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, 1996
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
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(State or other jurisdiction of (I.R.S. Employer Ident. No.)
incorporation or organization)
P. O. Box I, Coeur d'Alene, Idaho 83816
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (208) 667-3511
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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 [ ]
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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 21,890,971 shares
were issued and outstanding as of August 12, 1996.
<PAGE>
COEUR D'ALENE MINES CORPORATION
<TABLE>
INDEX
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets -- 3-4
June 30, 1996 and December 31, 1995
Consolidated Statements of Operations -- 5
Three Months Ended June 30, 1996 and 1995
Six Months Ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows -- 6-7
Six Months Ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of 11-17
Financial Condition and Results of Operations
PART II. Other Information. 18
SIGNATURES
</TABLE>
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<PAGE>
UNAUDITED
CONSOLIDATED BALANCE SHEETS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
<TABLE>
ASSETS June 30, December 31,
1996 1995
------------- -------------
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 46,373 $ 16,485
Funds held in escrow 2,271 2,271
Short term investments 128,857 63,076
Receivables 19,050 13,809
Inventories 29,891 30,981
--------- ---------
Total Current Assets 226,442 126,622
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 114,110 118,083
Less accumulated depreciation 51,355 34,152
--------- ---------
62,755 83,931
MINING PROPERTIES
Operational mining properties 145,935 150,656
Less accumulated depletion 35,470 38,529
--------- ---------
110,465 112,127
Developmental properties 104,308 108,820
--------- ---------
214,773 220,947
OTHER ASSETS
Investment in unconsolidated subsidiary 46,652
Marketable securities 20,193 4,390
Debt issuance costs, net of
accumulated amortization 4,390 4,703
Notes receivable 4,000 5,000
Other 10 53
--------- ---------
75,245 14,146
--------- ---------
$579,215 $445,646
========= =========
</TABLE>
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<PAGE>
UNAUDITED
CONSOLIDATED BALANCE SHEETS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31,
1996 1995
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(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 3,404 $ 5,743
Accrued liabilities 11,177 3,525
Accrued interest payable 3,332 4,526
Accrued salaries and wages 4,343 5,039
Bank Loans 18,900
Current portion of obligations under
capital leases 1,116 2,193
--------- ---------
Total Current Liabilities 42,272 21,026
OTHER LIABILITIES
6% Subordinated Convertible Debentures 49,840 50,000
6 3/8% Subordinated Convertible Debentures 100,000 100,000
Limited recourse project financing 24,000 24,000
Other long-term liabilities 11,519 9,386
Deferred income taxes 1,404 1,402
--------- ---------
Total Long-Term Liabilities 186,763 184,788
COMMITMENTS AND CONTINGENCIES:
SHAREHOLDERS' EQUITY
Mandatory Adjustable Redeemable Convertible
Securities (MARCS), par value $1.00 per
share, (a class of preferred stock)-
authorized 10,000,000 shares,
7,077,833 issued and outstanding 7,078
Common Stock, par value $1.00 per share-
authorized 60,000,000 shares, issued
22,950,182 and 21,524,093 shares
(including 1,059,211 shares
held in treasury stock) 22,950 21,524
Capital surplus 405,471 247,100
Accumulated deficit (72,637) (15,889)
Unrealized gains (losses) on
short-term investments 547 361
Repurchased and Nonvested Shares (13,229) (13,264)
--------- ---------
350,180 239,832
--------- ---------
$579,215 $445,646
========= =========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Three Months Ended June 30, 1996 and 1995
Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
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1996 1995 1996 1995
-------- -------- -------- --------
INCOME (In thousands except for per share data)
<S> <C> <C> <C> <C>
Sale of concentrates and dore' $ 18,752 $ 23,621 $ 41,361 $ 41,512
Less cost of mine operations 18,546 17,932 38,142 33,972
--------- --------- --------- ---------
Gross Profits 206 5,689 3,219 7,540
OTHER INCOME
Interest and other 2,223 2,061 4,154 4,447
--------- --------- --------- ---------
Total Income 2,429 7,750 7,373 11,987
EXPENSES
Administration 967 1,002 2,055 1,966
Accounting and legal 369 489 643 857
General corporate 1,750 1,737 3,400 3,200
Interest 776 2,635 1,460 5,617
Mining exploration 1,656 857 2,695 1,993
Idle facilities 583 1,124
Write down of mining
properties 54,382 54,382
--------- --------- --------- ---------
Total Expenses 59,900 7,303 64,635 14,757
--------- --------- --------- ---------
NET INCOME(LOSS)FROM CONTINUING
OPERATIONS BEFORE TAXES (57,471) 447 (57,262) (2,770)
Income tax benefit 590 791 514 642
NET INCOME(LOSS)FROM CONTINUING
OPERATIONS (56,881) 1,238 (56,748) (2,128)
INCOME FROM DISCONTINUED
OPERATIONS 2,169 2,360
--------- --------- --------- ---------
NET INCOME (LOSS) $(56,881) $ 3,407 $(56,748) $ 232
--------- --------- --------- ---------
EARNINGS PER SHARE DATA Earnings per share data:
Weighted average number
of shares of Common Stock
and equivalents used in
calculation 21,620 15,614 21,043 15,597
========= ========= ========= =========
Net Income (Loss)from
Continuing Operations $ (2.63) $ .08 $ (2.70) $ (.14)
Net Income From
Discontinued Operations .14 .15
--------- --------- --------- ---------
Net Income (Loss) Per Share $ (2.63) $ .22 $ (2.70) .01
========= ========= ========= =========
Net Income (Loss) per share
attributable to Common Shareholders:
Income(Loss)from continuing
operations $ (2.75) $ .08 $ (2.85) $ (.14)
Income(Loss) from discontinuing
operations .14 .15
--------- --------- --------- ---------
Net Income(Loss) $ (2.75) $ .22 $ (2.85) $ .01
========= ========= ========= =========
</TABLE>
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<PAGE>
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Three Months Ended June 30, 1996 and 1995
Six Months Ended June 30, 1996 and 1995
(continued)
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
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1996 1995 1996 1995
-------- -------- -------- --------
(In thousands except for per share data)
<S> <C> <C> <C> <C>
Fully Diluted Earnings Per Share:
Weighted average number
of shares of Common
Stock outstanding 26,137
Income (Loss) per share
from continuing
operations $ .11
Income per share from
discontinued operations .08
---------
NET INCOME(LOSS) PER SHARE $ .19
=========
Cash Dividends per
Common Shareholders $ .15 $ .15
========= =========
</TABLE>
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<PAGE>
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Six months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
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(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations $ (56,748) $ (2,128)
Adjustments to reconcile net loss from
continuing operations to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 5,521 8,494
Accrued reclamation 694
Deferred income taxes (728) (1,980)
Loss on disposition of assets 54,301 178
Gain on foreign currency transactions (92) (549)
Loss on sale of short-term investments 26 1,128
Change in operating assets and liabilities:
Accounts receivable (227) (3,828)
Inventories 1,090 825
Accounts payable and accrued liabilities (3,786) 280
Interest payable (1,194) (1,470)
---------- ----------
Net cash used in continuing operations (1,143) 950
Income from discontinued operations 2,360
Adjustments to reconcile income from
discontinued operations to net cash provided
by discontinued operations (1,757)
--------- ---------
603
--------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,143) 1,553
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in unconsolidated subsidiary (18,629)
Purchase of property, plant, and equipment (1,727) (1,831)
Purchase of short-term investments (114,973) (2,410)
Proceeds from sales of marketable securities 33,959 60,012
Expenditures on developmental properties (5,851) (29,295)
Expenditures on operational mining properties (19,988) (12,511)
Proceeds from sale of discontinued operations 1,420 2,855
Proceeds from disposition of other assets 115 864
--------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (125,674) 17,684
</TABLE>
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<PAGE>
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Six Months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Cash Dividends (5,762) (2,339)
Proceeds from preferred stock issuance
(net of offering costs) 144,644
Proceeds from bank loans 18,900 16,091
Retirement of obligations under capital leases (1,077) (1,002)
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 156,705 12,750
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 29,888 31,987
Cash and cash equivalents at beginning of year 16,485 15,148
--------- ---------
CASH AND CASH EQUIVALENTS AT
JUNE 30, 1996 AND 1995 $ 46,373 $ 47,135
========= =========
</TABLE>
See notes to consolidated financial statements.
-8-
<PAGE>
UNAUDITED
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three- and
six-month periods ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Coeur d'Alene Mines Corporation annual report on Form
10-K for the year ended December 31, 1995.
NOTE B: Inventories are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------------------
(In Thousands)
<S> <C> <C>
Ore in process and on leach pads $24,267 $25,727
Dore' inventory 1,490 2,052
Supplies 4,134 3,202
------- -------
$29,891 $30,981
</TABLE>
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 of
cost or market with 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:
The Company's income tax benefit for the three month and six month
periods ended June 30, 1996 results primarily from the recognition of tax
benefits associated with operating losses.
-9-
<PAGE>
NOTE D:
On March 8, 1996, the Company completed a public offering of $140.0
million of Mandatory Adjustable Redeemable Convertible Securities (MARCS). The
Company issued 6,588,235 shares of MARCS which were offered at a public
offering price of $21.25 per share. Each share of MARCS is mandatorily
convertible four years after issuance into 1.111 shares of Common Stock of the
Company, subject to adjustment in certain events, unless earlier converted by
the holder into Common Stock or redeemed for Common Stock by the Company. The
annual dividend payable on the MARCS will be $1.488 per share, payable
quarterly. The dividends will be deducted in computing net income (loss)
attributable to Common Shareholders. On April 8, 1996, the Company sold an
additional 489,598 shares of MARCS to the underwriters as a result of their
exercise of an overallotment option granted to them in connection with the
public offering. With the exercise of the overallotment option, the Company
has sold a total of 7,077,833 shares of MARCS for a total offering price of
$150.4 million which resulted in net proceeds to the Company of $144.6
million.
NOTE E:
On December 21, 1995, the Company announced it had entered into an option
agreement to acquire a 19.9% interest in a publicly listed Australian gold
producer, Gasgoyne Gold Mines NL ("Gasgoyne"), and intended to extend an offer
to Gasgoyne's shareholders to acquire all of the outstanding shares of
Gasgoyne. On January 31, 1996, Coeur made the filings required under the
Australian securities laws with the Australian Securities Commission ("ASC")
to initiate proceedings for the public offer. As of April 26, 1996, on which
date the Company's offer expired, Coeur held or was entitled to hold
approximately 35% of Gasgoyne's outstanding shares which it acquired by
issuing a total of 1,419,832 shares of the Company's Common Stock and paying a
total of approximately $15.4 million to Gasgoyne shareholders. Coeur cash
payments to Gasgoyne shareholders were financed by a loan facility with
Rothschild Australia Ltd. which provided for a maximum of US$50 million of
borrowings at an annual interest rate equal to LIBOR plus 1.5%. Borrowings
under the agreement were $18.9 million as of June 30, 1996. During the second
quarter of 1996, Coeur is reporting its proportionate share of Gasgoyne's net
results of operations pursuant to the equity method of accounting for
investments. Such amounts are reflected as a component of interest and other
income.
-10-
<PAGE>
The following table sets forth a condensed summary of the results of
operations of Gasgoyne for the six month period ended June 30, 1996.
<TABLE>
<CAPTION>
(In thousands - US$) June 30, 1996
-------------
<S> <C>
Total Revenues $18,631
Operating profit $ 6,176
Net Income from
continuing operations $ 2,113
</TABLE>
The following pro forma information reflects the Company's results of
operations as if the Gasgoyne transaction, that occurred in April 1996, had
occurred at the beginning of the periods presented.
<TABLE>
<CAPTION>
For the Six Months Ended
(In thousands - US$) June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Total Income $ 7,898 $ 12,533
Net Income (Loss) $(56,411) $ 317
Net Income (Loss) per share $ (2.68) $ .02
</TABLE>
On January 26, 1996, for a total consideration of approximately US$10.7
million, the Company acquired 5.5 million shares and options to acquire an
additional 5.0 million shares of Orion Resources NL, an Australian gold mining
company ("Orion"). Earlier in 1995 and in 1994, Coeur had acquired a total of
3.33 million shares of Orion for a total cost of US$3.8 million. On March 27,
1996, the Company exercised its option to acquire the additional 5.0 million
shares of Orion. As a result, Coeur holds approximately 19.2% of Orion's
outstanding shares.
NOTE F:
During the second quarter of 1996, the Company determined that certain
adjustments were required to properly reflect the estimated net realizable
values of certain mining properties in accordance with FASB statement No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets
to be disposed of." The Golden Cross Mine was written down by approximately
$53 million due to increased expenditure requirements related to remediation
of ground movement which impacts the tailings impoundment area. An engineering
evaluation is currently underway to determine the full extent and cost of the
remedial measures required to stabilize the on-site land movement. The
write-down included accrual of the anticipated remediation costs. The Faride
property write down of $1.1 million was necessary due to management's decision
not to exercise its final option payment on the project.
NOTE G:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
-11-
<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 metals stockpiles, global and regional
political and economic conditions, and other factors. The Company's currently
operating mines are the Rochester Mine in Nevada, which it wholly owns and
operates; the Golden Cross Mine in New Zealand, in which the Company has an
80% operating interest; the El Bronce Mine, a Chilean gold mine of which the
Company acquired operating control in October 1994; and the Fachinal Mine, a
Chilean gold mine wholly-owned by the Company at which initial production
commenced in late October 1995. In addition, the Company and Callahan own 50%
of Silver Valley Resources ("Silver Valley") which owns and operates the Coeur
and Galena silver mines which commenced operation in June 1996.
Silver Valley estimates that during the mines' first full year of
operations, they will produce a total of approximately 3,000,000 ounces of
silver per annum. Silver Valley is also conducting a development and
exploration program at the properties in connection with which it is expanding
the existing workings, improving infrastructure and conducting diamond
drilling to further increase reserves and mine life. In February of 1996,
Silver Valley announced reopening of the Coeur and Galena Mines. Silver Valley
began shipping concentrates in June, 1996.
As discussed below under "Liquidity and Capital Resources," the Company
expects prior to the end of August 1996 to increase its ownership in the El
Bronce Mine from 51% to 100%. Since the Company took over operations at El
Bronce, it has been able to increase production 42.5% from approximately
40,000 ounces per year to approximately 57,000 ounces forecast in 1996.
Construction of the new Fachinal mine was completed at a total cost of
approximately $41.1 million and initial production commenced in October 1995.
The mine, while currently producing gold and silver, has not reached
commercial production and is in the developmental stage at the end of 1996's
second quarter.
During the second quarter of 1996, the Company determined that certain
adjustments were required to properly reflect the estimated net realizable
values of certain mining properties. The Golden Cross Mine was written down by
approximately $53 million due to increased expenditure requirements related to
remediation of ground movement which impacts the tailings impoundment area. An
engineering evaluation is currently underway to determine the full extent and
cost of the remedial measures required to stabilize the on-site land movement.
The write-down included accrual of the anticipated remediation costs. The
Faride property write down of $1.1
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<PAGE>
million was necessary due to management's decision not to exercise its final
option payment on the project.
A production decision at the Kensington Property is subject to completion
of an updated feasibility study, 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 August 12, 1996 was $387.15 per ounce. With respect to the
permits, the Company is unable to control the timing of their issuance;
however, it is expected that all permits will be received by the end of 1996.
The Company's business plan is to continue to acquire mining properties
and/or 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 and expand the Company's gold
and/or silver production.
