of the Borrower if such action (together with any prior similar
action) would prevent the Borrower from carrying on its obligations under the
Operative Documents where, in the case of property or assets, the same can be
replaced by equivalent property or assets, and, in any such case, such
condemnation, nationalization, seizure, expropriation, assumption or action is
not withdrawn, rescinded, reversed, or in the case of any such action with
respect to property or assets, the same are not replaced with equivalent
property or assets within thirty days.
SECTION 9.1.13. Change in Control. Any Change in Control shall occur.
SECTION 9.1.14. Default, etc. by Construction Contractor. The
Construction Contractor shall default in the performance of any of its
obligations under the Construction Contract or Fluor Daniel, Inc. shall
default in the performance of any of its obligations under the Construction
Contract Guaranty and the Construction Contractor or, as the case may be,
Fluor Daniel, Inc. shall not have remedied such default within the time
prescribed under the Construction Contract or, as the case may be, the
Construction Contract Guaranty, or the Borrower shall terminate the services
of the Construction Contractor; provided, however, that in the event that the
Construction Contractor shall be so unable to perform such obligations or the
Borrower shall have so terminated the services of the Construction Contractor
then no Event of Default shall be deemed to have occurred pursuant to this
Section if the Borrower shall have appointed a substitute Construction
Contractor, or the Borrower shall be operating the Mine on an interim basis
and shall have made provision for the appointment of a substitute Construction
- 93 -
<PAGE>
Contractor, in each case acceptable to the Required Banks in their reasonable
discretion within 15 Business Days of the occurrence of such inability to
perform or termination.
SECTION 9.1.15. Failure to Achieve Project Completion. The Project
Completion Date shall not have occurred on or prior to January 1, 1997.
SECTION 9.1.16. Approvals. Any Approval which is material to the Fachinal
Project or the Mine or otherwise material to the conduct of the business of
the Borrower or the performance of any Obligor's obligations under any
Operative Agreement executed by it shall be denied or withdrawn or shall cease
to remain in full force and effect or shall otherwise be materially impaired.
SECTION 9.1.17. Materially Adverse Effect. Any event shall occur or
condition shall exist which constitutes a Materially Adverse Effect with
respect to any Obligor.
SECTION 9.1.18. Cease to Carry on Business. The Borrower ceases, is
restrained from or threatens to cease to carry on in the ordinary course the
Fachinal Project, its business or a substantial part thereof, and in the case
of any restraint caused by a Person other than the Borrower, the Borrower does
not recommence its business as aforesaid within 30 days.
SECTION 9.1.19. Unenforceability of Loan Documents and Project Documents.
A Loan Document or any material Project Document becomes wholly or partially
void or voidable or unenforceable against any Obligor party thereto or is
claimed to be so or is repudiated, in each case, by such Obligor or anyone on
their behalf.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described in
Section 9.1.6 shall occur, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations (excluding, however, unless
express instructions to the contrary are received from the relevant Bank,
Obligations in respect of any Hedging Agreement to which any Bank is a party)
shall automatically be and become immediately due and payable, without notice
or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 9.1.6) shall occur for
any reason, whether voluntary or involuntary, and be continuing, the Agent
may, and upon the direction of the Required Banks, shall, upon notice or
demand to the Borrower, declare all or any portion of the outstanding
principal amount of the Loans to be due and payable and any or all other
Obligations (excluding, however, unless express instructions to the contrary
are received from the relevant Bank, Obligations in respect of any Hedging
Agreement to which any Bank is a party) to be due and payable and/or the
Commitments (if not
- 94 -
<PAGE>
theretofore terminated) to be terminated, whereupon the full unpaid principal
amount of such Loans and any and all other Obligations which shall be so
declared due and payable shall be and become immediately due and payable,
without further notice, demand, or presentment, and/or, as the case may be,
the Commitments shall terminate.
SECTION 9.4. Event of Default after Project Completion Date. No Default
or Event of Default shall have, or shall be deemed to have, occurred in the
event that any of the events referred to in Sections 9.1.5, 9.1.6, 9.1.11,
9.1.16 or 9.1.17 shall have occurred with respect to the Guarantor at any time
on or after the Release Date.
ARTICLE 10. THE AGENT
SECTION 10.1. Actions. Each Bank authorizes the Agent to act on behalf of
such Bank under this Agreement and each other Loan Document and, in the
absence of other written instructions from the Required Banks received from
time to time by the Agent (with respect to which the Agent agrees that it
will, subject to the last paragraph of this Section, comply in good faith
except as otherwise advised by counsel to the effect that any such compliance
might subject such Agent to any liability of whatsoever nature), to exercise
such powers hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto.
Each Bank agrees (which agreement shall survive any termination of this
Agreement) to indemnify the Agent, pro rata according to such Bank's
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement or any other Loan Document, including the
reimbursement of the Agent for all out-of-pocket expenses (including
attorneys' fees and expenses on a full indemnity basis) incurred by the Agent
hereunder or in connection herewith or with any other Loan Document or in
enforcing the Obligations of any Obligor under this Agreement or any other
Loan Document, in all cases as to which the Agent is not reimbursed by an
Obligor; provided, however, that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements determined by a
court of competent jurisdiction in a final proceeding to have resulted from
the Agent's gross negligence or wilful misconduct.
Without limiting the generality of the foregoing, each Bank Party hereby
authorizes the Agent to:
(a) act on behalf of such Bank to execute and accept on its behalf
the Security Agreements (other than
- 95 -
<PAGE>
any Security Agreement which is expressed to be governed by Chilean law)
and to take all such actions thereunder necessary or appropriate with
respect to management or enforcement of the collateral security provided
by such Security Agreements and enforcement of the rights of the Bank
Parties thereunder; and
(b) (i) approve (x) in consultation with the Banks, the Development
Plan, the Insurance Summary and the Technical Review and (y) in
consultation with the Banks and the Independent Consultant, any
engineering studies prepared in connection with the Fachinal Project and
the criteria for Project Completion; and (ii) take all such actions as
may be necessary or appropriate in connection with the technical aspects
of this Agreement, the other Operative Documents and the transactions
contemplated hereby and thereby.