This report contains certain forward-looking statements relating to the
Company's gold and silver mining business, including estimated production
data, expected operating schedules and other operating data. Actual
production, operating schedules and results of operations could differ
materially from those projected in the forward-looking statements. The factors
that could cause actual results to differ materially from those projected in
the forward-looking statements include (i) changes in the market prices of
gold and silver, (ii) the uncertainties inherent in the Company's exploratory
and developmental activities, (iii) the uncertainties inherent in the
estimation of gold and silver ore reserves, (iv) changes that could result
from the Company's future acquisition of new mining properties or businesses,
(v) the risks and hazards inherent in the mining business (including
environmental hazards, industrial accidents, weather or geologically related
conditions), (vi) the effects of environmental and other governmental
regulations, and (vii) the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS
ENDED JUNE 30, 1995.
SALES AND GROSS PROFITS
Sales of concentrates and dore' decreased by $4,869,000, or 21%, for the
second quarter of 1996 from the same quarter of 1995 and is primarily
attributable to decreased production at the Golden Cross Mine. While overall
production for the Company increased substantially, revenue decreased due to
the fact that revenues attributable to the Fachinal Mine from 492,595 ounces
of silver and 5,397 ounces of gold are not reflected in the sales of
concentrates due to the fact that the Fachinal Mine has not achieved
commercial production; therefore, it continues to be treated as a development
stage property. As a result, the revenues generated from
-13-
<PAGE>
these preproduction metal sales have been offset against the capital cost of
the mine. The Company has implemented various programs designed to rectify
certain start-up inefficiencies at Fachinal.
Silver and gold prices averaged $5.30 and $394.94 per ounce,
respectively, in the second quarter of 1996 compared with $5.48 and $387.94
per ounce, respectively, in the second quarter of 1995. In the second quarter
of 1996, the Company produced 1,953,220 ounces of silver and 42,260 ounces of
gold compared to 1,679,814 ounces of silver and 41,822 ounces of gold in the
second quarter of 1995.
The cost of mine operations for the second quarter of 1996 increased by
$614,000, or 3%, above the prior year's comparable quarter. The increase is
primarily attributable to increased costs at the Golden Cross Mine as a result
of decreased ore grade and lower ore throughput associated with the land
stabilization issue. Mine operations gross profit as a percent of sales
decreased from 24% in the quarter ended June 30, 1995 to 1% in the quarter
ended June 30, 1996. As a result, gross profits from mine operations decreased
by $5,483,000.
The cash costs of production per ounce of silver on a silver equivalent
basis at the Rochester Mine amounted to $3.66 in the quarter ended June 30,
1996, compared to $3.65 per ounce in the quarter ended June 30, 1995. The cash
costs of production per ounce of gold at the El Bronce Mine were $258.86
during the second quarter of 1996 compared to $337.03 in 1995's same quarter.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $503.17 per ounce in the quarter ended June 30, 1996, compared to
$198.35 per ounce in the prior year's comparable quarter. The increase in
Golden Cross costs of production is primarily attributable to decreased ore
grades and lower ore throughput associated with the land stabilization issue.
INTEREST AND OTHER INCOME
Interest and other income increased by $162,000, or 8%, in the second
quarter of 1996 compared to the second quarter of 1995. The increase is
primarily the result of an increase in the level of the Company's cash and
securities portfolio.
TOTAL INCOME
As a result of the above, the Company's total income decreased by
$5,321,000, or 69%, in the second quarter of 1996 compared to the second
quarter of 1995.
EXPENSES
For the second quarter of 1996, total expenses, prior to the write-down
of mining property, decreased by $1,785,000, or 24%, below the prior year's
comparable quarter. The decrease is primarily due to decreases in interest
expense of $1,859,000 resulting from reduced long-term debt and the effect of
capitalized interest, and idle facilities expenses of
-14-
<PAGE>
$583,000. In the second quarter of 1996, the Company reported the write down
of mining properties of $54,382,000 related to the write down at the Golden
Cross Mine and the Faride property.
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 $57,471,000 for the second quarter of 1996
compared to income from continuing operations before income taxes of $447,000
for the second quarter of 1995. The Company reported an income tax benefit for
the second quarter of 1996 of $590,000 compared to $791,000 for the same
period of 1995. As a result, the Company reported a net loss from continuing
operations of $56,881,000, or $2.63 per primary share, for the second quarter
of 1996 compared to income from continuing operations of $1,238,000, or $.08
per primary share, for 1995'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 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 reported $2,169,000 from discontinued
operations (net of taxes).
NET INCOME (LOSS)
As a result of the above, the Company reported a net loss of $56,881,000,
or $2.63 per primary share ($2.75 attributable to common shareholders), for
the second quarter of 1996 compared with $3,407,000, or $.22 per primary share
attributable to common shareholders. ($.19 per fully diluted share), for the
second quarter of 1995. Fully diluted earnings per share is not presented
during the second quarter of 1996 because it is antidilutive.
SIX MONTHS ENDED JUNE 30, 1996, COMPARED TO SIX MONTHS ENDED JUNE 30,
1995
SALES AND GROSS PROFITS
Sales of concentrates and dore' decreased by $151,000, or less than 1%,
for the six months ended June 30, 1996 compared with the same period of 1995
and was primarily attributable to decreased production at Golden Cross in 1996
compared to the same period in 1995. While overall production for the Company
increased substantially, revenues decreased due to the fact that revenues from
1,067,995 ounces of silver and 11,832 ounces of gold attributable to the
Fachinal Mine are not reflected in the sales of concentrates due to the fact
that the Fachinal Mine has not achieved commercial production; therefore, it
continues to be treated as a development stage property. As a result, a net
operating loss of approximately $281,000 at the mine was capitalized during
the six months
-15-
<PAGE>
ended June 30, 1996. The Company has implemented various programs designed to
rectify certain start-up inefficiencies at Fachinal. During the first six
months of 1996, the Company produced 4,144,905 ounces of silver and 89,462
ounces of gold compared to 3,208,631 ounces of silver and 78,394 ounces of
gold in the first six months of 1995. Silver and gold prices averaged $5.42
and $395.08 per ounce, respectively, in the first six months of 1996 compared
to $5.09 and $383.52 per ounce, respectively, in the same period in 1995.
The cost of mine operations in the first six months of 1996 increased by
$4,170,000, or 12%, over the first six months of 1995. The increase is
primarily attributable to an increase in the costs of Golden Cross operations.
As a result, gross profit from mine operations decreased by $4,321,000, or
57%, in the first six months of 1996 from 1995's comparable period. Mine
operations gross profit as a percent of sales decreased from 18% in the six
months ended June 30, 1995 to 8% in the six months ended June 30, 1996.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $403.33 per ounce in the six months ended June 30, 1996, compared
to $217.27 in the prior year's comparable six month period. The increase is
primarily attributable to decreased mine ore grades and costs associated with
the land stabilization program. The cash costs of production per ounce of
silver on a silver equivalent basis at the Rochester Mine amounted to $3.65
per ounce in the six months ended June 30, 1996, compared to $3.80 in the six
months ended June 30, 1995. The cash costs of production per ounce of gold at
the El Bronce Mine were $251.78 for the six months ended June 30, 1996
compared to $303.12 for the six months ended June 30, 1995.
INTEREST AND OTHER INCOME
Interest and other income in the first half of 1996 decreased by
$293,000, or 7%, compared to the first half of 1995. The decrease is primarily
a result of a decrease in the management fee income resulting from the
Company's interest in the El Bronce Mine.
TOTAL INCOME
As a result of the above, the Company's total income decreased by
$4,614,000, or 39%, in the six months ended June 30, 1996, compared with the
prior year's comparable period.
EXPENSES
Total expenses in the first half of 1996, prior to the write-down of
mining properties, decreased by $4,504,000, or 31%, compared with the prior
year's six-month period. The decrease is primarily attributable to decreases
of $4,157,000 in interest expense resulting from reduced long-term debt and
the effect of capitalized interest and $1,124,000 in idle facilities expense.
In the second quarter of 1996, the Company reported
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<PAGE>
the write-down of mining properties of $54,382,000 related to the Golden Cross
Mine and the Faride property.
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 $57,262,000 in the first six months of 1996
compared to $2,770,000 in the first six months of 1995. The Company reported
an income tax benefit of $514,000 for the first six months of 1996, compared
to $642,000 in the first six months of 1995. As a result, the Company reported
a net loss from continuing operations of $56,748,000, or $2.70 per share, in
the first six months of 1996, compared to a net loss of $2,128,000, or $.14
per share, in the first six months of 1995.
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 $2,360,000, or $.15 per share.
NET INCOME (LOSS)
As a result of the above, the Company reported a net loss of $56,748,000,
or $2.70 per share ($2.85 attributable to common shareholders), in the first
six months of 1996, compared to net income of $232,000, or $.01 per share, in
the prior year's comparable six-month period.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL; CASH AND CASH EQUIVALENTS
The Company's working capital at June 30, 1996 was approximately $184.2
million compared to approximately $105.6 million at December 31, 1995. The
ratio of current assets to current liabilities was 5.4 to 1 at June 30, 1996,
compared with 6.0 to 1 at December 31, 1995. The increase in the Company's
working capital at June 30, 1996 compared to December 31, 1995 is primarily
attributable to the issuance of $150 million of mandatory adjustable
convertible securities during the first half of 1996.
Net cash consumed by operating activities for the first six months of
1996 was $1.1 million compared with $1.6 million provided by operating
activities during the first six months of 1995. A total of $125.7 million of
cash was used in investing activities in the six months of 1996 compared to
$17.7 million provided by investing activities in the first six months of
1995. Of the $125.7 million used in investing activities during the first six
months of 1995, $115.0 million relates to the purchase of investment grade
intermediate term investments. The Company's financing activities provided
$156.7 million of cash during the
-17-
<PAGE>
first six months of 1996 compared with $12.8 million for the first six months
of 1995. As a result of the above, the Company's net cash increase for the
first six months of 1996 was $29.9 million compared with a net cash increase
of $32.0 million for the first six months of 1995.
For the years ended June 30, 1996 and 1995, the Company expended
$1,315,000 and $1,279,000, respectively, in connection with environmental
compliance activities at its operating properties. At June 30, 1996, the
Company had expended a total of approximately $8.2 million on environmental
and permitting activities at the Kensington property, which expenditures have
been capitalized as part of its development cost.
ACQUISITION OF REMAINING EL BRONCE INTEREST
The Company expects prior to the end of August 1996 to consummate the
purchase of 49% of the shares of Compania Minera CDE El Bronce. In July 1994,
the Company had made an agreement pursuant to which the Company acquired
operating control, a 51% interest in operating profits and an option to
acquire a 51% equity interest in the producing El Bronce Mine. With the
acquisition of the additional interest, the Company will own 100% of the mine.
The terms of the purchase are $10,500,000 cash, prepayment of the remainder of
the option price in the approximate amount of $3,800,000 and a net smelter
return royalty of 3% to be paid quarterly.
PUBLIC OFFERING OF MARCS
On March 8, 1996, the Company completed a public offering of $140.0
million of Mandatory Adjustable Redeemable Convertible Securities (MARCS). The
Company issued 6,588,235 shares of MARCS which were offered at a public
offering price of $21.25 per share. Each share of MARCS is mandatorily
convertible four years after issuance into 1.111 shares of Common Stock of the
Company, subject to adjustment in certain events, unless earlier converted by
the holder into Common Stock or redeemed for Common Stock by the Company. The
annual dividend payable on the MARCS will be $1.488 per share, payable
quarterly. On April 8, 1996, the Company sold an additional 489,598 shares of
MARCS to the underwriters as a result of their exercise of an overallotment
option granted to them in connection with the public offering. With the
exercise of the overallotment option, the Company sold a total of 7,077,833
shares of MARCS for a total offering price of $150.4 million which resulted in
net proceeds to the Company of $144.6 million.
ACQUISITIONS OF INTERESTS IN AUSTRALIAN GOLD MINING COMPANIES
GASGOYNE. As stated above, Coeur's Offer for outstanding Gasgoyne shares
expired on April 26, 1996. Pursuant to the Offer, which was conducted on the
basis of 7 Coeur shares of Common Stock plus A$96 in exchange for each 100
Gasgoyne shares, Coeur issued a total of 1,419,832 shares of Common Stock and
paid a total of approximately A$19.5 (or US$15.4 based on prevailing currency
exchange rates) to accepting Gasgoyne shareholders, and acquired a total of
20,293,691 Gasgoyne shares
-18-
<PAGE>
constituting 35.4% of Gasgoyne's outstanding shares (or 35.1% of Gasgoyne's
outstanding shares and shares subject to outstanding options). Pursuant to the
Sons of Gwalia offer for Gasgoyne shares that also expired on April 26, 1996,
Sons of Gwalia acquired 35,159,497 Gasgoyne shares constituting approximately
61.4% of Gasgoyne's outstanding shares (or 60.9% of Gasgoyne's outstanding
shares and shares subject to outstanding options). Coeur's cash payments to
Gasgoyne shareholders were financed by a loan facility with Rothschild
Australia Limited, which provides for a maximum of US$50 million of borrowings
at an annual interest rate equal to LIBOR plus 1.5%.
ORION. On January 24, 1996, at a cost of US$10.7 million, Coeur acquired
from Homestake Mining Company ("Homestake") 5.5 million shares of and an
option to acquire an additional 5.0 million shares of Orion held by Homestake.
(Earlier in January 1995 and in the last quarter of 1994, Coeur had acquired
3.3 million outstanding Orion shares for a total cost of approximately US$3.8
million.) On March 26, 1996, Coeur exercised the options previously acquired
from Homestake for the additional 5.0 million Orion shares for a purchase
price of US$3.8 million. As a result of the above acquisitions of Orion
shares, which were funded by Coeur's own cash resources, Coeur presently owns
approximately 19.2% of Orion's outstanding shares.
FEDERAL NATURAL RESOURCES ACTION
On March 22, 1996, an action was filed in the United States District
Court for the District of Idaho (Civ. No. 96-0122-N-EJL) by the United States
against various defendants, including the Company, asserting claims under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
and the Clean Water Act for alleged damages to Federal natural resources in
the Coeur d'Alene River Basin of northern Idaho as a result of releases of
hazardous substances from mining activities conducted in the area since the
late 1800s. No specific monetary damages are identified in the complaint.
However, in July 1996, the government indicated damages may approximate $982
million. The United States asserts that the defendants are jointly and
severally liable for costs and expenses incurred by the United States in
investigation, removal and remedial action and the restoration or replacement
of affected natural resources. In 1986 and 1992 the Company had settled
similar issues with the State of Idaho and the Coeur d'Alene Indian Tribe,
respectively, and believes that those prior settlements exonerate it of
further involvement with alleged natural resource damage in the Coeur d'Alene
River Basin. Accordingly, the Company intends to vigorously defend this matter
and at an appropriate stage will seek to be dismissed from this action. At
this initial stage of the proceedings it is not possible to predict its
ultimate outcome.
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<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 14, 1996.
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
17,114,900 shares for and 100,293 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
17,112,438 shares for, 49,724 shares against, with 53,031 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 6, 1996 between Registrant
and N.M. Rothschild & Sons, Ltd. (Australia)
11 Statement regarding computation of per share earnings.
(b) REPORTS ON FORM 8-K
On April 30, 1996, the Company filed a Form 8-K reporting under Item
2 thereof information relating to the expiration and results of the
Company's Offer for outstanding shares of Gasgoyne Gold Mines N.L.
(an Australian gold company). Amendment No. 1 to this report was
filed on May 10, 1996. Financial statements and pro forma financial
information to the Company's acquisition of Gasgoyne was furnished by
Amendment No. 2 to Form 8-K which was filed on July 1, 1996.
On July 12, 1996, the Company filed a Form 8-K reporting the write
down of its Golden Cross property.