The Agent shall not be required to take any action hereunder or under any
other Loan Document, or to prosecute or defend any suit in respect of this
Agreement or any other Loan Document, unless it is indemnified to its
satisfaction by the Banks against loss, costs, liability and expense. If any
indemnity in favor of the Agent shall become impaired, it may call for
additional indemnity and cease to do the acts indemnified against until such
additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Bank by 5:00 p.m., London
time, on the day prior to a proposed Borrowing Date that such Bank will not
make available the amount which would constitute its Percentage of the Loans
to be made by all the Banks on such date, the Agent may assume that such Bank
has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to
the extent that such Bank shall not have made such amount available to the
Agent, such Bank and the Borrower severally agree to repay the Agent forthwith
on demand such corresponding amount together with interest thereon, for each
day from the date the Agent made such amount available to the Borrower to the
date such amount is repaid to the Agent, at the interest rate applicable at
the time to the relevant Loans.
SECTION 10.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Bank Party for any action
taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, or responsible for any recitals or warranties
herein or therein, or for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, or to make any inquiry
respecting the performance by the Borrower or any other Obligor of its
obligations hereunder or thereunder, or the validity,
- 96 -
<PAGE>
genuineness, creation, perfection or priority of the Liens and security
interests created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security.
The Agent shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement, or writing which
it believes to be genuine and to have been presented by a proper Person.
SECTION 10.4. Successors. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all the Banks. If the Agent
at any time shall resign, the Required Banks may appoint (subject, as long as
no Default shall have occurred and be continuing, to the prior written consent
of the Borrower, such consent not to be unreasonably withheld or delayed)
another Bank as the successor Agent which shall thereupon become the Agent
hereunder. If no successor Agent shall have been so appointed as aforesaid,
and shall have accepted such appointment, within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint (subject, as long as no Default shall have occurred and
be continuing, to the prior written consent of the Borrower, such consent not
to be unreasonably withheld or delayed) a successor Agent, which shall be one
of the Banks or a commercial banking institution having a combined capital and
surplus of at least U.S.$500,000,000 (or the equivalent thereof in another
currency). Upon the acceptance of any appointment as an Agent hereunder by the
successor Agent, such successor Agent, shall be entitled to receive from the
retiring Agent, such documents of transfer and assignment as the successor
Agent may reasonably request, and shall thereupon succeed to and become vested
with all rights, powers, privileges and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and each other Loan Document.
SECTION 10.5. Loans by Rothschild. Rothschild shall have the same rights
and powers with respect to the Loans made by it or any of its Affiliates as
any Bank and may exercise the same as if it were not the Agent. Rothschild and
its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with any Obligor or any Affiliate of any thereof as if
Rothschild were not the Agent.
SECTION 10.6. Rothschild as the Agent. In acting as Agent for the Banks,
the Credits and/or Treasury Division(s) of Rothschild shall be treated as a
separate entity from any other division of Rothschild (or similar units of
Rothschild in any subsequent reorganization) or Affiliates and, without
detracting from the generality of the foregoing, in the event that any of
Rothschild's divisions (or similar units) or Affiliates should act for the
Borrower, any other Obligor, or any Subsidiary of the Guarantor (the "Group")
in an advisory capacity in relation to any other matter, any information given
by any member of the Group to such divisions (or similar units) or Affiliates
for the
- 97 -
<PAGE>
purpose of obtaining advice shall be treated as confidential and shall not be
available to the other Bank Parties without the consent of the Borrower or, as
the case may be, such Obligor or Subsidiary; and notwithstanding anything to
the contrary expressed or implied herein and without prejudice to the
generality of the foregoing, Rothschild shall not as between itself and the
other Bank Parties be bound to disclose to any Bank Party or other Person any
information supplied by any member of the Group to Rothschild in its capacity
as the Agent hereunder which is identified by such member at the time of
supply as being unpublished price sensitive information relating to a proposed
transaction by a member of the Group and supplied solely for the purpose of
evaluating in consultation with Rothschild in such capacity whether such
transaction might require a waiver or amendment to any of the provisions
contained herein or in any other Loan Document. Before undertaking any work of
the nature described above the Agent, on behalf of Rothschild, shall notify
the Banks of the general nature of such work and shall confirm that in so
acting it shall not be in conflict with its duties as Agent hereunder.
SECTION 10.7. Credit Decisions. Each Bank acknowledges that it has,
independently of the Agent and each other Bank, and based on the financial and
other information referred to in Sections 7.5 and 7.17 and such other
documents, information and investigations as it has deemed appropriate, made
its own credit decision to extend its Commitment. Each Bank also acknowledges
that it will, independently of the Agent and each other Bank, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 10.8. Copies, etc. The Agent shall give prompt notice to each
Bank of each notice or request required or permitted to be given to the Agent
by any Obligor pursuant to the terms of this Agreement or any other Loan
Document. The Agent will distribute to each Bank each Instrument received for
its account (including any item of documentation delivered by any Obligor or
any Affiliate thereof pursuant to Article 6) and copies of all other
communications received by the Agent from any Obligor for distribution to the
Banks by the Agent in accordance with the terms of this Agreement or any other
Loan Document.
ARTICLE 11. MISCELLANEOUS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document (except to the extent otherwise set forth in
such Loan Document) may from time to time be amended, modified or waived, if
such amendment, modification or waiver is in writing and consented to by the
Obligors, the Agent and the Required Banks; provided, however, that no such
amendment, modification or waiver which would:
- 98 -
<PAGE>
(a) modify any requirement hereunder that any particular action be
taken or a determination be made by, or with the consent of or in
consultation with, all the Banks or by the Required Banks shall be
effective unless consented to by each Bank;
(b) modify this Section, change the definition of "Required Banks",
increase the Total Commitment Amount or the Percentage of any Bank or
otherwise subject any Bank to any additional obligation, reduce any
commissions described in Section 3.3.1 or 3.3.2 or modify Section 9.1.15
shall be made without the consent of each Bank;
(c) extend the due date for, or reduce the amount of, any payment or
prepayment of principal of or interest on any Loan or any other amount
payable hereunder or under any other Loan Document shall be made without
the consent of each Bank;
(d) affect the interests, rights or obligations of the Agent qua the
Agent shall be made without consent of the Agent; or
(e) authorize or effect the release of any of the Collateral which
is the subject of any Lien granted or purported to be granted in favor of
the Agent (for the ratable benefit of the Bank Parties) or in favor of
the Bank Parties pursuant to any relevant Security Agreement or of any
obligation of the Guarantor under Articles 2 or 3 of the Guaranty
Agreement shall be made without the consent of all the Banks.