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<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 13, 1996 /s/DENNIS E. WHEELER
---------------------
Dennis E. Wheeler
Chairman, President and
Chief Executive Officer
Dated August 13, 1996 /s/JAMES A. SABALA
------------------
James A. Sabala
Senior Vice President
(Principal Financial and
Accounting Officer)
EXHIBIT 10(a)
DATED 6 JUNE 1996
COEUR D'ALENE MINES CORPORATION
("the Borrower")
EACH BANK OR FINANCIAL INSTITUTION
named in Schedule 1
(each a "Participant")
ROTHSCHILD AUSTRALIA LIMITED
("the Agent" and "the Security Trustee")
-------------------------------
SYNDICATED FACILITY AGREEMENT
-------------------------------
MIDDLETONS MOORE & BEVINS
Solicitors
Level 6
7 Macquarie Place
SYDNEY NSW 2000
Tel: 390 8100
Fax: 247 2866
DX 10263 SSE
Ref: MXF.ROTH7360-061
<PAGE>
<TABLE>
TABLE OF CONTENTS
<C> <C>
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 11
1.3 Determination, statement and certificate conclusive 12
1.4 Document or agreement 12
2. COMMITMENTS 12
2.1 Commitments 12
2.2 Obligations several 12
3. CANCELLATION OF COMMITMENTS 13
3.1 During Availability Period 13
3.2 Allocation among Participants 13
3.3 At end of Availability Period 13
4. PURPOSE 13
5. LOAN FACILITY 13
5.1 Advance 13
5.2 Revolving Facility 14
5.3 Loan Limit 14
5.4 Substitute Bases 14
5.5 15
6. DRAWDOWN NOTICES 15
6.1 When notice to be given 15
6.2 Contents of Drawdown Notices 15
6.3 Notification of Participants 16
7. REPAYMENT 16
7.1 Repayment 16
7.2 Allocation among Participants 16
8. PREPAYMENTS AND REDRAWINGS 16
8.1 Voluntary prepayments 16
8.2 Interest and break costs 16
8.3 Apportionment 17
8.4 US$ Present Value Excess 17
9. INTEREST 17
9.1 Interest 17
9.2 Interest Periods 17
9.3 Market Failure 18
10. EXTENSION OF EXPIRY DATE 18
11. PAYMENTS 19
11.1 Manner 19
11.2 Payment to be made on Business Day 19
11.3 Distribution by Agent 19
11.4 Appropriation where Insufficient moneys available 19
11.5 Borrower Withholding 20
11.6 Agent Withholding 20
11.7 Agent Reimbursement 20
11.8 Agent to Receive Full Payment 21
11.9 Unanticipated default 21
11.10 Rounding 21
12. CHANGES IN LAW 22
12.1 Increased costs 22
12.2 Minimisation 23
12.3 Survival of obligations 23
12.4 Prepayment on increased costs 23
13. ILLEGALITY 23
14. CONDITIONS PRECEDENT 24
14.1 Conditions precedent to First Drawdown Notice 24
14.2 Conditions precedent to each drawdown 25
14.3 Conditions precedent waiver 26
15. REPRESENTATIONS AND WARRANTIES 26
15.1 Representations and warranties 26
15.2 Reliance on representations and warranties 31
16. UNDERTAKING 31
16.1 General undertakings 31
16.2 Undertakings relating to Mortgaged Property 35
16.3 Financial Undertakings 36
16.4 Share Ratio Undertaking 36
17. EVENTS OF DEFAULT 36
17.1 Events of Default 36
17.2 Consequences 41
17.3 Default Conversion and Indemnity 41
17.4 Currency Indemnity 42
18. INTEREST ON OVERDUE AMOUNTS 42
18.1 Accrual and payment 42
18.2 Rate 43
19. FEES 43
19.1 Establishment fee 43
19.2 Commitment fee 44
20. INDEMNITIES 44
21. CONTROL ACCOUNTS 45
22. EXPENSES 45
23. STAMP DUTIES AND TAXES 45
24. SET-OFF 46
25. WAIVERS, REMEDIES CUMULATIVE 46
26. CONSENTS AND APPROVALS 47
27. ACKNOWLEDGEMENT BY BORROWER AND GUARANTORS 47
28. SEVERABILITY OF PROVISIONS 47
29. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES 47
30. MORATORIUM LEGISLATION 48
31. ASSIGNMENTS 48
31.1 Assignment by Borrower 48
31.2 Assignment by Participants 48
31.3 Substitution certificates 48
31.4 Disclosure 49
31.5 No increased costs 49
32. RELATIONSHIP OF PARTICIPANTS TO AGENT 49
32.1 Authority 49
32.2 Instructions extent of discretion 50
32.3 No obligation to Investigate authority 50
32.4 Agent not a fiduciary 50
32.5 Exoneration 50
32.6 Delegation 51
32.7 Reliance on documents and experts 51
32.8 Notice of transfer 51
32.9 Notice of default 51
32.10 Agent as Participant and banker 51
32.11 Indemnity to Agent 51
32.12 Independent Investigation of credit 52
32.13 No monitoring 52
32.14 Information 52
32.15 Replacement of Agent 52
32.16 Amendment of Transaction Documents 53
33. PROPORTIONATE SHARING 54
33.1 Sharing 54
33.2 Refusal to join In action 54
34. AGENT DEALINGS 55
35. CONFIDENTIALITY 55
35.1 Confidentiality 55
35.2 Permitted disclosure 55
35.3 Survival of obligation 55
36. NOTICES 55
37. SERVICE OF PROCESS 56
38. AUTHORISED OFFICERS 57
39. GOVERNING LAW AND JURISDICTION 57
40. COUNTERPARTS 57
41. ATTORNEY 57
</TABLE>
<PAGE>
SYNDICATED FACILITY AGREEMENT
AGREEMENT dated 6 June 1996 between:
1. COEUR D'ALENE MINES CORPORATION (ARBN 072 498 125) a company
incorporated in the State of Idaho, United States of America with its
registered office at 505 Front Avenue, Coeur d'Alene, Idaho 83814,
United States of America and registered under the Corporations Law as a
foreign corporation (the "Borrower");
2. EACH BANK OR FINANCIAL INSTITUTION named in Schedule 1 (each a
"Participant");
3. ROTHSCHILD AUSTRALIA LIMITED (ACN 008 458 366) incorporated in
Australian Capital Territory of Level 15, 1 O'Connell Street, Sydney, as
agent for the Participants (in its capacity as agent, the "Agent" and in
its capacity as security trustee, the "Security Trustee")
RECITAL
The Borrower has requested the Participants to provide the Borrower with
facilities under which financial accommodation may be made available to the
Borrower.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context requires otherwise.
"A$ Advance" means the outstanding principal amount of an Advance drawn in A$.
"A$ Interest Rate" in relation to an Interest Period means:
(a) the rate determined by the Agent to be the average bid rate (rounded up,
if necessary, to the nearest two decimal places) displayed at or about
10.15am (Sydney time) on the first day of that Interest Period on the
Reuters screen BBSW page for a term equivalent or comparable to the
Interest Period; or
(b) if:
(i) for any reason there is no rate displayed for a period equivalent
or comparable to that Interest Period; or
<PAGE>
-2-
(ii) the basis on which that rate is displayed is changed and in the
opinion of the Agent that rate ceases to reflect the Participants'
cost of funding to the same extent as at the date of this
Agreement,
then the A$ Interest Rate will be the rate determined by the Agent to be
the average of the buying rate quoted to the Agent by each of three
Australian banks selected by the Agent at or about that time on that
date for bills of exchange which are accepted by an Australian bank
selected by the Agent and which have a term equivalent to the Interest
Period. If there are no buying rates the rate will be the rate
determined by the Agent to be its cost of funds.
"Accounting Principles" means generally accepted accounting principles in the
United States of America consistently applied except to the extent disclosed
in the Accounts and complying with all applicable laws.
"Accounts" means the financial accounts of the Borrower on a consolidated
basis as referred to in Clause 16.1(a)(i) and (ii) prepared in accordance with
the Accounting Principles.
"Acquisition Shares" means:
(i) all shares or other securities acquired by or on behalf of the Borrower
in Gasgoyne; and
(ii) all shares or other securities acquired by or on behalf of the Borrower
in Orion (other than the Excluded Orion Shares).
"Advance" means each loan amount drawn down under Clause 5.1 or the principal
amount thereof outstanding from time to time.
"Affiliate" means, in respect to a Person, any other Person which directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with such Person where the term "control" means:
(a) the power to vote 50% or more of the securities or other equity
interests of a Person having ordinary voting power; or
(b) the possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise,
and is deemed to include a "Related Body Corporate" as defined under the
Corporations Law.
"Australian Dollars", "AUD", and "A$" means the lawful currency of Australia.
<PAGE>
-3-
"Authorisation" includes:
(a) any consent, authorisation, registration, filing, lodgement, agreement,
notarisation, certificate, permission, licence, approval, authority or
exemption from, by or with a Governmental Agency; or
(b) in relation to anything which will be fully or partly prohibited or
restricted by law if a Governmental Agency intervenes or acts in any way
within a specified period after lodgement filing, registration or
notification, the expiry of that period without intervention or action.
"Authorised Officer" means:
(a) in respect of the Borrower, any person holding the office of Secretary,
President or Vice President, or any person from time to time nominated
as an Authorised Officer by the Borrower by a notice to the Agent
accompanied by certified copies of signatures of all new persons so
appointed; and
(b) in respect of the Agent or a Participant, any person whose title or
acting title includes the word "Manager", "Company Secretary",
"Associate Director" or "Director" or cognate expressions or any person
from time to time nominated as an Authorised Officer by the Agent or the
Participant, as the case may be, by a notice to the Borrower.
"Availability Period" means the period commencing on the date the Conditions
Precedent have been satisfied and expiring on the Business Day before the
Expiry Date.
"Base Rate" means for A$ Advances, the A$ Interest Rate or for US$ Advances,
the US$ Interest Rate, as the case may be;
"Business Day" means a weekday on which banks are open for general banking
business in Sydney and for the purposes of determining the US$ Interest Rate
means a day on which the relevant financial markets are open in London, as the
case may be.
"Code" means the United States Internal Revenue code of 1986, and the rules
and regulations thereunder, each as amended or supplemented from time to time.
"Collateral Security" means any Security Interest, Guarantee or other document
or agreement at any time created or entered into as security for any Secured
Moneys.
"Commitment Fees" means the Commitment Fees referred to in Clause 18.2
"Conditions Precedent" means the Conditions Precedent specified in Clause 14.1
and 14.2.
"Control" means the power directly or indirectly to control the membership of
the board of directors of a corporation or to otherwise directly or indirectly
direct or control the direction of
<PAGE>
-4-
the management and policies of that corporation whether by the ownership of
any interest in shares of that corporation or otherwise.
"Corporations Law" means as applicable the Corporations Law of the
Commonwealth of Australia as applying in each State and Territory of Australia
and any legislation amending or replacing it.
"Currency Equivalent" means in respect of any one currency, the equivalent in
another currency converted at the Spot Rate.
"Current Assets" means at any time the aggregate amount shown by the Accounts
as total current assets.
"Current Liabilities" means at any time the aggregate amount shown by the
Accounts as total current liabilities.
"Current Ratio" means Current Assets divided by Current Liabilities.
"Drawdown Date" means the date on which any accommodation under this Agreement
is or is to be drawn utilising any Undrawn Loan Commitments.
"Drawdown Notice" means a notice under Clause 6.
"Drawn Participation" means in respect of a Participant its share of the
Principal Outstanding, being the proportion of the Principal Outstanding which
that Participant's Loan Commitment bears to the aggregate of all Loan
Commitments.
"Employee Benefit Plan" means any employee benefit plan within the meaning of
Section 3(3) of ERISA which (a) is maintained for the employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding
six years been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"ERISA" means the United States Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended or modified
from time to time.
"ERISA Affiliate" means any Person who, together with the Borrower, is treated
as a single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.
"Establishment Fee" means the establishment fee referred to in Clause 19.1.
"Event of Default" means any of the events specified in Clause 17.
"Excluded Orion Shares" means the following shares in Orion which were
acquired prior to the date of this document:
<PAGE>
-5-
<TABLE>
<CAPTION>
Certificate Number Number of Ordinary Sahres
<S> <C>
10969 5,000,000
10967 5,500,000
10990 3,330,000
----------
13,830,000
</TABLE>
"Expiry Date" means the earlier of either:
(a) the date occurring 13 months after the date of first drawdown of an
Advance under this Agreement; or
(b) 30 April 1997;
subject to any extension under Clause 10.
"Financial Indebtedness" means any indebtedness, present or future, actual or
contingent in respect of moneys borrowed or raised or any financial
accommodation whatever. Without limitation, it includes indebtedness under or
in respect of a negotiable or other financial instrument, subordinated
debentures, Guarantee, interest gold or currency exchange, hedge or
arrangement of any kind, redeemable share, share the subject of a Guarantee,
discounting arrangement, finance or capital Lease, hire purchase, deferred
purchase price (for more than 90 days) of an asset or service or an obligation
to deliver goods or other property or provide services paid for in advance by
a financier or in relation to another financing transaction.
"Financial Undertakings" means each of the obligations of the Borrower
contained in Clause 16.3.
"Funded Indebtedness" means all indebtedness actual or contingent in respect
of moneys borrowed or raised or any financial accommodation whatsoever and is
deemed to include all actual or contingent liabilities in respect of
guarantees and letters of credit.
"Gasgoyne" means Gasgoyne Gold Mines NL ACN 009 212 382 a company incorporated
in the State of Western Australia, Australia.
"Gasgoyne's Total Indebtedness" means on a consolidated basis the aggregate of
Gasgoyne's total current and non-current liabilities as disclosed by its
financial statements from time to time prepared in accordance with generally
accepted accounting principles in Australia.
"Gasgoyne's Net Tangible Worth" means on a consolidated basis the aggregate of
Gasgoyne's total assets less intangible assets as disclosed by its financial
statements from time to time prepared in accordance with generally accepted
accounting principles in Australia.
<PAGE>
-6-
"Governmental Agency" means any government or any governmental,
semi-governmental or judicial entity or authority in any jurisdiction. It also
includes any self-regulatory organisation established under statute or any
stock exchange.
"Guarantee" means any guarantee, indemnity, letter of credit, performance
bond, legally binding letter of comfort or suretyship, or any other obligation
or irrevocable offer (whatever called and of whatever nature):
(a) to pay or to purchase;
(b) to provide funds (whether by the advance of money, the purchase of or
subscription for shares or other securities, the purchase of assets,
rights or services, or otherwise) for the payment or discharge of;
(c) to indemnify against the consequences of default in the payment of, or
(d) to be responsible otherwise for, an obligation or indebtedness of
another person, a dividend, distribution, capital or premium on shares,
stock or other interests, or the insolvency or financial condition of
another person.
"Guarantor" means at any time any person which has given a Guarantee in
respect of any of the Secured Monies.
"Indemnified Party" means the Agent, a Participant or the Security Trustee.
"Intangible Assets" means at any time the aggregate intangible assets of the
Borrower as calculated by the Agent on the basis of the Accounts by reference
to the Accounting Principles and the categories of assets disclosed in the
Accounts, and includes goodwill.
"Interest Coverage Ratio" means the Operating Profit during the period of
calculation divided by Interest Expense during that period.
"Interest Expense" means all interest and amounts in the nature of interest or
having similar purpose or effect to interest (including as a component of
Lease payments) which is paid or payable by the Borrower and excludes
dividends payable on Shareholders' Equity.
"Interest Period" means each of the periods so described in Clause 9.2;
"Ioma Call Option" means call option agreement dated 20 December 1995 between
Ioma and the Borrower under which Ioma Pty Limited granted to the Borrower an
option to purchase 10,611,300 shares in Gasgoyne.