No failure or delay on the part of any Bank Party in exercising any power or
right under this Agreement or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on any Obligor in any case shall
entitle it or any other Obligor to any notice or demand in similar or other
circumstances. No waiver or approval by any Bank Party under this Agreement or
any other Loan Document shall, except as may be otherwise stated in such
waiver or approval, be applicable to subsequent transactions. No waiver or
approval hereunder shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
SECTION 11.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to it at its
address set forth below its signature hereto and designated as its "Address
for Notices" or at such other address as may be designated by such party in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received; any notice, if
transmitted by telex
- 99 -
<PAGE>
or facsimile, shall be deemed given when transmitted (answerback confirmed in
the case of telexes and transmission confirmed by the sending facsimile
machine in the case of facsimiles).
SECTION 11.3. Costs and Expenses.
(a) The Borrower agrees to pay on demand all expenses (inclusive of
United Kingdom Value Added Tax or any other similar tax) of each Bank
Party for the negotiation, preparation, execution and delivery of this
Agreement and each other Loan Document, including schedules and exhibits,
and any amendments, waivers, consents, supplements or other modifications
to this Agreement or any other Loan Document as may from time to time
hereafter be required (including the reasonable fees and expenses of
counsel to the Agent on a full indemnity basis from time to time incurred
in connection therewith), whether or not the transactions contemplated
hereby are consummated, and all expenses (inclusive as aforesaid) of the
Bank Parties (including reasonable fees and expenses of counsel to the
Agent on a full indemnity basis and any stamp or other taxes (including
stamp tax (impuesto de timbres) payable in connection with the Notes)
incurred in connection with the preparation and review of the form of any
Instrument relevant to this Agreement or any other Loan Document, the
consideration of legal questions relevant hereto and thereto and the
filing, recording, refiling or re-recording of any Loan Document and all
amendments or supplements to any thereof and any and all other documents
or Instruments of further assurance required to be filed or recorded or
refiled or re-recorded by the terms hereof or of any other Loan Document.
(b) The Borrower agrees to pay on demand all expenses of each Bank
Party's officers or agents in connection with its annual on-site
inspections of the Mine and all fees and expenses of the Independent
Consultant for the preparation of each Quarterly Report and each Monthly
Report, the fees and expenses of the independent chartered accountants
and certified public accountants in connection with the performance of
their duties described in Section 8.1.8, the certification of each
Compliance Certificate and the Project Completion Certificate or any
other matter relating to the Fachinal Project and the Mine, and all fees
and expenses of the Insurance Broker, and the Agent and the Account Banks
in connection with the performance of their respective duties referred to
herein.
(c) The Borrower agrees to reimburse each Bank Party upon demand for
all out-of-pocket expenses (including attorneys' fees and expenses on a
full indemnity basis and inclusive of United Kingdom Value Added Tax or
any other similar tax) incurred by such Bank Party in connection with (i)
the negotiation of any restructuring or "work-out", whether or not
consummated,
- 100 -
<PAGE>
of any Obligations, and (ii) the enforcement of any Obligations.
SECTION 11.4. Indemnification; Release of Guarantor. In consideration of
the execution and delivery of this Agreement by each Bank Party and the
extension of the Commitments, each of the Borrower and the Guarantor hereby
jointly and severally indemnifies, exonerates and holds each Bank Party and
each of its officers, directors, shareholders, employees and agents (the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities (including liability under
any indemnity given by the Agent under the Project Account Agreement (U.S.))
and damages and expenses in connection therewith, including reasonable
attorneys' fees and disbursements on a full indemnity basis (the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of any Obligor as the result of any
determination by the Banks pursuant to Article 6 not to fund any
borrowing);
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the release by the Borrower or the
Guarantor of any Hazardous Material; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases or threatened
releases from, any real property owned or operated by the Borrower of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental
Law), regardless of whether caused by, or within the control of, the
Borrower or the Guarantor,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, each Obligor hereby
jointly and severally agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under Applicable Law; provided, however, that the Guarantor shall be under no
obligation under this Section after the Release Date except with
- 101 -
<PAGE>
respect to any Indemnified Liability which has been incurred on or prior to
the Release Date or any Indemnified Liability arising, in whole or in part, as
a result of any event or failure to act which occurred on or prior to the
Release Date.
For the avoidance of doubt, the Guarantor shall be under no further
obligation to any Bank Party pursuant to this Agreement at any time after the
Release Date except as otherwise expressly set forth in the first paragraph of
Article 7, Section 8.1, Section 8.2 or the foregoing provisions of this
Section; provided, however, that nothing in this Section shall, or shall be
deemed to, affect or in any other way release the liability of the Guarantor
after the Release Date in respect of any breach of any of its obligations
contained in this Agreement which occur on or prior to the Release Date.
SECTION 11.5. Survival. The obligations of the Borrower under Sections
3.3, 5.2, 5.3, 5.4, 5.6, 11.3 and 11.4 and the obligations of the Banks under
Section 10.1, shall, in each case, survive any termination of this Agreement.
The representations and warranties made by each Obligor in this Agreement and
in each other Loan Document to which it is a party shall survive the execution
and delivery of this Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Counterparts, Effectiveness, etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Obligors and the Agent and be deemed to be an original and all
of which shall constitute together but one and the same agreement. This
Agreement shall become effective on the date (the "Effective Date") when
counterparts hereof executed on behalf of the Obligors and each Bank (or
notice thereof satisfactory to the Agent) shall have been received by the
Agent.
- 102 -
<PAGE>
SECTION 11.9. Governing Law; Entire Agreement.
(a) THIS AGREEMENT AND, UNLESS OTHERWISE SPECIFIED THEREIN, EACH
OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) This Agreement and the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject
matter hereof and thereof and supersede any prior agreements, written or
oral, with respect thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) no Obligor may assign or transfer its rights or obligations
hereunder without the prior written consent of the Agent and all the
Banks; and
(b) the rights of sale, assignment, and transfer of the Banks are
subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans; Participations in Loans. Each
Bank may assign, or sell participations in, its Loans and Commitments to one
or more other Persons in accordance with this Section.
SECTION 11.11.1. Assignments. Any Bank, with notice to the Borrower and
the other Banks, may assign and delegate to any of its Affiliates or to any
other Bank or to one or more commercial banks or other financial institutions
recognized as "registered financial institutions" by the Central Bank at the
time of the proposed assignment and delegation (each Person described as being
the Person from or to whom such assignment and delegation is to be made, being
hereinafter referred to as an "Assignor Bank" or "Assignee Bank",
respectively), all or any fraction of such Bank's total Loans and Commitment
(which assignment and delegation shall be of a constant, and not a varying,
percentage of all the Assignor Bank's Loans and Commitment) in a minimum
aggregate amount of U.S.$2,500,000; provided, however, that any transfer by
any Bank of any Commitment shall require the consents (not to be unreasonably
withheld or delayed) of the other Banks and (as long as no Default shall have
occurred and be continuing) the Borrower; and provided, further, that, the
Borrower, each other Obligor and the Agent shall be entitled to continue to
deal solely and directly with the Assignor Bank in connection with the
interests so assigned and delegated to an Assignee Bank until:
(a) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee
- 103 -
<PAGE>
Bank, shall have been given to the Borrower and the Agent by such
Assignor Bank and such Assignee Bank;
(b) such Assignee Bank shall have executed and delivered to the
Borrower and the Agent a Bank Assignment Agreement, which shall have been
accepted by the Agent;
(c) the Agent shall have been provided with certified copies of
relevant Approvals from the Central Bank and such other evidence as the
Agent may reasonably request in connection with any Approval required or
advisable in connection with such assignment and delegation; and
(d) the processing fees (if any) described below shall have been
paid.
From and after the date that the Agent accepts such Bank Assignment Agreement,
(x) the Assignee Bank thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have
been assigned and delegated to such Assignee Bank in connection with such Bank
Assignment Agreement, shall have the rights and obligations of a Bank
hereunder and under the other Loan Documents, (y) the Assignor Bank, to the
extent that rights and obligations hereunder have been assigned and delegated
by it in connection with such Bank Assignment Agreement, shall be released
from its obligations hereunder and under the other Loan Documents, and (z) the
Note and the Security Agreements expressed to be governed by the laws of Chile
shall be amended, and all necessary steps taken in relation thereto, to
reflect such assignment and delegation. Accrued interest on that part of the
Loans assigned to the Assignee Bank, and accrued fees in respect thereof,
shall be paid as provided in the Bank Assignment Agreement. Except in the case
where any such Assignee Bank is an Affiliate of such Assignor Bank, such
Assignor Bank or such Assignee Bank shall also pay a processing fee to the
Agent upon delivery of any Bank Assignment Agreement in the amount of
U.S.$1,500. Any attempted assignment and delegation not made in accordance
with this Section shall be null and void.
SECTION 11.11.2. Participations. Any Bank may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, Commitments or other interests of such Bank hereunder;
provided, however, that:
(a) no participation contemplated in this Section shall relieve such
Bank from its Commitment or its other obligations hereunder or under any
other Loan Document;
(b) such Bank shall remain solely responsible for the performance of
its Commitment and such other obligations;
- 104 -
<PAGE>
(c) the Obligors and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Bank, or is itself a Bank, shall be entitled to require such Bank to take
or refrain from taking any action hereunder or under any other Loan
Document, except that such Bank may agree with any Participant that such
Bank will not, without such Participant's consent, take any actions of
the type described in clause (b) or (c) of Section 11.1; and
(e) the Borrower shall not be required to pay any amount under
Sections 5.2, 5.3, 5.4, 5.5 and 5.6 that is greater than the amount which
it would have been required to pay had no participating interest been
sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.9, 5.10, 5.11, 11.3 and 11.4, shall
be considered a Bank.
SECTION 11.12. Other Transactions. Without prejudice to the provisions of
Section 10.5, nothing contained herein shall preclude any Bank Party from
engaging in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with any Obligor or any of their
Affiliates in which such Obligor or such Affiliate is not restricted hereby
from engaging with any other Person.
SECTION 11.13. Forum Selection and Consent to Jurisdiction; Waiver of
Immunity. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE AGENT, THE BANKS OR THE OBLIGORS SHALL BE BROUGHT AND MAINTAINED IN THE
COURTS OF THE STATE OF NEW YORK OR IDAHO OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE DISTRICT OF IDAHO;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY
BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE ANY
PROPERTY MAY BE FOUND, INCLUDING THE COMPETENT COURTS OF THE COMUNA OF
SANTIAGO, CHILE. EACH OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH OBLIGOR HEREBY IRREVOCABLY
APPOINTS CT CORPORATION SYSTEM WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK 10019, AND AT 300 N. 6TH STREET, BOISE, IDAHO
83701 AS ITS AGENT FOR SERVICE OF PROCESS IN NEW YORK AND IDAHO, RESPECTIVELY
(HEREIN WITH RESPECT TO EACH OBLIGOR, ITS "PROCESS AGENT"). SERVICE OF PROCESS
MAY BE MADE UPON ANY OBLIGOR BY MAILING OR DELIVERING A COPY OF SUCH PROCESS
TO IT IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S
- 105 -
<PAGE>
RELEVANT ADDRESS AND EACH OBLIGOR HEREBY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN NEW YORK OR IDAHO
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY THE MAILING OF
COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS FOR NOTICES SET FORTH BELOW ITS
SIGNATURE HERETO. IN ADDITION, THE BORROWER HEREBY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN CHILE
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY THE NOTIFICATION
BY A CLERK OF A COMPETENT COURT TO THE MANAGER OR ANOTHER AUTHORIZED
REPRESENTATIVE OF THE BORROWER AT ITS ADDRESS FOR NOTICES SET FORTH BELOW ITS
SIGNATURE HERETO, IN THE MANNER PRESCRIBED BY APPLICABLE LAW. EACH OBLIGOR
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
TO THE EXTENT THAT ANY OBLIGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH OBLIGOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.14. Waiver of Jury Trial. THE AGENT, THE BANKS, THE GUARANTOR,
THE FINANCE SUBSIDIARY AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE
BANKS, THE GUARANTOR, THE FINANCE SUBSIDIARY OR THE BORROWER. EACH PARTY
HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE OTHER PARTIES HERETO ENTERING INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT.