"Lease" means:
(a) any lease, charter, hire purchase or hiring arrangement of any property
(including, without limitation, a right to use intellectual property or
a franchise);
(b) an agreement under which property is or may be used or operated by a
person other than the owner; or
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(c) an agreement or arrangement under which property, is or may be managed
or operated by a person other than the owner, and the operator or
manager or its Affiliate (whether in the same or another agreement or
arrangement) is required to make or assure minimum, fixed and/or
floating rate payments of a periodic nature.
"Liquidation" includes administration, receivership, compromise, arrangement,
amalgamation, official management, reconstruction, winding up, dissolution,
assignment for the benefit of creditors, arrangement or compromise with
creditors or bankruptcy and includes without limitation the following actions
by or involving the Borrower:
(i) commencement of a voluntary case under the United States bankruptcy
laws;
(ii) filing a petition seeking to take advantage of any other laws of
Australia, the United States or any other jurisdiction, relating to
bankruptcy, insolvency, reorganisation, winding up or composition for
adjustment of debts;
(iii) consenting to or failing to contest in a timely and appropriate manner
any petition filed against it in an involuntary case under any such
bankruptcy or other laws;
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of a substantial part of
its property;
(v) admit in writing its inability to pay its debts as they become due; (vi)
make a general assignment for the benefit of creditors; or (vii) take
any corporate, partnership or other action for the purpose of
authorising any of the foregoing.
"Loan Commitment" in relation to a Participant means the amount opposite each
Participant's name in Schedule 1.
"Loan Facility" means the provision of Advances in A$ or US$ pursuant to the
terms and conditions of this Agreement.
"Loan Facility Limit" means the aggregate of the Loan Commitments as at the
date of this Agreement, being US$50,000,000.
"Majority Participants" means Participants whose Loan Commitments are more
than two thirds of the aggregate of the Loan Commitments.
"Margin" means one point five per centum (1.5%) per annum.
"Material Adverse Effect" means a material adverse effect on the ability of
the Borrower to perform its obligations under any of the Transaction
Documents, on the value of any of the Security or on the financial condition
or business of the Borrower.
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"Mortgage" means a deed between the Security Trustee and the Borrower under
which the Borrower mortgages by first ranking charge all its interest in the
Acquisition Shares and other rights, proceeds and benefits arising therefrom.
"Mortgaged Property" means the property mortgaged or charged by a Security or
any Collateral Security.
"Mortgaged Shares" means all the ordinary shares or other securities in
Gasgoyne or Orion which is Mortgaged Property.
"Net Tangible Worth" means at any time Tangible Assets less Total Liabilities.
"Operating Profit" means the total operating income less operating expenses
over the relevant period as calculated by the Agent based upon the Accounts
(where operating expenses does not include Interest Expense, dividends on
Shareholders' Equity or depreciation but does include income tax).
"Original US$ Value of the Principal Outstanding" means at the relevant time
the aggregate of:
(a) the total Principal Outstanding of US$ Advances; and,
(b) the aggregate of each A$ Advance converted to US$ at the relevant
Currency Equivalent as at the Drawdown Date of each A$ Advance
respectively.
"Orion" means Orion Resources NL ACN 009 182 825 a company incorporated in
Western Australia.
"PBGC" means the Pension Benefit Guaranty Corporation in the United States or
any successor agency.
"Participant" means a bank or financial institution named in Schedule 1 or any
substituted Participant under Clause 31.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (a) is maintained for employees of the Borrower or any
ERISA Affiliates or (b) has at any time within the preceding six years been
maintained for the employees of the Borrower or any of its current or former
ERISA Affiliates.
"Person" means an individual, corporation, partnership, association, trust,
business trust, joint venture, limited liability company, joint stock company,
pool, syndicate, sole proprietorship, unincorporated organisation,
Governmental Agency or any other form of entity or group thereof specifically
listed herein.
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"Potential Event of Default" means any event or circumstance which with the
giving of notice or passage of time or both would become an Event of Default.
"Present US$ Value of the Principal Outstanding" means at the relevant time
the aggregate of:
(a) the total Principal Outstanding of US$ Advances; and
(b) the aggregate of each A$ Advance converted to US$ at the Currency
Equivalent at that time.
"Principal Outstanding" means the aggregate principal amount of all A$
Advances and US$ Advances which remain outstanding from time to time.
"Quarter" means each 3 monthly period ending on 31 March, 30 June, 30
September and 31 December in each year.
"Secured Moneys" means all money which the Borrower (whether alone or with
another person) is or at any time may become actually or contingently liable
to pay to or for the account of an Indemnified Party (whether alone or with
another person) for any reason whatever under or in connection with a
Transaction Document.
It includes, without limitation, money by way of principal, interest, fees,
costs, indemnities, charges, duties or expenses or payment of liquidated or
unliquidated damages for which the Borrower is or at any time may become so
liable under or in connection with a Transaction Document, or as a result of a
breach of or default under or in connection with a Transaction Document.
Where the Borrower would have been liable but for its Liquidation, it will be
taken still to be liable.
"Security" means:
(a) the Mortgage;
(b) all share scrip issued from time to time in respect of the Acquisition
Shares;
(c) share transfers executed in blank by the Borrower to be held by the
Security Trustee as security; and
(d) such incidental or related documentation as the Agent may require.
"Security Interest" includes any mortgage, pledge, lien, encumbrance or charge
or any security or preferential interest or arrangement of any kind or any
other right of, or arrangement with, any creditor to have its claims satisfied
in priority to other creditors with, or from the proceeds of, any asset.
Without limitation it includes retention of title other than in the ordinary
course of day-to-day trading and a deposit of money by way of security but it
excludes a charge or lien arising in favour
<PAGE>
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of a Governmental Agency by operation of statute unless there is default in
payment of moneys secured by that charge or lien.
"Security Trust Deed" means the Security Trust Deed entered into between the
Borrower, the Security Trustee and the Participants prior to the date of this
Agreement in relation amongst other things to the Security.
"Share Ratio Undertaking" means the obligations of the Borrower under Clause
16.4.
"Shareholders' Equity" means Shareholders' Equity of the Borrower as disclosed
in the Accounts.
"Spot Rate" means the Agent's Sydney office spot rate of exchange for the
purchase of the relevant currency in accordance with the Agent's usual market
practice. The Agent's determination of the Spot Rate from time to time is
prima facie correct.
"Subordinated Debentures" means any debentures issued by the Borrower which
are totally subordinated to the Secured Moneys.
"Subsidiary" means as to any Person, any corporation, partnership or other
entity which more than fifty percent (50%) of the outstanding capital stock or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity is at the time, directly or indirectly, owned by or the
management is otherwise controlled by such Person (irrespective of whether, at
the time, capital stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) and is deemed to include a subsidiary as defined under the
Corporations Law.
"Takeover" means the offer by the Borrower to acquire shares in Gasgoyne
pursuant to Offer and Part A Statement dated 19 March 1996 (as varied or
amended with approval of the Agent).
"Tangible Assets" means at any time the aggregate amount of the assets
disclosed by the Accounts less all Intangible Assets.
"Tax" includes any tax, levy, impost, deduction, charge, rate, duty,
compulsory loan or withholding which is levied or imposed by a Governmental
Agency, and any related interest, penalty, charge, fee or other amount.
"Termination Event" means:
(a) a "Reportable Event" described in Section 4043 of ERISA; or
(b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA; or
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(c) the termination of a Pension Plan, the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension Plan amendment as
a termination under Section 4041 of ERISA;
(d) the institution of proceedings to terminate, or the appointment of a
trustee with respect to any Pension Plan by the PBGC;
(e) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of or the appointment of a
trustee to administer, any Pension Plan; or
(f) the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan;
(g) the imposition of a lien pursuant to Section 412 of the Code or Section
302 of ERISA;
(h) any event or condition which results in the reorganisation or insolvency
of a Multiemployer Plan under Sections 4241 or 4245 of ERISA;
(i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by
PBGC of proceedings to terminate a Multiemployer Plan under Section 4042
of ERISA.
"Total Liabilities" means at any time the aggregate of the total current and
long term liabilities as shown by the Accounts and excludes Shareholders'
Equity.
"Transaction Document" means this Agreement, the Security, the Security Trust
Deed, any Collateral Security or a document or agreement entered into or
provided under or in connection with, or for the purpose of amending or
novating, any of the above. It includes, without limitation, an undertaking by
or to a party or its lawyers under or in relation to any of the above.
"Undrawn Loan Commitment" means a Participant's Loan Commitment less its Drawn
Participation.
"United States Dollars", "USD" and "US$" means the lawful currency of United
States of America.
"US$ Advance" means the outstanding principal amount of an Advance drawn in
US$.
"US$ Interest Rate" means in relation to an Interest Period the rate
determined by the Agent to be the arithmetic mean (rounded up if necessary to
the nearest integral multiple of 1/16%) of:
(a) the screen rates shown on the Reuters page "LIBO" or such other page as
may replace page "LIBO" on that system for the purpose of displaying
offered rates for United States Dollar deposits being the rate per annum
at which United States Dollar deposits are offered for a period equal or
comparable to such period at or about 11.00am (Sydney time) on the first
day of such period; or
(b) if at or about such time on any relevant day less than 2 such rates
appear on Reuters, the rates notified to the Agent by each of three
leading banks as being the rate per annum at which United States Dollar
deposits in an amount comparable to the amount of such sum
<PAGE>
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are offered to that bank for such period by prime banks in the London or
Singapore (as selected by the Agent) interbank market at or about
11.00am (Sydney time) on the first day of such period.
If there are no such rates available the rate will be the rates determined by
the respective Participants to be their cost of US$ funds and the US$ Interest
Rate shall be calculated in respect of each Drawn Participation accordingly.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise.
(a) The singular includes the plural and the converse.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(d) A reference to a person, corporation, trust, partnership, unincorporated
body or other entity includes any of the foregoing.
(e) A reference to a Clause, Annexure or Schedule is a reference to a clause
of, or annexure or schedule to this Agreement.
(f) A reference to a party to this Agreement or another agreement or
document includes the party's successors and permitted substitutes or
assigns.
(g) A reference to an agreement or document is to the agreement or document
as amended, novated, supplemented or replaced from time to time, except
to the extent prohibited by this Agreement.
(h) A reference to legislation or to a provision of legislation includes a
modification or re-enactment of it, a legislative provision substituted
for it and a regulation or statutory instrument issued under it.
(i) A reference to "writing" includes a facsimile transmission and any means
of reproducing words in a tangible and permanently visible form.
(j) A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing.
(k) A reference to an "asset" includes any real or personal, present or
future, tangible or intangible property or asset and any right,
interest, revenue or benefit in, under or derived from the property or
asset.
(l) An Event of Default "subsists" until it has been waived in writing by
the Agent acting on the instructions of the Majority Participants.
(m) A reference to an amount for which a person is contingently liable
includes, without limitation an amount which that person may become
actually or contingently liable to pay if a contingency occurs, whether
or not that liability will actually arise.
(n) Any agreement or obligation on the part of or in favour of two or more
persons shall be deemed to bind them or be in favour of them jointly and
each of them severally.
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1.3 Determination, statement and certificate conclusive
Except where otherwise provided in this Agreement any determination, statement
or certificate by the Agent or any Participant or an Authorised Officer of the
Agent or any Participant provided for in this Agreement is sufficient evidence
of its contents and binds the parties in the absence of manifest error or
proof to the contrary.
1.4 Document or agreement
A reference to an "agreement" includes a Security Interest, Guarantee,
undertaking, deed, agreement or legally enforceable arrangement whether or not
in writing. A reference to a "document" includes an agreement (as so defined)
in writing or a certificate, notice, instrument or document.
2. COMMITMENTS
2.1 Commitments
Subject to this Agreement each Participant with a Loan Commitment agrees with
the Borrower to make available its Undrawn Loan Commitment but so that the
aggregate of the Original US$ Value of the Principal Outstanding will not at
any time exceed the aggregate of the Loan Commitments.
2.2 Obligations several
The obligations and rights of each Participant under this Agreement are
several and:
(a) failure of a Participant to carry out its obligations does not relieve
any other Participant of its obligations;
(b) no Participant is responsible for the obligations of any other
Participant or the Agent; and
(c) subject to the Transaction Documents each Participant may separately
enforce its rights under any Transaction Document.
3. CANCELLATION OF COMMITMENTS
3.1 During Availability Period
The Borrower may at any time during the Availability Period cancel all or part
of the Undrawn Loan Commitments upon giving not less than 5 Business Days'
prior notice to the Agent. If only part of the Undrawn Loan Commitments is
cancelled, it must be at least US$1,000,000 and a whole multiple of
US$1,000,000. The notice is irrevocable.
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3.2 Allocation among Participants
Any partial cancellation will be applied against the Undrawn Loan Commitment
of each Participant ratably according to its Loan Commitment. The Agent shall
promptly notify each Participant of any cancellation under this Clause and the
amount of the Participant's Loan Commitment which is cancelled.
3.3 At end of Availability Period
At the close of business (Sydney time) on the last day of the Availability
Period the Undrawn Loan Commitments of the Participants will be cancelled.
4. PURPOSE
The Borrower shall use the proceeds of all Advances provided under this
Agreement:
(a) for the purpose of or in connection with the acquisition by the Borrower
of ordinary shares in Gasgoyne as follows:
(i) the cash component of the purchase of 10,611,300 shares (up to
19.99% of the fully diluted issued capital) pursuant to exercise
of the Ioama Call Option;
(ii) the cash component of the Takeover;
(iii) other contingencies, fees and costs arising as a result of or in
connection with the Takeover;
including the refinancing of the Borrower's funds expended for the
purposes referred to in this subclause (a);
(b) for the purpose of or in connection with the acquisition by the Borrower
of shares, options or other securities in Orion other than the Excluded
Orion Shares; or
(c) for such other purposes (if any) as the Agent may approve in their sole
discretion;
and for no other purpose.
5. LOAN FACILITY
5.1 Advance
(a) Subject to this Agreement, whenever the Borrower requests an Advance
under the Loan Facility, each Participant shall make available the
proportion of the proposed Advance equal to the proportion which its
Loan Commitment bears to the aggregate of the Loan
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Commitments to the Agent in immediately available funds by 11am (Sydney
time) on the relevant Drawdown Date for the account of the Borrower.
(b) On receipt the Agent will pay it in accordance with the relevant
Drawdown Notice to the relevant account, or in accordance with other
payment instructions acceptable to the Agent as specified in the
Drawdown Notice.
(c) Unless the Agent otherwise agrees the Borrower shall ensure that the
principal amount of each Advance is a minimum of US$1,000,000 or
A$1,000,000 or an integral multiple thereof or the aggregate of the
Undrawn Loan Commitment.
(d) Unless the Agent otherwise agrees, the Borrower shall ensure that there
are no more than 4 Advances in the same currency with different Interest
Periods current at any time.
5.2 Revolving Facility
The Loan Facility is revolving and accordingly subject to the other provisions
of this Agreement (including 4(c) which will require the purposes to be
approved in the sole discretion of the Agent) any Advances repaid or prepaid
may be redrawn.
5.3 Loan Limit
The Borrower shall ensure that at no time the Original US$ Value of the
Principal Outstanding exceeds the Loan Facility Limit.
5.4 Substitute Bases
(a) Notwithstanding anything to the contrary contained in this agreement, if
at any time prior to the commencement of any Interest Period the Agent
or a Participant shall have determined (such determination being
conclusive and binding upon the Borrower) that:
(i) it or the Participant is unable or unwilling to make US$ available
to the Borrower free of any obligation on the part of the Borrower
to deduct withholding tax from all payments to be made by the
Borrower; or
(ii) by reason of any change in any applicable law regulation or
regulatory requirement or in its interpretation by any relevant
authority charged with the administration thereof or by any
relevant court or by reason of any change in national or
international, financial, political or economic conditions or
exchange controls it is impracticable for the Agent or a
Participant to fund or to renew a US$ Advance,
the Agent or the Participant, as the case may be, shall as soon as
practicable give written notice of such determination to the Borrower.
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(b) Upon notice being given under clause 5.4(a), the Agent, the relevant
Participant and the Borrower shall negotiate in good faith with a view
to agreeing to an alternative funding or other arrangement.
(c) If such agreement is not reached within 14 days of the notice referred
to in Clause 5.4(a) neither the Agent nor the Participants are required
to make such US$ Advance available to the Borrower.
5.5 The Borrower acknowledges to the Agent and each Participant that:
(a) the Borrower will make its own judgement and decision in respect of
drawing each US$ Advance or A$ Advance independently and without
reliance on any Participant; and
(b) Neither the Participant nor the Agent is under a liability or
responsibility (whether in contract, tort or otherwise) and is not to be
taken to have accepted any liability or responsibility (whether in
contract, tort or otherwise) whatsoever in respect of movement in rates
of interest or exchange or any advice, opinions or data rendered or
given by any of their officers, employees, agents or other persons
representing the Participants or Agent, irrespective of whether or not
the advice, opinions or data was or is rendered or given at the request
of the Borrower or that the advice was or is incorrectly or negligently
given; and
(c) advice, opinions or data relating to anticipated movements in rates of
interest or exchange are inherently speculative in nature and any
reliance by the Borrower on the actions, advice, opinion or data of the
Participants or Agent or any of their officers, employees, agents or
other persons representing any financier is at the Borrower's sole risk
and expense.
6. DRAWDOWN NOTICES
6.1 When notice to be given
Whenever the Borrower wishes to drawdown an Advance utilising any of the
Undrawn Loan Commitment it shall give to the Agent an irrevocable Drawdown
Notice substantially in the form of Schedule 2. That Drawdown Notice must be
received by the Agent not later than 11 am (Sydney time) five Business Days
before the proposed Drawdown Date which must be a Business Day during the
Availability Period.
6.2 Contents of Drawdown Notices
Each Drawdown Notice must be signed by an Authorised Officer of the Borrower
and specify:
(a) the purposes for which the drawing is to be applied which must comply
with Clause 4 together with such supporting information (if any) as the
Agent may reasonably require to verify those purposes;
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(b) the bank account in Sydney to which the proceeds of any Advance are to
be paid or other payment instructions acceptable to the Agent;
(c) the amount of the proposed Advance and whether an A$ Advance or US$
Advance;
(d) the requested Drawdown Date which must be a Business Day during the
Availability Period; and
(e) the initial Interest Period in respect of the proposed Advance.
6.3 Notification of Participants
The Agent shall give prompt notice to each Participant of the contents of each
Drawdown Notice and the amount of each Participant's Drawn Participation of
the accommodation requested.
7. REPAYMENT
7.1 Repayment
Subject to this Agreement the Borrower shall repay the Principal Outstanding
on the Expiry Date.
7.2 Allocation among Participants
Repayments will be applied ratably among the Participants according to their
participations in the Principal Outstanding.
8. PREPAYMENTS AND REDRAWINGS
8.1 Voluntary prepayments
(a) Subject to this Clause, if it gives at least five Business Days' prior
notice to the Agent (who shall promptly notify the Participants) the
Borrower may prepay all or part of the Principal Outstanding on the last
day of an Interest Period for the Advance prepaid or subject to Clause
8.2(b) on any other Business Day. That notice is irrevocable and the
Borrower shall prepay in accordance with it.
(b) Unless the Agent agrees otherwise, prepayment of part only of the
Principal Outstanding may only be made in a principal amount of a
minimum of A$1,000,000 or US$1,000,000 and an integral multiple thereof.
8.2 Interest and break costs
The Borrower shall pay:
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(a) any interest accrued on any amount prepaid under this Agreement; and
(b) any amount payable under Clause 20 (indemnities) in consequence of a
prepayment which is not made on the last day of an Interest Period, at
the time of the prepayment.
8.3 Apportionment
Prepayments under this Clause will be applied ratably in reduction of the
respective Drawn Participations of all the Participants in the Principal
Outstanding.
8.4 US$ Present Value Excess
If at any time the Present US$ Value of the Principal Outstanding exceeds the
Loan Facility Limit, the Borrower shall, subject to prior written notice from
the Agent, prepay on the last day of the current Interest Period for Advances
in chronological order of priority from the earliest such date occurring,
sufficient Advances or part thereof (subject to Clause 8.1(b)) until such
excess is prepaid.
9. INTEREST
9.1 Interest
(a) Interest will accrue from day to day on each Advance at the Margin plus
the Base Rate.
(b) The Borrower shall pay accrued interest in arrears on the first Business
Day of each month in respect of the whole of the interest for the
preceding calendar month.
(c) Interest is to be calculated on the actual days elapsed and for A$
Advances on a 365 day year and for US$ Advances on a 360 day year.
9.2 Interest Periods
(a) Subject to this Clause 9.2, each Interest Period for an A$ Advance is to
be a period of 30 days, 60 days, 90 days or 180 days.
(b) Subject to this Clause 9.2, each Interest Period for a US$ Advance is to
be a period of 1 month, 2 months, 3 months or 6 months.
(c) The initial Interest Period for an Advance is selected by the Borrower
in the relevant Drawdown Notice. Each subsequent Interest Period for
that Advance shall be as specified in notice given by the Borrower to
the Agent not less than 5 Business Days (or such shorter period as may
be agreed in the sole discretion of the Agent) before commencement of
the Interest Period provided that if no such notice is given or if an
Event of Default has occurred and is subsisting, the Interest Period
shall be selected by the Agent.
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(d) The Borrower may select any other Interest Period agreed by the Agent.
(e) An Interest Period which would otherwise end on a day which is not a
Business Day is a period ending on the succeeding Business Day in the
same calendar month, or if none, the preceding Business Day.
(f) If an Interest Period of a number of months commences on a date in a
month and there is no corresponding date in the month in which it is to
end, it will end on the last Business Day of that month.
(g) An Interest Period which would otherwise end after the Expiry Date ends
on the Expiry Date.
(h) The initial Interest Period selected for an Advance to comply with
Clause 5.1(d) shall be for a period to expire on the last day of an
Interest Period for an existing Advance as selected by the Borrower.
9.3 Market Failure
If, when the US$ Interest Rate for an Interest Period is due to be determined:
(a) the Agent determines and notifies the Borrower that, by reason of
circumstances affecting the market for US$, adequate and fair means do
not exist for determining the US$ Interest Rate applicable for that
Interest Period; or
(b) the Agent is unable to obtain quotes for US$ for the Interest Period
selected by the Borrower; or
(c) the Agent has notified the Borrower that deposits in US$ are not
available to the Participants in sufficient amounts in the ordinary
course of business to fund, make or maintain that US$ Advance for that
Interest Period; or
(d) the Agent notifies the Borrower that the rate determined under the
definition of US$ Interest Rate is less than the cost to any Participant
of obtaining such deposits to fund that US$ Advance for that Interest
Period;
then the US$ Interest Rate for that US$ Drawing and that Interest Period will
be the cost to each Participant of funding that Participant's Drawn
Participation by whatever means that Participant determines to be most
appropriate (as certified by the Participant to the Borrower within five
Business days of the first day of that Interest Period) and expressed as a
percentage rate per annum.
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10. EXTENSION OF EXPIRY DATE
Not later than one month prior to each anniversary of the date of first
drawdown of the first Advance made under this Agreement the Borrower may
request the Agent to extend the Expiry Date. The response to such request will
be determined in the sole discretion of the Agent in consultation with the
Participants and in any event no extension will be granted beyond the earlier
of:
(a) the date being 36 months from the date of drawdown of the first Advance
under this Agreement; or
(b) 30 April 1999.
If there is no unconditional mutual agreement between the parties prior to the
Expiry Date as to an extension and, if applicable, the terms and conditions
thereof the Expiry Date shall not be extended.
11. PAYMENTS
11.1 Manner
The Borrower shall make all payments under any Transaction Document in the
currency in which such obligation is due:
(a) for A$, by transfer of immediately available A$ funds to the account in
New South Wales specified by the Agent from time to time, by 11 am
(Sydney time) on the due date; and
(b) for US$, by transfer of immediately available US$ funds to the $US bank
account specified by the Agent from time to time, by 11.00am (Sydney
time) on the due date or at the option of the Agent by prior notice to
the Borrower, US$ funds settled through the New York Clearing House
Interbank Payments System or other funds for payment in US$ which the
Agent specifies to the Borrower as being customary at the time for the
settlement of international transactions in New York City of the type
contemplated by the Loan Facility; and
(c) in either of the foregoing cases, without set-off or counterclaim and
without deduction, whether on account of Taxes or otherwise, except any
compulsory deduction for Taxation.
11.2 Payment to be made on Business Day
Whenever any payment becomes due on a day which is not a Business Day, the due
date will be the preceding Business Day.
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11.3 Distribution by Agent
Unless any Transaction Document expressly provides otherwise, the Agent shall
promptly distribute amounts received under any Transaction Document for the
account of the Participants among the Participants in accordance with their
respective entitlements and in like funds as they are received by the Agent.
11.4 Appropriation where Insufficient moneys available
Where amounts required to be distributed by the Agent under Clause 11.3 on any
day are not sufficient to make all the payments required, those amounts will
be allocated among the Participants as follows:
(a) first, to all amounts then due and payable by way of reimbursement or
indemnity under any Transaction Document;
(b) second, to payment of interest payable under any Transaction Document;
(c) third, to payment of any fees then due and payable under any Transaction
Document; and
(d) fourth, to repayment or prepayment of the Principal Outstanding then due
and payable.
Within each of the above paragraphs, those amounts will be allocated ratably
according to the respective amounts referred to. That allocation will override
any appropriation made by the Borrower.
11.5 Borrower Withholding
If a law or Governmental Agency requires the Borrower to withhold or deduct
any Tax or other amount from any payment to Agent, Security Trustee or any
Participant so that the Agent, Security Trustee or Participant would not
actually receive in immediately available funds for its own benefit on the due
date the full amount provided for under a Transaction Document, then:
(a) the amount of the payment by the Borrower shall be increased so that,
after withholding such amount or making such deduction and after making
deductions applicable to all additional amounts payable under this
clause, the Agent, Security Trustee or Participant shall receive the
amount it would have received if no withholding or deductions had been
required;
(b) the Borrower shall make the required withholdings or deductions; and
(c) the Borrower will forthwith pay the full amount withheld or deducted to
the relevant Governmental Agency in accordance with applicable law and
the requirements of the relevant Governmental Agency and shall promptly
provide receipts or other reasonable evidence of such payment to the
Agent.
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11.6 Agent Withholding
If a law requires the Agent to deduct Taxes from a payment by the Agent to a
Participant under any Transaction Document so that the Participant does not
actually receive for its own benefit on the due date the full amount which it
would have otherwise received, then:
(a) the Borrower must pay to the Agent an amount equal to the amount which
the Agent must deduct;
(b) the Agent must make the deduction; and
(c) the Agent must pay the full amount deducted to the relevant authority in
accordance with applicable law.
11.7 Agent Reimbursement
If an amount is to be paid under a Transaction Document to the Agent and the
Agent is to make a corresponding payment to another person, the Agent is not
obliged to make that corresponding payment until it has been able to establish
that it has actually received that amount. If the corresponding payment is
made and it transpires that the Agent had not actually received the amount due
to be paid to it, then:
(a) the person to whom the corresponding payment was made must refund it to
the Agent on demand; and
(b) the person who should have made the payment to the Agent must pay to the
Agent on demand an amount sufficient to reimburse the Agent for its cost
of funding the corresponding payment during the period beginning on the
due date for payment and ending on the date when it receives it in
cleared funds.
11.8 Agent to Receive Full Payment
Any amount payable by the Borrower to the Agent under this Clause must be such
amount as is necessary to ensure that the Agent receives a net amount in the
relevant currency or currencies equal to the full amount which it would have
received had a deduction not been made or had payment not been made subject to
such Taxes together with further additional amounts by way of interest equal
to the amount of any Taxes and any income tax imposed on or payable by the
Agent or payable by the Borrower in respect of any amount payable under this
clause, including any taxes and income tax payable by reason of a previous
application of this clause.
11.9 Unanticipated default
(a) (Assumption as to payment) The Agent may assume that a party (the
"Payer") due to make a payment for the account of another party (the
"Recipient") makes that payment
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when due unless the Payer notifies the Agent at least one Business Day
before the due date that the Payer will not be making the payment.
(b) (Reliance on assumption) In reliance on that assumption, the Agent may
make available to the Recipient on the due date an amount equal to the
assumed payment.
(c) (Recoupment) If the Payer does not in fact make the assumed payment, the
Recipient shall repay the Agent the amount on demand. The Payer will
still remain liable to make the assumed payment, but until the Recipient
does repay the amount, the Payer's liability will be to the Agent in the
Agent's own right
(d) (Interest) If the Payer is the Borrower any interest on the amount of
the assumed payment accruing before recovery will belong to the Agent.
If the Payer is a Participant that Participant shall pay interest on the
amount of the assumed payment at the rate determined by the Agent, in
line with its usual practice, for advances of similar duration to
financial institutions of the standing of the Participant.
11.10 Rounding
In making any allocation or appropriation under any Transaction Document the
Agent may round amounts to the nearest dollar.
12. CHANGES IN LAW
12.1 Increased costs
Whenever any Indemnified Party determines in good faith that:
(a) the effective cost to the Indemnified Party of making, funding or
maintaining any accommodation made available under the Loan Facility or
its Loan Commitment is increased in any way;
(b) any amount paid or payable to the Indemnified Party or received or
receivable by the Indemnified Party, or the effective return to the
Indemnified Party, under or in respect of any Transaction Document is
reduced in any way;
(c) the return of the Indemnified Party on the capital which is or becomes
directly or indirectly allocated by the Indemnified Party to any
accommodation made available under the Loan Facility or its Loan
Commitment is reduced in any way, or
(d) insofar as any relevant law, official directive or request relates to or
affects its Loan Commitment, any accommodation made available under the
Loan Facility or the Transaction Documents, the overall return on
capital of the Indemnified Party is reduced in any way,
<PAGE>
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as a result of any change in, any making of, or any change in the
interpretation or application by any Governmental Agency of, any law, official
directive or request, then:
(e) (when it has calculated the effect of the foregoing and the amount to be
charged to the Borrower) that Indemnified Party shall promptly notify
the Borrower and supply reasonable details of that calculation under
this Clause; and
(f) on demand from time to time the Borrower shall pay for the account of
the Indemnified Party the amount certified by an Authorised Officer of
the Indemnified Party to be necessary to compensate the Indemnified
Party for the increased cost or the reduction.
Without limiting the above in any way, this Clause applies:
(g) to any law, official directive or request with respect to Taxation
(except any Tax on overall net income) or reserve, liquidity, capital
adequacy, special deposit or similar requirements;
(h) to official directives or requests which do not have the force of law
where it is the practice of responsible bankers or financial
institutions in the country concerned to comply with them; and
(i) where the increased cost or the reduction arises because the relevant
Indemnified Party is restricted in its capacity to enter other
transactions, or is required to make a payment, or foregoes or earns
reduced interest or other return on any capital or on any amount
calculated by reference in any way to, or allocates capital to, the
amount of any accommodation made available under the Loan Facility, its
Commitment or to any other amount paid or payable or received or
receivable under any Transaction Document.