SECTION 11.15. English Language.
(a) This Agreement and the other Loan Documents have been negotiated
in English and, other than the Notes, the Notes Operating Procedure
Agreement and such of the Security Agreements which are expressed to be
governed by Chilean law, executed in the English language. All
certificates, reports, notices and other documents and communications
given or delivered pursuant to this Agreement and the other Loan
Documents shall be in the English language or, if not in the English
language, shall be accompanied by a certified English translation
thereof. In the case of any document originally issued in a language
other than English, the English language version of any such document
shall, absent manifest error, control
- 106 -
<PAGE>
the meaning and interpretation of the matters set forth therein.
(b) The unofficial Spanish translation of this Agreement, initialled
for identification by the Chilean counsel to the Obligors referred to in
clause (a) of Section 6.1.11 and by the Chilean counsel to the Bank
Parties described in clause (c) of Section 6.1.11 and, upon delivery
thereof as soon as practicable following the Effective Date, the official
Spanish translation of this Agreement, as prepared by an official
translator of the Chilean Ministry of Foreign Affairs and approved by
Chilean counsel to the Bank Parties described as aforesaid, shall be the
agreed Spanish translation hereof for all purposes of this Agreement and
each other Loan Document. The parties agree that the Borrower shall as
soon as practicable after the Effective Date procure the translations
referred to in this clause. No Spanish translation of this Agreement
(other than as described in this clause) may be filed in any public
registry in Chile or used for any purpose before any competent court of
Chile. The English language version of this Agreement shall be the
original Instrument hereof and, in case of any conflict in interpretation
between the English language version and the Spanish translation hereof,
the English language version shall control.
- 107 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANIA MINERA CDE FACHINAL LIMITADA,
as the Borrower
By: /s/James A. Sabala
--------------------------------------
Name Printed: James A. Sabala
Title: Vice President/Treasurer
Address
for Notices: 505 Front Street
P.O. Box I
Coeur D'Alene
Idaho 83814
Facsimile No.: 208-667-2213
Attention: James A. Sabala
COEUR D'ALENE MINES CORPORATION,
as the Guarantor
By: /s/James A. Sabala
--------------------------------------
Name Printed: James A. Sabala
Title: Senior Vice President &
Chief Financial Officer
Address
for Notices: 505 Front Street
P.O. Box I
Coeur D'Alene
Idaho 83814
Facsimile No.: 208-667-2213
Attention: James A. Sabala
- 108 -
<PAGE>
COEUR BULLION CORPORATION,
as the Finance Subsidiary
By: /s/James A. Sabala
--------------------------------------
Name Printed: James A. Sabala
Title: Senior Vice President &
Chief Financial Officer
Address
for Notices: 505 Front Street
P.O. Box I
Coeur D'Alene
Idaho 83814
Facsimile No.: 208-667-2213
Attention: James A. Sabala
Commitment Amount
U.S.$12,000,000 N M ROTHSCHILD & SONS LIMITED,
individually as a Bank and as
the Agent
By: /s/Michael A. Price
-------------------------
Name Printed: Michael Allan Price
Title: Director
By: /s/Andrew William Wright
--------------------------
Name Printed: Andrew William Wright
Title: Manager
Address
for Notices:
New Court
St. Swithin's Lane
London EC4P 4DU
England
Telex No.: 888031
Facsimile No.: 44-71-280-5139
Attention: Dr. Michael A. Price
- 109 -
<PAGE>
Lending
Office: The Chase Manhattan Bank N.A.
1 Chase Manhattan Plaza
New York, New York
U.S.A.
For the account of:
N M Rothschild & Sons Limited
A/C No.: 001-1-948262
Telex No.: 888031
Facsimile No.: 44-71-280-5139
Attention: Mark Turner/Frankie Petts
BAYERISCHE VEREINSBANK AG
By: /s/Martin Rey
-------------------------
Title: VP
By: /s/Wolfram Schieder
--------------------------
Title: VP
Address
for Notices:
Kardinal - Faulhaber - Str.1
D-80311 Munchen
Telephone No.: (089) 3782-5815/5528
Facsimile No.: (089) 3782-6293
Attention: VCF3/Project Finance
Mr. Michael Loefler/
Mr. Martin Rey
Lending
Office: Bayerische Vereinsbank AG,
London Branch
1, Royal Exchange Buildings
GB - London EC3V 3LD
Telephone No.: (0171) 280-3904 or
(0171) 280-3928
Telex No.: 889196 BVLG
Facsimile No.: (0171) 696-9989
Attention: Loan Administration
J. Jellicoe/S. Durham
- 110 -
<PAGE>
(Payments to be made via:
Bayerische Vereinsbank AG
(Swift Code BVBEUS33)
335 Madison Avenue
New York, NY 10017
Account No. 01-586-091073-00
Favor: Bayerische Vereinsbank AG,
London Branch (Swift Code BVBEGB2L)
- 111 -
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE
Item 1 Approvals
Part A Current Approvals
Permit, Approval
Agency or Notification Date
1. Foreign Investment Approval of CDE Public deed
Committee of Chile application for dated January
Foreign Investment 12, 1994, before
Contract up to US$52 Mrs. Maria Gloria
million Acharan, Notary
Public of Santiago
2. Foreign Investment Approval of the Public deed dated
Committee of Chile substitution of the December 27, 1994,
Borrower as the before Mrs. Maria
"Recipient Company" Gloria Acharan,
for the Fachinal Notary Public of
Project in place of Santiago
CDE, Agencia en Chile.