12.2 Minimisation
(a) (No defence) It will not be a defence that any cost, reduction or
payment referred to in this Clause could have been avoided.
(b) (Negotiation) At the request of the Borrower the Agent and any relevant
Participant shall negotiate in good faith with the Borrower with a view
to finding a means by which any cost, reduction or payment can be
minimised.
12.3 Survival of obligations
The Borrower's obligations under this Clause survive the repayment of any
Principal Outstanding and the termination of this Agreement
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<PAGE>
12.4 Prepayment on increased costs
(a) Within 60 days after the Borrower receives a demand under Clause
l2.l(f), the Borrower may notify the relevant Participant through the
Agent that it wishes to prepay the Participant's participation in the
accommodation affected.
(b) The notification will be irrevocable and the Borrower shall prepay in
accordance with it. Clause 8.2(b) does not apply to a prepayment under
this Clause.
13. ILLEGALITY
If as a result of any change in a law, regulation or an official directive
which has the force of law or compliance with which is in accordance with the
practice of responsible bankers in the jurisdiction concerned or in their
interpretation or administration after the date of this Agreement, a
Participant determines that it is or has become apparent that it will become
contrary to that official directive, impossible or illegal for:
(a) that Participant to fund, provide or maintain financial accommodation or
otherwise observe its obligations under the Transaction Documents; or
(b) a person from whom that Participant has raised or proposes to raise
money in connection with financial accommodation under the Transaction
Documents to fund, provide or maintain that money,
then the Borrower, within five Business Days of receipt of a notice from the
Agent to do so, must pay to the Agent for the account of that Participant an
amount certified by that Participant to the Agent to be the aggregate of the
Secured Moneys of that Participant and any other amount due for payment to
that Participant (contingently or otherwise) under the Transaction Documents.
The amount so specified in that notice is the amount which the Participant
notifies to the Agent under this clause 13. The Participant's obligations to
the Borrower under the Transaction Documents terminate upon the giving of the
notice.
14. CONDITIONS PRECEDENT
14.1 Conditions precedent to First Drawdown Notice
The right of the Borrower to give the first Drawdown Notice and the
obligations of each Participant under this Agreement are subject to the
condition precedent that the Agent receives or is satisfied with all of the
following in form and substance satisfactory to the Agent:
(a) (Omnibus Certificate)
A certificate in the form of Schedule 4 plus attachments duly completed
from the Borrower;
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(b) (Good Standing Certificate)
A certificate from the Secretary of State of the State of incorporation
of the Borrower confirming the current status in good standing of the
corporation;
(c) (Financing Statement)
A duly completed and executed Financing Statement for filing in the
State of Idaho by the Borrower in connection with the Mortgage.
(d) (Other Instruments)
Each instrument which evidences any other necessary corporate or other
action in connection with those Transaction Documents;
(e) (Powers of Attorney)
The original of each power of attorney under which a person signs and
delivers a Transaction Document for the Borrower and, if required by the
Agent, evidence of its stamping and registration;
(f) (Specimen Signatures)
a certified specimen signature of each Authorised Officer of the
Borrower;
(g) (Transaction Documents)
duly executed and delivered Transaction Documents and if required by the
Agent, evidence of their stamping and registration with all applicable
Governmental Agencies;
(h) (Mortgaged Property) results of searches, enquiries and requisitions in
relation to the Mortgaged Property as may be required by the Agent;
(i) (share certificate) all share scrip and evidence of title to the
Mortgaged Property and all other incidental documents required by the
Agent;
(j) (legal opinion) a legal opinion from Evans Keane, 111 Maine Street,
Kellog, Idaho, USA, addressed to Rothschild Australia Limited as
Security Trustee and as Agent as to the valid binding and enforceable
nature of the Transaction Documents in the relevant jurisdiction(s).
(k) (Authorisations) evidence that all necessary Authorisations for the
Transaction Documents and for the acquisition of the Acquisition Shares
have been obtained and are in full force and effect;
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(l) (stamping of security) if the Agent does not require stamping of
relevant Transaction Documents prior to first drawdown of an Advance
provision of all estimated stamp duty funds to the Agent or its
solicitors;
(m) (fees) evidence that all fees payable by the Borrower to the Agent or a
Participant on or before the first Drawdown Date have been paid (or if
applicable will be paid at the time of first drawdown);
(n) (Takeover Terms) satisfactory review by the Agent of the structure, bid
timetable and documentation in relation to the Takeover;
(o) (Callahan Mining Corporation Shares) evidence that shares in Gasgoyne
held by Callahan Mining Corporation, a Subsidiary of the Borrower, have
been transferred to the Borrower and are subject to the Mortgage.
Anything required to be certified under this Clause must be certified by the
secretary, a director, President or Vice President of the Borrower as being
true and complete as at the date of certification.
14.2 Conditions precedent to each drawdown
The obligations of each Participant to make available any accommodation are
subject to the further conditions precedent that:
(a) (representations true) the representations and warranties by the
Borrower in the Transaction Documents are true as at the date of the
relevant Drawdown Notice and the relevant Drawdown Date as though they
had been made at that date in respect of the facts and circumstances
then subsisting;
(b) (no default) no Event of Default or Potential Event of Default is
subsisting at the date of the relevant Drawdown Notice and the relevant
Drawdown Date or will result from the provision of the accommodation;
(c) (Authorisation) all necessary Authorisations for the acquisition of the
Acquisition Shares being funded by the Advance to be drawn have been
obtained.
(d) (Drawdown Limit) as a result of the proposed Advance, the Original US$
Value of the Principal Outstanding and the Present US$ Value of the
Principal Outstanding will not exceed the Loan Facility Limit.
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14.3 Conditions precedent waiver
The Agent may waive non-compliance with any condition precedent in Clause 14.1
or 14.2 prior to drawdown of an Advance but the Agent may require compliance
with the Condition Precedent waived at any later time by notice in writing to
the Borrower.
15. REPRESENTATIONS AND WARRANTIES
15.1 Representations and warranties
The Borrower makes the following representations and warranties.
(a) (Status) it is a corporation duly organised and validly existing under
the laws of the place of its incorporation specified in this Agreement.
(b) (Power) it has the power to enter into and perform its obligations under
the Transaction Documents to which it is expressed to be a party, to
carry out the transactions contemplated by those documents and to carry
on its business as now conducted or contemplated.
(c) (Corporate authorisations) It has taken all necessary corporate action
to authorise the entry into and performance of the Transaction Documents
to which it is expressed to be a party, and to carry out the
transactions contemplated by those documents.
(d) (Documents binding) Each Transaction Document to which it is expressed
to be a party is its valid and binding obligation enforceable in
accordance with its terms, subject to any necessary stamping and
registration and subject to laws pertaining to bankruptcy and
enforcement of creditors' rights and general equitable principles. Each
Security and any Collateral Security is effective security over the
Mortgaged Property with the priority stated.
(e) (Transactions permitted) The execution and performance by it of the
Transaction Documents to which it is expressed to be a party and each
transaction contemplated under those documents did not and will not
violate in any respect a provision of:
(i) a law or treaty or a judgment, ruling, order or decree of a
Governmental Agency binding on it;
(ii) its articles of incorporation or By-laws or other constituent
documents; or
(iii) any other document or agreement which is binding on it or its
assets,
and, except as provided by the Transaction Documents, did not and will
not:
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(iv) create or impose a Security Interest on any of its assets; or
(v) allow a person to accelerate or cancel an obligation with respect
to Financial Indebtedness, or constitute an event of default,
cancellation event, prepayment event or similar event (whatever
called) under an agreement relating to Financial Indebtedness,
whether immediately or after notice or lapse of time or both.
(f) (Accounts)
(i) Its most recent consolidated accounts for the financial year ended
31 December 1995 as provided by the Borrower to the Agent give a
true and fair view of its and its Subsidiaries' state of affairs
at the date to which they relate and the results of its and its
Subsidiaries' operations for the accounting period ended on that
date.
(ii) There has been no change in its and its Subsidiaries' state of
affairs since that date which may have a Material Adverse Effect.
(iii) Those accounts comply
(A) with the Accounting Principles consistently applied, except
to the extent of departures from those principles and
practices disclosed in them; and
(B) with all applicable laws.
(iv) All material Financial Indebtedness and other material contingent
liabilities are disclosed in those accounts.
(g) (No litigation) No litigation, arbitration, Tax claim, dispute or
administrative or other proceeding is current or pending or to the
knowledge of the Borrower, threatened, which concerns this Agreement or
any other Transaction Document, or the Takeover or any document
associated therewith, or the authority or ability of the Borrower to
perform its obligations thereunder, or which may have a Material Adverse
Effect.
(h) (No default)
(i) it is not in default under a document or agreement (including,
without limitation, an Authorisation) binding on it or its assets;
and
(ii) nothing has occurred which confirms an event of default,
cancellation event, prepayment event or similar event (whatever
called) under those documents or agreements, whether immediately
or after notice or lapse of time or both,
where that may have a Material Adverse Effect.
(i) (Authorisations) Each Authorisation which is required in relation to:
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(i) the execution, delivery and performance by it of the Transaction
Documents to which it is expressed to be a party and the
transactions contemplated by those documents;
(ii) the validity and enforceability of those documents and the
effectiveness or priority of each Security or any Collateral
Security; and
(iii) the acquisition of the Acquisition Shares which are the subject of
the Mortgages;
has been obtained or effected, is in full force and effect, has been
complied with and all applicable fees have been paid.
(j) (No misrepresentation) All information provided by it to the Agent and
the Participants is true in all material respects at the date of this
Agreement or, if later, when provided. Neither that information nor its
conduct and the conduct of anyone on its behalf in relation to the
transactions contemplated by the Transaction Documents, was or is
misleading in any material respect, by omission or otherwise.
(k) (Agreements disclosed) Each document or agreement which is material to
the Transaction Documents or the acquisition of the Acquisition Shares
or which has the effect of varying a Transaction Document has been
disclosed to the Agent in writing.
(l) (Copies of documents) All copies of documents (including, without
limitation, its latest accounts and all Authorisations) given by it or
on its behalf to the Agent are true and complete copies and are in full
force and effect unless otherwise stated to the Agent.
(m) (Title)
(i) The Borrower is the sole beneficial owner of the Mortgaged
Property purported to be charged or mortgaged by it free of any
third party right or interest whatever (other than Security
Interests approved by the Agent);
(ii) None of the Borrower's Mortgaged Property is subject to a Security
Interest which is not permitted by Clause 16.1(g) (Negative
pledge);
(iii) the Mortgaged Property is not subject to any shareholder or other
agreements which would limit the exercise by the Agent of all
rights associated therewith or the enjoyment by the Agent of all
dividends, distributions or proceeds thereof.
(n) (Law) it has complied with all laws binding on it where breach may have
a Material Adverse Effect.
(o) (Trust) It does not hold any assets the subject of any Transaction
Document as the trustee of any trust.
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(p) (Affiliate) No Affiliate of the Borrower on its own account or on behalf
of the Borrower or any other person on behalf of the Borrower or an
Affiliate of the Borrower has acquired or intends to acquire any
Acquisition Shares.
(q) (ERISA)
(i) Neither the Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit
Plans other than those identified in Schedule 5 hereto. If
requested by the Agent, the Borrower will provide the Agent with
accurate and complete copies of all contracts, agreements and
documents described in Schedule 5.
(ii) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit
Plans except where a failure to so comply would not have a
Material Adverse Effect and except for any required amendments for
which the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired. Each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has
been determined by the United States Internal Revenue Service to
be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. No
material liability has been incurred by the Borrower or any ERISA
Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer
Plan.
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the United States
Internal Revenue Service been received or requested with respect
to any Pension Plan, nor has the Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302 of ERISA
or the terms of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code of Section 302 of
ERISA, nor has there been any event requiring any disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan, except where the occurrence of any such event will
not have a Material Adverse Effect.
(iv) To the extent it could have a Material Adverse Effect, neither the
Borrower nor any ERISA Affiliate has:
(i) engaged in a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code;
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(ii) incurred any liability to the PBGC which remains outstanding
other than the payment of premiums and there are no premium
payments which are due and unpaid;
(iii) failed to make a required contribution or payment to a
Multiemployer Plan; or
(iv) failed to make a required instalment or other required
payment under Section 412 of the Code.
(v) No Termination Event has occurred or is reasonably expected to
occur which in either case could reasonably be expected to have a
Material Adverse Effect.
(vi) No material proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of the Borrower after due
inquiry, threatened concerning or involving any:
(i) employee welfare benefit plan (as defied in Section 3(1) of
ERISA) currently maintained or contributed to by the
Borrower or any ERISA Affiliate;
(ii) Pension Plan; or
(iii) Multiemployer Plan.
15.2 Reliance on representations and warranties
The Borrower acknowledges that the Agent and the Participants have entered
into the Transaction Documents in reliance on the representations and
warranties in this Clause.
16. UNDERTAKING
16.1 General undertakings
The Borrower undertakes to the Agent and each Participant during the term of
this Agreement and while any Secured Moneys exist as follows, except to the
extent that the Agent acting on the instructions of the Majority Participants
consents:
(a) The Borrower will provide to the Agent in sufficient copies for the
Participants and in a form satisfactory to the Agent:
(i) (annual accounts) as soon as practicable (and in any event not
later than 120 days) after the close of each of its financial
years copies of the Borrower's consolidated audited financial
statements including balance sheet and statements of operations;
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(ii) (quarterly reports) as soon as practicable (and in any event not
later than 45 days after the end of each financial quarter) copies
of quarterly accounts of the Borrower containing financial
information presented in a consistent form with the Accounts in
subclause (i) which may be satisfied by the Borrower providing to
the Agent a copy of relevant periodic reports filed with the
Securities and Exchange Commission containing such accounts
together with such other information which the Agent considers
necessary to calculate the Financial Undertakings;
(iii) (annual budget) annual budget and cash flow forecasts of the
Borrower in a form satisfactory to the Agent before 31 December in
each year in respect of the next calendar year;
(iv) (documents issued to shareholders) promptly as may be requested by
the Agent from time to time documents which applicable law
requires the Borrower to issue to its shareholders or
stockholders;
(b) The Borrower will provide to the Agent:
(i) (litigation) promptly, written particulars of any litigation,
arbitration, Tax claim, dispute or administrative or other
proceeding in relation to any of the Mortgaged Property;
(ii) (Governmental Agency) promptly, any notice, order or material
correspondence from or with a Government Agency relating to the
Acquisition Shares, the Mortgaged Property or its use which may
have a Material Adverse Effect;
(iii) (Public Company reports and documents) promptly, copies of all
reports to or filings with the United States Securities Commission
and reports to or filings with any state securities agency which
are material to the financial position of the Borrower;
(iv) (Corporate annual reports) promptly after the filing thereof, each
annual report filed by the Borrower with the Secretary of State of
its state of incorporation;
(v) (other Information) promptly, any other information or reports
which the Agent may reasonably request in relation to the
financial condition or business of the Borrower, its Subsidiaries,
or the Mortgaged Property.
(c) (Accounting principles) it will ensure that the Accounts provided to the
Agent under paragraph (a):
(i) comply with the Accounting Principles; and
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(ii) give a true and fair view of its consolidated and unconsolidated
state of affairs and the result of its consolidated operations, at
the date, and for the period ending on the date, to which those
statements are prepared.
(d) (Authorisations) It will ensure that each Authorisation required for:
(i) the execution, delivery and performance by it of the Transaction
Documents to which it is expressed to be a party and the
transactions contemplated by those documents;
(ii) the validity and enforceability of those documents and the
effectiveness and priority of each Security or any Collateral
Security, and
(iii) the acquisition of the Acquisition Shares by the Borrower,
is obtained when required, complied with and promptly renewed and
maintained in full force and effect it will provide copies promptly to
the Agent when they are obtained or renewed.
(e) (Notice to Agent) it will notify the Agent as soon as it becomes aware
of:
(i) any Event of Default or Potential Event of Default;
(ii) any event or circumstance which results in the Borrower not
proceeding with the Takeover;
(iii) any proposal by a Governmental Agency to acquire compulsorily any
of the Mortgaged Property or the whole or a substantial part of
its assets or business;
(iv) any substantial dispute between it and a Governmental Agency in
relation to or affecting the Takeover or the Acquisition Shares;
(v) any event or circumstance which may give rise to a substantial
claim against it in relation to the Takeover;
(vi) any change in its Authorised Officers, giving specimen signatures
of any new Authorised Officer appointed, and, where requested by
the Agent, evidence satisfactory to the Agent of the authority of
any Authorised Officer.
(f) (Disposal of assets) It will not sell or otherwise dispose of, part with
possession of, or create an interest in, any of the Mortgaged Property
or agree or attempt to do so (whether in one or more related or
unrelated transactions) except the Securities and any Collateral
Security.
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(g) (Negative pledge) It will not create or allow to exist a Security
Interest over the Mortgaged Property other than the Security or any
Collateral Security.
(h) (Corporate existence) it will do everything necessary to maintain its
corporate existence in good standing including registration as a foreign
company in Australia. It will not transfer its jurisdiction of
incorporation or enter any merger or consolidation without the prior
consent of the Agent which shall not be unreasonably withheld (except
any merger or consolidation which results in the Borrower being the
surviving entity and which does not result in any breach of Clause 16.3
or in the opinion of the Agent any Material Adverse Effect).
(i) (Compliance with law) It will comply fully with all laws binding on it
where non-compliance may have a Material Adverse Effect.
(j) (Pay Taxes) it will pay all Taxes payable by it when due, but:
(i) it need not pay Taxes for which it has set aside sufficient
reserves and which are being contested in good faith, except where
failure to pay those Taxes may have a Material Adverse Effect; and
(ii) it will pay contested Taxes which it is liable to pay on the final
determination or settlement of the contest.
(k) (Change of business) The Borrower will not cease or change its principal
business activity from that presently carried on by it being as a
producer of precious metals.
The Borrower will not take action, whether by acquisition or otherwise,
which alone or in aggregate would alter the nature of that business.
(l) (Change of By-Laws) It will not change its articles of incorporation or
By-Laws in any respect which may have an adverse effect on the ability
of the Borrower to perform its obligations under any of the Transaction
Documents, on the value of the Security or on the financial condition or
business of the Borrower, without the prior consent of the Agent which
shall not be unreasonably withheld.
(m) (inspection) The Agent or persons authorised by it may at any time on
reasonable notice inspect, and require the provision of, copies of
records of the Borrower, and the Mortgaged Property which the Agent
considers are reasonably relevant to its or the Participants' position.
The Borrower will do everything in it power to assist that inspection
and provide those copies and will ensure that its employees and officers
do the same.
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(n) (Information) If the Borrower requests the Agent to give its consent to
any matter or thing it will provide to the Agent all information which
it may reasonably require for the purpose of deciding whether to give or
withhold that consent.
(o) (Change of Name of chief executive office) The Borrower will not change
its name or the address of its chief executive office from that set
forth on page 1 of this Agreement without not less than sixty (60) days'
prior written notice thereof to the Agent.
(p) (Compliance with ERISA) In addition to and without limiting the
generality of Clause 16.1(i), make timely payment of contributions
required to meet the minimum funding standards set forth in ERISA with
respect to any Employee Benefit Plan; not take any action or fail to
take any action the result of which could be a material liability to the
PBGC or to a Multiemployer Plan; not participate in any prohibited
transaction that could result in any material civil penalty under ERISA
or material tax under the Code; furnish to the Agent upon the Agent's
request such additional information about any Employee Benefit Plan as
may be reasonably requested by the Agent; and operate each Employee
Benefit Plan in such a manner that will not incur any material tax
liability under Section 4980B of the Code or any material liability to
any qualified beneficiary as defined in Section 4980B of the Code.
16.2 Undertakings relating to Mortgaged Property
The Borrower undertakes to the Agent and each Participant during the term of
this Agreement and while any Secured Moneys exist as follows, except to the
extent that the Agent acting on the instructions of the Majority Participants
consents otherwise.
(a) (Pay outgoings)
(i) The Borrower will promptly pay all outgoings (including calls if
applicable) payable by it in connection with the Acquisition
Shares or otherwise in respect of the Mortgaged Property.
(ii) On request by the Agent, the Borrower will immediately provide to
the Agent evidence of every payment covered by this undertaking.
(b) (Takeover)
The Borrower shall not alter the consideration to be paid for the
Acquisition Shares under the Takeover without the prior consent of the
Agent which shall not be unreasonably withheld.
(c) (Maintenance of Gasgoyne)
The Borrower will use its best endeavours to ensure that upon obtaining
Control of Gasgoyne, Gasgoyne will not by any act or omission do
anything which would result in
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Gasgoyne not carrying on its ordinary course of business or which would
result in an increase in the ratio of Gasgoyne's Total Indebtedness
divided by Gasgoyne's Net Tangible Worth.
(d) (Preservation and protection of security)
Each will promptly do everything necessary or reasonably required by the
Agent:
(i) to preserve and protect the value of the Mortgaged Property; and
(ii) to protect and enforce its title in the Mortgaged Property and the
title of the Security Trustee and the Participants as mortgagee,
chargee or pledgee of the Mortgaged Property.
(e) (Related Corporation Acquisition)
No Affiliate of the Borrower or other person on behalf of the Borrower
shall acquire Acquisition Shares unless the Agent holds a Security
Interest in a form acceptable to it over those Acquisition Shares
securing the Secured Monies and that Affiliate has provided
undertakings, representations and obligations to the Agent and
Participants in a form acceptable to the Agent which are consistent with
the undertakings, representations and obligations of the Borrower
herein.
16.3 Financial Undertakings
(a) The Borrower shall at all times ensure and undertakes that during the
term of this Agreement and while there exist any Secured Moneys that
its:
(i) Net Tangible Worth is not less than US$160,000,000;
(ii) Interest Coverage Ratio for any Quarter or longer period
determined by the Agent is not less than 1.5 to 1.
(iii) Current Ratio does not fall below 2 to 1;
(iv) Funded Indebtedness (excluding Subordinated Debentures) divided by
Net Tangible Worth does not exceed 0.5 to 1.
(b) The above figures and ratios shall be calculated and determined by the
Agent based upon the Accounts and such other information as may be
obtained by the Agent or Participants. The Borrower shall promptly
provide to the Agent all information which may be requested by the Agent
to enable the Agent to calculate and determine the above figures and
ratios.
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(c) If the Borrower disputes the calculation or determination of the Agent
under Clause 16.3(b), the Agent shall promptly if requested by the
Borrower refer the dispute to Price Waterhouse (or other reputable
accounting firm reasonably selected by the Agent) to act as expert and
not as arbitrator and its decision shall be binding on the parties.
Pending such decision the calculation or determination of the Agent
shall apply for the purposes of this Agreement.
16.4 Share Ratio Undertaking
The Borrower shall at all times ensure and undertakes that during the
term of this Agreement and while there exists any Secured Monies the
Market Value of the Mortgaged Shares shall not fall below twice the A$
Currency Equivalent of the Principal Outstanding from time to time,
provided that where either Orion or Gasgoyne becomes a wholly owned
Subsidiary ("New Subsidiary") of the Borrower there shall be excluded
from the above calculation, as calculated by the Agent:
(a) the Market Value in respect of the Mortgaged Shares in that New
Subsidiary; and
(b) that portion of the Principal Outstanding which relates to
Advances (or repayment and redrawings thereof) utilised for
purchase of the Mortgaged Shares in the New Subsidiary and
provided further that this clause 16.4 shall not apply if both Gasgoyne
and Orion become New Subsidiaries.
where:
"Market Value" means at any time the A$ market value of the Mortgaged
Shares determined by the Agent based upon the most recent daily closing
sale price as quoted on the Australian Stock Exchange Limited or if
there is no sale during the 2 Business Days prior to the date of such
determination, the market value as determined by the Agent in good
faith, whose certificate as to such value shall be conclusive in the
absence of manifest error.
17. EVENTS OF DEFAULT
17.1 Events of Default
Each of the following is an Event of Default (whether or not it is in the
control of the Borrower) except to the extent previously approved by the Agent
in writing acting on the instructions of all the Participants.
(a) (Obligations under Transaction Documents) The Borrower fails:
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(i) to pay an amount payable by it under a Transaction Document when
due (other than a delay of no more than 3 Business Days subject to
payments under Clause 18 and Clause 20);
(ii) to comply with any of its other obligations under a Transaction
Document and, if in the opinion of the Agent that failure can be
remedied within 14 days, does not remedy the failure within 14
days of the Borrower becoming aware of it; or
(iii) to satisfy within the time stipulated anything which the Agent
made a condition of its waiving compliance with a condition
precedent or undertaking in a Transaction Document.
(b) (Subordination) Any Financial Indebtedness of the Borrower comprising
subordinated debentures, notes or stock issued by the Borrower is paid
or repaid or recovered before the Secured Moneys are paid or repaid in
full (other than any payment, repayment or redemption which is fully met
by issue of Shareholders Equity or replacement debentures, notes or
stock).
(c) (Misrepresentation) A representation, warranty or statement by or on
behalf of the Borrower in a Transaction Document, or in a document
provided under or in connection with a Transaction Document, is not true
in a material respect or is misleading in a material respect when made
or repeated.
(d) (Cross default)
Any Financial Indebtedness of the Borrower aggregating to at least
US$1,000,000 or its Currency Equivalent:
(A) is not paid when due or within an applicable grace period; or
(B) becomes due and payable or capable of being declared due and
payable before its stated maturity or expiry;
provided that subclause (B) does not apply if the Borrower exercises an
optional right of prepayment or termination is otherwise by mutual
agreement, in the absence of actual, likely or threatened default and
provided that this subclause (d) shall not apply if prior to the
Indemnified Parties or any of them exercising any of their rights under
the Transaction Documents as a consequence of the Event of Default in
this subclause (d) the Agent is reasonably satisfied that the relevant
event referred to in (A) or (B) above has been rectified within 14 days
of its occurrence to the satisfaction of the relevant creditor.
(e) (Administration, winding up, arrangements, insolvency etc.)
(i) An administrator is appointed to the Borrower;
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(ii) Except for the purpose of a solvent reconstruction or amalgamation
previously approved by the Agent:
(A) an application or an order is made, proceedings are
commenced, a resolution is passed or proposed in a notice of
meeting or an application to a court or other steps (other
than in the opinion of the Agent frivolous or vexatious
applications, proceedings, notices and steps which are
stayed or dismissed within 14 days if within Australia, or
60 days outside Australia) are taken for:
(a) the winding up, dissolution, official management or
administration of the Borrower; or
(b) the Borrower entering into an arrangement, compromise
or composition with or assignment for the benefit of
its creditors or a class of them; or
(B) the Borrower ceases, suspends or threatens to cease or
suspend the conduct of all or substantially all of its
business or disposes of or threatens to dispose of
substantially all of its assets; or
(iii) the Borrower is, or under applicable legislation is taken to be,
unable to pay its debts (other than as the result of a failure to
pay a debt or claim the subject of a good faith dispute) or stops
or suspends or threatens to stop or suspend payment of all or a
class of its debts.
(iv) there shall have been entered against the Borrower a decree or
order by a court adjudging it bankrupt or insolvent, or approving
as properly filed a petition seeking reorganisation, arrangement,
adjustment or composition of or in respect of it under any
applicable law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by it
of proceedings to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganisation or relief under any
applicable law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it
or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they
become due.
(v) A case or other proceeding shall be commenced against the Borrower
in any court of competent jurisdiction in United States of America
or any of its States seeking:
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(i) relief under the United States federal bankruptcy laws or
under any other laws relating to liquidation; or
(ii) the appointment of a trustee, receiver, custodian,
liquidator or the like for the Borrower or for all or any
substantial part of their respective assets;
and such case or proceeding shall continue undismissed or unstayed
for a period of sixty (60) consecutive days, or an order granting
the relief requested in such case or proceeding shall be entered.
(f) (Enforcement against assets)
(i) A receiver, receiver and manager, administrative receiver, trustee
or similar officer is appointed to;
(ii) a holder of a Security Interest pertaining to any assets of the
Borrower becomes entitled to foreclose such Security Interest or
any such Security Interest becomes enforceable or is enforced
over; or
(iii) a distress, attachment or other execution involving an amount in
excess of US$1,000,000 (or Currency Equivalent) is levied or
enforced over,
all or any of the assets or undertaking of the Borrower.
(g) (Analogous process) Anything analogous to anything referred to in
paragraphs (d) to (f) to inclusive or having substantially similar
effect occurs with respect to any Affiliate of the Borrower including
under any law of any jurisdiction.
(h) (Vitiation of Transaction Documents)
(i) All or any part of a Transaction Document is terminated or is or
becomes void, illegal, invalid, unenforceable or of limited force
and effect;
(ii) a party becomes entitled to terminate, rescind or avoid all or
part of a Transaction Document; or
(iii) a party other than the Agent or a Participant alleges or claims
that an event described in sub-paragraph (i) has occurred or that
it is entitled as described in sub-paragraph (ii).
(i) (Amendment of articles) The articles of incorporation or By-Laws of the
Borrower are amended in breach of Clause 16.1(l).
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(j) (Revocation of Authorisation) An Authorisation which is material to the
performance by the Borrower of its obligations under a Transaction
Document, or to the validity and enforceability of a Transaction
Document or to the security of the Indemnified Parties is repealed,
revoked or terminated or expires, or is modified or amended or
conditions are attached to it in a manner unacceptable to the Agent, and
is not replaced, if capable of replacement, within 14 days, by another
Authorisation acceptable to the Agent.
(k) (Material adverse change) Any other event or series of events, whether
related or not, occurs (including, without limitation, a material
adverse change in the business, assets or financial condition of the
Borrower, or the value of the Mortgaged Property), which may in the
opinion of the Agent have a Material Adverse Effect.
(l) (Control of Borrower) Without the prior consent of the Agent:
(i) the Borrower becomes a Subsidiary of another person; or
(ii) in the opinion of the Agent there is a substantial change in the
ownership or Control of the Borrower.
(m) (Compulsory acquisition)
(i) All or any substantial or material part of the Mortgaged Property
is compulsorily acquired by or by order of a Governmental Agency
or under law;
(ii) a Governmental Agency orders the sale, vesting or divesting of all
or any substantial or material part of the Mortgaged Property;
(iii) a Governmental Agency takes a step for the purpose of any of the
foregoing or proposes or threatens to do any of the foregoing and
the Borrower fails to take or diligently to pursue steps necessary
or reasonably requested by the Agent for the purpose of preventing
the occurrence of any of the foregoing; or
(iv) if any Governmental Agency shall have condemned, nationalised,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Borrower or of its share
capital, or shall have assumed custody or control of such property
or other assets or of the business or operations of the Borrower
or of its share capital, or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that
would prevent the Borrower or its officers from carrying on its
business or operations or a substantial part thereof.
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(n) (Governmental Interference) A law or anything done by a Governmental
Agency wholly or partially to a material extent renders illegal,
prevents or restricts the performance or effectiveness of a Transaction
Document or otherwise has in the opinion of the Agent a Material Adverse
Effect.
(o) (Stock Exchange Listing) The Borrower ceases to be listed on the New
York Stock Exchange or if listed on the Australian Stock Exchange
Limited ceases to be so listed or if there is any demand or proceeding
commenced by any relevant stock exchange or other Governmental Agency
for such delisting.