3. Foreign Investment Approval of CDE Public deed dated
Committee of Chile application for March 24, 1995,
Foreign Investment before Mrs. Maria
Contract up to Gloria Acharan,
US$28 million Notary Public of
Santiago
4. Foreign Investment Assignment of Public deed dated
Committee of Chile Foreign Investment April 10, 1995,
Contract's rights before Mrs. Maria
from CDE to the Gloria Acharan,
Guarantor Notary Public of
Santiago
5. Central Bank of Approval to CDE for Resolution No. 306-
Chile special system for 07-930902 of the
return and liquidation Council of the
of a part or all of the Central Bank of
sales proceeds (other Chile adopted on
than sales in Chile) September 2, 1993
of the Fachingal Project
in the Proceeds Account
6. Central Bank of Approval to CDE of Resolution No. 306-
Chile terms and conditions 07-930902 of the
governing loans Council of the
associated with Central Bank of
foreign investment, Chile adopted
under Decree Law on September 2, 1993
600, and authorization
<PAGE>
for CDE, Agencia en
Chile, to deposit the
proceeds of such loans
in bank accounts
outside Chile
7. Central Bank of Approval to the Borrower Resolution No. 395-
Chile for special system for 09-941222 of the
return and liquidation Council of the
of a part or all of Central Bank of
the sales proceeds Chile adopted on
(other than sales December 22, 1994
in Chile) of the
Fachinal Project in
the Proceeds Account
8. Central Bank of Approval to the Borrower Resolution No. 306-
Chile of terms and conditions 07-930902 of the
governing loans Council of the
associated with Central Bank of
foreign investment, Chile adopted on
under Decree Law September 2, 1993
600, and authorization
for the Borrower
to deposit the
proceeds of such
loans in bank
accounts outside
Chile
9. Central Bank of Registration of December 12, 1994
Chile Coeur Bullion as a (Circular No. 12.715)
a "finance
institution"
10. Central Bank of Authorization to See Item 1, Part A,
Chile deposit insurance Paragraphs 1 to 4
proceeds paid
outside Chile in
foreign currency in
the account referred
to in Section 5.4.7
of the Foreign
Investment Contract
11. Internal Revenue Authorization for Resolution No.
Service CDE, Agencia en 11.223, dated
Chile, to keep August 20, 1992
books and records
denominated in US
dollars
12. Internal Revenue Authorization for Resolution No.
Service the Borrower to 1.685, dated April
keep books and 3, 1995
records denominated
in US dollars
<PAGE>
13. COREMA XI Region Environmental Impact Resolution No.
Study 819, dated October
25, 1994
14. SERNAGEOMIN Mine Exploitation Resolution No.
Method 681, dated October
7, 1994
15. SERNAGEOMIN Minerals Treatment Resolution No.
Method 681, dated October
7, 1994
16. SERNAGEOMIN Approval of tailing Resolution No.
dam 731, dated October
25, 1994
17. SERNAGEOMIN Approval of the Resolution No.
waste dam 719, dated October
19, 1994
18. Ministry of Approval of the Resolution No.
Agriculture change of use of soil 6, dated October 3,
1994
19. Housing Approval of change Resolution No.
Ministry of use of soil 819, dated September
9, 1994
20. Ministry of Registration under Resolution No.
Defense the National Explosives 50/096/0002,
Consumer Register dated February 20,
1995
21. Ministry of Approval for the Resolution No.
Defense construction of two 99/096/0012,
explosive storages dated February 20,
1995
PART B Pending Approvals
Permit, Approval
Agency or Notification Date
1. Foreign Investment Notice to the Foreign Prior to the
Committee Investment Committee of Borrowing
the conditional Date
assignment by the
Guarantor and the
Borrower of rights
under the Foreign
Investment Contract
2. Central Bank Notice to the Prior to the
of Chile Central Bank of Borrowing
the conditional Date
assignment by the
Guarantor and the
<PAGE>
Borrower of rights
under the Foreign
Investment Contract
3. Central Bank Approval of Prior to the
of Chile Citibank, N.A. as Borrowing Date
the bank where the
account referred to
in Section 5.4.7
of the Foreign
Investment Contract
may be opened
4. Central Bank Approval of, and Prior to the
of Chile registration with, Borrowing Date
the Central Bank
of the financial
terms and conditions
of the Loan
Agreement
5. Central Bank Approval of, and Prior to the
of Chile registration with, Borrowing Date
the Central Bank
of the financial
terms and conditions
of Approved Subordinated
Indebtedness
6. Central Bank Authorization of the Prior to the
of Chile Borrower to (i) Borrowing Date
purchase foreign
currency in the
official foreign
Exchange market to
pay insurance
premiums and (ii)
deposit insurance
proceeds paid in
foreign currency
in the account referred
to in Section 5.4.7
of the Foreign
Investment Contract
7. Central Bank Approval of the Prior to the
of Chile terms and conditions Borrowing Date
of the Hedging
Agreements
8. Municipality of Industrial Patent Not before
Chile Chico operations begin
9. Municipality of Construction Permit June, 1995
Chile Chico
10. Health Service Health Service related Second
<PAGE>
permits Semester 1995
11. General General water agency Second
Water Agency related permits Semester 1995
12. Undersecretary Telecommunications June, 1995
of equipment approval
Telecommunications
13. National National Department First Semester
Department of of Maritime Territory 1996
Maritime Territory related permits
14. Department of Inter-connection with Second
Public Roads public roads permits Semester 1995
Item 2 Mortgaged Mining Concessions
The mining concessions mortgaged in accordance with the Loan Agreement to
which this Schedule I is attached are described as follows:
Guanaca 1 to 87
Guanaca 101 to 106
Guanaca 131 to 158
Guanaca 161 to 190
Guanaca 191 to 220
Guanaca 221 to 243
Laguna 1 to 100
Jara 1 to 100
Mallines 1 to 100
Horquetas 1 to 75
Buitrera 1 to 60
Buitrera 61 to 90
Buitrera 91 to 120
Brillantes 1 to 100
Bayo 1 to 70
Meseta 1 to 100
Aguila 1 to 100
Sinter 1 to 100
Ribera 1 to 60
Punta 1 to 90
Orilla 1 to 75
Rocas 1 to 100
Bahia 1 to 100
Verde 1 to 60
Perra 1 to 66
Alpaca 1 to 45
Vicuna 1 to 45
Larga 1 all 84
Cascada 1 to 100
Lapiz 1 to 7
Lapiz 21 to 32
Lapiz 41 to 52
Lapiz 61 to 72
Lapiz 81 to 92
Lapiz 101 to 109
<PAGE>
Arroyo 1 to 25
Arroyo 31 to 40
Perra 101 to 123
Perra 131 to 160
Perra 161 to 190
Perra 191 to 220
Perra 221 to 244
Nieves 1 to 30
Nieves 31 to 60
Nieves 61 to 90
Nieves 91 to 120
Nieves 121 to 150
Nieves 151 to 180
Exploration Mining Concessions:
Nevado 1
Nevado 2
Nevado 3
Nevado 4
Nevado 5
Nevado 6
Nevado 7
Nevado 8
Nevado 9
Nevado 10
Nevado 11
Item 3(a) Mortgaged Real Estate (Borrower)
The real estate mortgaged in accordance with the Loan Agreement to
which this Schedule I is attached is described as follows:
Real estate named Laguna Verde Sur, located in Chile Chico, Province of
General Carrera, XI Region of Chile, registered under the name of the Borrower
at page 61 v. No. 53 of the Real Estate Registrar of Chile Chico corresponding
to 1995.
Real estate named Guanaco, located in Chile Chico, Province of General
Carrera, XI Region of Chile, registered under the name of the Borrower at page
62 v. No. 54 of the Real Estate Registrar of Chile Chico corresponding to
1995.
Real estate named Chacra Valdivia, located in Chile Chico, Province of
General Carrera, XI Region of Chile, registered under the name of the Borrower
at page 65 v. No. 57 of the Real Estate Registrar of Chile Chico corresponding
to 1995.
Real estate located at 10 Sotomavor Street, in Chile Chico, Province of
General Carrera, XI Region of Chile, registered under the name of the Borrower
at page 64 v. No. 56 of the Real Estate Registrar of Chile Chico corresponding
to 1995.
Real estate located at 275 Jose Miguel Carrera Street, Chile Chico,
Province of General Carrera, XI Region of Chile, registered under the name of
the Borrower at page 63 v. No. 55 of the Real Estate Registrar of Chile Chico
corresponding to 1995.
<PAGE>
Item 3(b) Mortgaged Real Estate (CDE)
Ownership rights in a real estate named Laguna Verde Norte, located in
Chile Chico, Province of General Carrera, XI Region of Chile, registered under
the name of CDE, Agencia en Chile and Messrs. Hernandez Sepalveda at page 42
No. 63 of the Real Estate Registrar of Chile Chico corresponding to 1993.
Item 4 Mortgaged Water Rights
The water rights mortgaged in accordance with the Loan Agreement to
which this Schedule I is attached is described as follows:
200 Liters per second from General Carrera Lake (DGA No.30)
200 Liters per second from General Carrera Lake (DGA No.104)
200 Liters per second from General Carrera Lake (DGA No.43)
80 Liters per second from El Bano stream (DGA No.45)
35 Liters per second from La Tina stream (DGA No.441)
100 Liters per second from El Rodeo stream (DGA No.452)
Item 5 Project Documents
The Project Documents, which have been delivered to the Agent, are
described as follows:
a) The Construction Contract dated December 12, 1994 between CDE
Chilean Mining Corporation and Fluor Daniel Chile Ingenieria Y
Construccion S.A.
b) The Construction Contract Guaranty dated August 18, 1994, made
by Fluor Daniel, Inc.
c) A letter of confirmation from Maurice J.H. Kuitems of Fluor
Daniel, Inc. to William F. Boyd regarding the Construction
Contract Guaranty, which letter is dated January 11, 1995.
d) The Foreign Investment Contract comprising the following
documents:
(i) the Foreign Investment Contract executed before the
Notary Public of Santiago, Mrs. Maria Gloria Acharan
Toledo pursuant to Decree Law 600 dated January 12, 1994
initially among CDE, CDE Agencia en Chile and Chile;
(ii) an amendment by public deed to that Foreign Investment
Contract executed before the Notary Public of Santiago,
Mrs. Maria Gloria Acharan Toledo, on December 27, 1994
among
<PAGE>
the same parties described in paragraph (i) above;
(iii) the Foreign Investment Contract executed before the
Notary Public of Santiago, Mrs. Maria Gloria Acharan
Toledo, dated March 24, 1995 among CDE, the Borrower and
Chile;
(iv) the assignment of each of the rights of CDE in, to and
under the documents referred to in paragraphs (i), (ii)
and (iii) above to the Guarantor executed by public deed
before the Notary Public of Santiago, Mrs. Maria Gloria
Acharan Toledo, on April 10, 1995.
e) Assignment of the Construction Contract and the Construction
Contract Guaranty, submitted in accordance with Section
8.1.1(g) of the Loan Agreement (there being no other change or
modifications to Project Documents) which assignment is dated
April 13, 1995 by CDE Chilean Mining Corporation to Compania
Minera CDE Fachinal Limitada.
Item 6 Litigation
There is no litigation or other matter pending which is required to
be disclosed in accordance with Section 6.2.2 and Section 7.7 of the Loan
Agreement.
Item 7 Assets; Properties
There exists no exceptions to the representations and warranties
set forth in Section 7.12 of the Loan Agreement other than the matter of
an outstanding interest in surface rights as explained in the letter from
Juan Yrarrazaval to William Boyd dated March 21, 1995, a copy of which
has been delivered to the Agent.
Item 8 Subsidiaries
The Borrower, the Finance Subsidiary and CDE have no subsidiaries.
The subsidiaries of the Guarantor, which are disclosed in accordance with
Section 7.13 of the Loan Agreement, are listed as follows:
Coeur Alaska, Inc.
Coeur Rochester, Inc.
Coeur Explorations, Inc.
Coeur Bullion Corporation
CDE Chilean Mining Corp.
Callahan Mining Corporation
Coeur New Zealand, Inc.
Silver Valley Resources Corporation
Compania Minera CDE Fachinal Limitada
Item 9 Material Patents and Trademarks
<PAGE>
No exceptions to the warranties and representations set forth in
Section 7.14 of the Loan Agreement exist.
Item 10 Environmental Matters
No exceptions to the warranties and representations set forth in
Section 7.18 of the Loan Agreement exist.
Item 11 Liens
No liens exist which are to be disclosed in accordance with Section
8.2.3(h) of the Loan Agreement.
Item 12 Take or Pay Contracts
No Take or Pay Contracts exist which are required to be disclosed
in accordance with Section 8.2.8 of the Loan Agreement.
Item 13 Royalty Agreements
No royalty agreements exist which are required to be disclosed in
accordance with Section 8.2.17 of the Loan Agreement.
<PAGE>
SCHEDULE II
INSURANCE SUMMARY
COURSE OF CONSTRUCTION 12/27/94 TO 12/27/95
FEDERAL INSURANCE CO. POL #657-07-83
-----------------------------------------------------------------------------
Coverage for Fachinal Minesite, Chile Chico and Cacabuco, Chile
$35,000,000 Agreed Amount Property Damage
$ 5,000,000 Sublimit Business Interruption
$10,000,000 Earthquake and Flood Sublimit
$ 1,000,000 Underground Property Sublimit subject to specified
perils
Subject to policy terms, conditions and exclusions
BOILER & MACHINERY (Mechanical Breakdown) 12/27/94 TO 12/27/95
FEDERAL INSURANCE CO. POL #7832-07-97
-----------------------------------------------------------------------------
$18,000,000 Property Damage - Comprehensive Form
$ 50,000 Deductible
Subject to policy terms, conditions and exclusions
OCEAN MARINE CARGO INSURANCE (including War Risk) 1/11/95 TO 1/11/96
FEDERAL INSURANCE CO. POL #FO-45128
-----------------------------------------------------------------------------
$ 4,000,000 Any One Shipment - Warehouse to Warehouse
(Anywhere in the world to Minesite)
$ 10,000 Deductible
Subject to policy terms, conditions and exclusions
FOREIGN LIABILITY POLICY 7/1/94 TO 7/1/95
GREAT NORTHERN INS. CO.
-----------------------------------------------------------------------------
$ 1,000,000 Combined Single Limits of Bodily Injury and
Property Damage Anywhere in the world except USA
and Canada
$ 1,000,000 Combined Single Limits of Bodily Injury and
Property Damage Arising out of Automobiles excess
any valid Chilean coverage
Foreign Voluntary Workers' Compensation Insurance
All subject to policy terms, conditions and
exclusions of the policy.
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Three Months Ended
June 30
1995 1994
-------------------------------
Primary Earnings Per Share:
Average shares outstanding 15,598,198 15,354,627
Net effect of dilutive stock
options-based on the treasury
stock method using average
market price 15,490
------------- -------------
15,613,687 15,354,627
============= =============
Income from continuing operations $ 1,238,995 $ (1,560,380)
Income from discontinued operations 2,168,533 225,581
------------- -------------
Net Income $ 3,407,528 $ (1,334,799)
Per share amounts:
Earnings from continuing operations $ .08 $ (.10)
Earnings from discontinued operations .14 .01
------------- -------------
Earnings per share $ .22 $ (.09)
============= =============
Fully diluted Earnings Per Share:
Average shares outstanding 15,598,198
Net effect of dilutive stock
options-based on the treasury
stock method using average
market price 15,490
Assumed conversion of 6%
convertible bonds 1,923,077
Assumed conversion of 7%
convertible bonds 4,783,163
Assumed conversion of 6 3/8%
convertible bonds 3,816,794
-------------
26,136,722
=============
Net income $ 1,238,998
Add 6% convertible bond
interest net of federal
income tax effect 514,083
Add 7% convertible bond
interest net of federal
income tax effect 911,332
Add 6 3/8% convertible bond
interest net of federal
income tax effect 1,104,075
Less adjustment for capitalized
interest (913,258)
Income from continuing operations 2,855,230
Income from discontinued operations 2,168,531
-------------
Net income $ 5,023,761
=============
Per share amounts:
Earnings from continuing operations $ .11
Earnings from discontinued operations .08
-------------
Earnings per share $ .19
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 47,134,926
<SECURITIES> 75,595,470
<RECEIVABLES> 14,918,807
<ALLOWANCES> 0
<INVENTORY> 33,389,973
<CURRENT-ASSETS> 171,039,176
<PP&E> 319,651,472
<DEPRECIATION> 74,928,440
<TOTAL-ASSETS> 432,963,178
<CURRENT-LIABILITIES> 23,365,834
<BONDS> 224,987,000
<COMMON> 16,657,995
0
0
<OTHER-SE> 148,880,474
<TOTAL-LIABILITY-AND-EQUITY> 432,963,178
<SALES> 41,511,714
<TOTAL-REVENUES> 45,959,130
<CGS> 33,972,120
<TOTAL-COSTS> 33,972,120
<OTHER-EXPENSES> 9,140,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,616,770
<INCOME-PRETAX> (2,770,282)
<INCOME-TAX> (642,321)
<INCOME-CONTINUING> (2,127,961)
<DISCONTINUED> 2,360,196
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232,235
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