(p) (Financial Undertakings) The Financial Undertakings are not complied
with at all times for any reason (other than any non-compliance which is
rectified within 14 days of breach of the relevant Financial
Undertaking).
(q) (Share Ratio) The Share Ratio Undertaking is not complied with at all
times for any reason.
17.2 Consequences
In addition to any other rights provided by law or any Transaction Document,
at any time after an Event of Default (if such Event of Default has not been
expressly waived in writing by the Agent) the Agent may and shall if the
Majority Participants direct do all or any of the following:
(A) by notice to the Borrower declare all moneys actually or contingently
owing under this Agreement immediately due and payable, and the Borrower
will immediately pay the Principal Outstanding together with accrued
interest and fees and all such other moneys; and/or
(B) by notice to the Borrower cancel the Loan Commitments.
17.3 Default Conversion and Indemnity
Without limiting the generality of any of the other provisions herein
contained, at any time after an Event of Default has occurred (and is
subsisting so far as the Agent has actual knowledge) the Agent may in its
absolute discretion at any time and from time to time thereafter without
notice to the Borrower make a spot or forward purchase of A$ on behalf of the
Borrower at the prevailing market price in accordance with the Agent's usual
practice necessary to repay any or all of the present or future, actual or
contingent US$ obligations of the Borrower to the Agent or Participants. All
moneys expended and costs incurred by the Agent in such purchase as from the
date such moneys are expended or costs are incurred, shall be deemed an A$
Advance repayable forthwith upon demand by the Agent and there shall accrue
thereon and be payable by the Borrower to the Agent interest calculated on a
daily basis calculated from the date of such loan at the rate per annum and in
the manner specified in Clause 18.2.
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17.4 Currency Indemnity
If a judgement or order is rendered by any court or tribunal for the payment
of any amounts owing to the Agent or Participant under this Agreement or for
the payment of damages in respect of any breach of this Agreement or under or
in respect of a judgement or order of another court or tribunal for the
payment of such amounts or damages and such judgement or order is expressed in
a currency ("the Judgement Currency") other than Australian Dollars ("the
Domestic Currency") the Borrower shall indemnify and hold harmless the Agent
and Participants against any deficiency in terms of the Domestic Currency in
the amounts received by the Agent Participants arising or resulting from any
variation as between:
(a) the rate of exchange at which the Agent or Participants as the case may
be bona fide at the time the judgement or order is rendered is able in
accordance with its usual market practice to purchase the Domestic
Currency with the Judgement Currency; and
(b) the rate of exchange at which the Agent or Participants is able in
accordance with its usual market practice to purchase the Domestic
Currency with the amount of the Judgement Currency actually received by
the Agent or Participants.
18. INTEREST ON OVERDUE AMOUNTS
18.1 Accrual and payment
To the extent not prohibited by any applicable law:
(a) (Accrual) Interest accrues on each unpaid amount which is due and
payable by the Borrower under or in respect of any Transaction
Document (including interest payable under this Clause):
(i) on a daily basis up to the date of actual payment from (and
including) the due date or, in the case of an amount payable
by way of reimbursement or indemnity, the date of
disbursement or loss, if earlier;
(ii) both before and after judgment (as a separate and
independent obligation); and
(iii) at the rate provided in Clause 18.2.
(b) (Payment) The Borrower shall pay interest accrued under this
Clause on demand by the Agent and on the last Business Day of each
calendar quarter.
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18.2 Rate
The rate applicable under this Clause is the sum of 2% per annum plus the
higher of:
(a) the rate (if any) applicable to the amount immediately before the due
date; and
(b) for successive Interest Periods not exceeding one month selected by the
Agent, the rate determined by the Agent to be the Base Rate for US$ or
A$ as the amount owing may be denominated, as the case may be.
19. FEES
19.1 Establishment fee
The Borrower shall pay to the Agent (on account of it and the Participants in
shares agreed between the Agent and the Participants) an establishment fee
calculated and payable as follows:
(a) A$200,000 prior to the date of this Agreement;
(b) on the first Business Day of the month after the month of the first
drawdown of an Advance, 1.25% of the maximum Original US$ Value of the
Principal Outstanding during the month of that first drawdown and on the
first Business Day of each subsequent month 1.25% of any increase in the
maximum Original US$ Value of the Principal Outstanding during the
immediate preceding month (being an increase in the amount upon which
the 1.25% fee has previously been calculated);
provided that
(c) no amount is required to be paid under Clause 19.1(b) until the amount
otherwise payable exceeds A$200,000 and only such excess is payable;
(d) the maximum fee payable under this Clause 19.1 is 1.25% multiplied by
the Loan Facility Limit and upon payment of that maximum amount no
further payments are required under Clause 19.1(b);
(e) if no extension of the Expiry Date is granted under Clause 10, there
will be refunded by the Agent or as applicable the respective
Participants who received those fees, any fees paid under this Clause
19.1 which exceed whichever is the greater of:
(i) A$200,000; or
(ii) fees calculated in accordance with this Clause 19.1 substituting
"0.75%" in lieu of "1.25%" in subclauses (b) and (c); and
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(f) the fee payable in accordance with this Clause 19.1 remains payable
notwithstanding any earlier repayment or termination of the Loan
Facility.
19.2 Commitment fee
(a) A commitment fee accrues at the rate of zero point two five per centum
(0.25%) per annum on the daily amount of each Participant's Undrawn Loan
Commitment.
(b) The fee is calculated on the actual number of days elapsed and a year of
365 days.
(c) The Borrower shall pay any accrued commitment fee in arrears on the
first Business Day of each month in respect of the whole amount accrued
for the preceding month and any pro rata payment on the Expiry Date.
20. INDEMNITIES
On demand the Borrower shall indemnify each Indemnified Party against any
loss, cost, charge, liability or expense the Indemnified Party (or any officer
or employee of the Indemnified Party) may sustain or incur as a direct or
indirect consequence of:
(a) the occurrence of any Event of Default;
(b) any exercise or attempted exercise of any right, power or remedy under
any Transaction Document;
(c) accommodation requested in a Drawdown Notice not being provided for any
reason (including, without limitation, failure to fulfil any condition
precedent but excluding any default by the Agent); or
(d) a Participant receiving payments of principal in respect of any
Principal Outstanding otherwise than in accordance with Clause 7.1 or
Clause 8.1 for any reason (but excluding default by the Agent).
Without limitation the indemnity will cover any amount determined by the
relevant Participant to be incurred by reason of the liquidation or
re-employment of deposits or other funds acquired or contracted for by the
relevant Participant to fund or maintain any accommodation or amount
(including loss of margin) and by reason of the reversing or termination of
any agreement or arrangement entered into by the relevant Participant to
hedge, fix or limit its effective cost of funding or maintaining any
accommodation or amount and by reason of having to provide funds sooner,
and/or maintain funding later, than contemplated by the Drawdown Notice or
this Agreement (including, without limitation, additional borrowing or hedging
costs). It will not cover any Indemnified Party for any loss, cost, charge,
liability or expense caused by a default by that Indemnified Party.
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21. CONTROL ACCOUNTS
The accounts kept by the Agent constitute sufficient evidence unless the
contrary is proved of the amount at any time due from the Borrower under this
Agreement.
22. EXPENSES
On demand the Borrower shall reimburse:
(a) the Agent for the reasonable expenses of the Agent in relation to the
preparation, execution and completion of the Transaction Documents
(including expenses in relation to the Agent's due diligence and in
relation to the expert under Cluase 16.3(c)) and any subsequent consent,
approval, determination, waiver or amendment; and
(b) each Indemnified Party for the expenses of that Indemnified Party in
relation to:
(i) the actual or contemplated enforcement of the Transaction
Documents, or actual or contemplated exercise, preservation or
consideration of any rights, powers or remedies under the
Transaction Documents or in relation to the Mortgaged Property;
and
(ii) any inquiry by a Governmental Agency concerning the Borrower or a
transaction or act for which, or in connection with which,
financial accommodation or funds raised under a Transaction
Document are used or provided,
including, without limitation, any expenses incurred in any review or
audit or in retaining consultants to evaluate matters of material
concern to the Indemnified Parties, and administrative costs including
any time of its executives (whose time and costs are to be charged at
reasonable rates),
and including in each case, fees and expenses of solicitors, attorneys,
accountants, appraisers, consultants and other experts and agents retained by
the Agent or other Indemnified Party in connection with all such matters on a
full indemnity basis, expressly including costs of the legal opinion referred
to in Clause 14.1.
23. STAMP DUTIES AND TAXES
(a) The Borrower shall pay all stamp, transaction, registration and similar
Taxes (including, subject to paragraph (c), fines and penalties) which
may be payable or determined to be payable in relation to the execution,
delivery, performance or enforcement of any Transaction Document or any
payment or receipt or any other transaction contemplated by any
Transaction Document.
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(b) Those Taxes include financial institutions duty, debits tax or other
Taxes payable by return and Taxes passed on to any Indemnified Party by
a bank or financial institution but excludes any Tax on the overall net
income of an Indemnified Party.
(c) On demand the Borrower shall indemnify each Indemnified Party against
any liability resulting from delay or omission to pay those Taxes except
to the extent the liability results from failure by the Indemnified
Party to pay any Tax after having been put in funds to do so by the
Borrower.
(d) The Borrower shall not be liable for any cost or expense under this
Clause 23 directly due to any substitution, addition or replacement of
any Participant, the Agent or Security Trustee or any assignment of the
rights of any of those persons under the Transaction Documents (other
than arising in respect of enforcement of the Transaction Documents) and
which would not have been incurred had that substitution, addition,
replacement or assignment not taken place.
24. SET-OFF
(a) The Borrower irrevocably authorises each Indemnified Party, if an Event
of Default is subsisting, to apply any credit balance in any currency
(whether or not matured) in any of its accounts with any branch of that
Indemnified Party towards satisfaction of any sum at any time due and
payable by it to that Indemnified Party under or in relation to any
Transaction Document. Subject to paragraph (b), no Indemnified Party is
obliged to make the application.
(b) To implement the application any Indemnified Party may effect currency
exchanges as if on a competitive basis and otherwise in accordance with
its normal procedures.
25. WAIVERS, REMEDIES CUMULATIVE, SOVEREIGN IMMUNITY
(a) No failure to exercise and no delay in exercising any right, power or
remedy under any Transaction Document operates as a waiver. Nor does any
single or partial exercise of any right, power or remedy preclude any
other or further exercise of that or any other right, power or remedy.
(b) The rights, powers and remedies provided to the indemnified Parties in
the Transaction Documents are in addition to, and do not exclude or
limit, any right, power or remedy provided by law.
(c) The Borrower irrevocably waives any immunity that it or its property has
from:
(a) set off;
(b) legal, arbitral or administrative proceedings;
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(c) any process or order of any court, administrative tribunal or
arbitrator for the satisfaction or enforcement of a judgment,
order or arbitral award or for the arrest, detention or sale of
any property;
(d) service upon it of any process, judgment, order or arbitral award,
on the grounds of sovereignty or otherwise under any law of any
jurisdiction.
26. CONSENTS AND APPROVALS
Except where expressly stated any Indemnified Party may give or withhold, or
give conditionally, approvals and consents, may be satisfied or unsatisfied,
may form opinions, and may exercise rights, powers and remedies, at its
absolute discretion. Without limitation, no term shall be implied, nor shall
any rule of construction apply to the effect that, an Indemnified Party must
act reasonably. Any consent or approval of an Agent or Participant shall not
be binding upon the Agent or a Participant unless given in writing.
27. ACKNOWLEDGEMENT BY BORROWER AND GUARANTORS
The Borrower confirms that:
(a) it has not entered into this Agreement in reliance on, or as a result
of, any conduct of any kind of or on behalf of any Indemnified Party or
any Affiliate of any Indemnified Party (including, without limitation,
any advice, warranty, representation or undertaking); and
(b) neither any Indemnified Party nor any Affiliate of any Indemnified Party
is obliged to do anything (including, without limited, disclose anything
or give advice),
except as expressly set out in the Transaction Documents or in writing duly
signed by or on behalf of the relevant Indemnified Party or Affiliate.
28. SEVERABILITY OF PROVISIONS
Any provision of any Transaction Document which is prohibited or unenforceable
in any jurisdiction is ineffective as to that jurisdiction to the extent of
the prohibition or unenforceability. That does not invalidate the remaining
provisions of that Transaction Document nor affect the validity or
enforceability of that provision in any other jurisdiction.
29. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES
(a) All representations and warranties in any Transaction Document survive
the execution and delivery of the Transaction Documents and the
provision of advances and accommodation.
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(b) Each indemnity in any Transaction Document:
(i) is a continuing obligation;
(ii) is a separate and independent obligation; and
(iii) survives termination or discharge of the relevant Transaction
Document.
30. MORATORIUM LEGISLATION
To the full extent permitted by law all legislation which at any time directly
or indirectly:
(a) lessens, varies or affects in favour of the Borrower any obligation
under a Transaction Document; or
(b) delays, prevents or prejudicially affects the exercise by any
Indemnified Party of any right, power or remedy conferred by any
Transaction Document,
is excluded from the Transaction Documents.
31. ASSIGNMENTS
31.1 Assignment by Borrower
The Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Agent acting on the
instructions of all Participants.
31.2 Assignment by Participants
A Participant may assign or transfer all or any of its rights or obligations
under the Transaction Documents at any time if:
(i) any necessary prior Authorisation is obtained;
(ii) it gives the Borrower prior written notice of the identity of the
assignee or transferee;
(iii) unless the transferee or assignee is an Affiliate of the Participant,
the Borrower has given its prior consent, which:
(A) it shall not withhold unreasonably; and
(B) will be deemed to have been given if no response is received
within 15 days of the request for consent; and
(iv) in the case of a transfer of obligations, the transfer is effected by a
substitution in accordance with Clause 31.3.
<PAGE>
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31.3 Substitution certificates
(a) If a Participant wishes to substitute a new bank or financial
institution for all or part of its participation under this Agreement,
it and the substitute shall execute and deliver to the Agent four
counterparts of a certificate substantially in the form of Schedule 3.
(b) On receipt of the certificate, if the Agent is satisfied that the
substitution complies with Clause 31.2, it shall promptly:
(i) notify the Borrower:
(ii) countersign the counterparts on behalf of all other parties to
this Agreement;
(iii) enter the substitution in a register kept by it (which shall be
conclusive); and
(iv) retain one counterpart and deliver the others to the retiring
Participant, the substitute Participant and the Borrower.
(c) Each other party to this Agreement irrevocably authorises the Agent to
sign each certificate on its behalf.
(d) Unless the Agent otherwise agrees, no substitution may be made while any
Drawdown Notice is current.
(e) Notwithstanding any other provision of any Transaction Document, the
Borrower need not pay the cost to any person of a substitution under
this Clause.
31.4 Disclosure
A Participant may disclose to a proposed assignee, transferee or
sub-participant information which relates to the Borrower or was furnished in
connection with the Transaction Documents if it first obtains the consent of
the Borrower (which shall not unreasonably withhold or delay that consent).
31.5 No increased costs
Notwithstanding anything to the contrary in the Transaction Documents, but
without limiting Clause 12, if a Participant assigns its rights or transfers
its obligations under the Transaction Documents, the Borrower will not be
required to pay any net increase in the aggregate amount of costs, Taxes, fees
or charges which is a direct consequence of the assignment or transfer or as
referred to in Clause 23(d).
<PAGE>
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32. RELATIONSHIP OF PARTICIPANTS TO AGENT
32.1 Authority
(a) Subject to Clause 32.15 each Participant irrevocably appoints the Agent
to act as its agent under the Transaction Documents with all powers
expressly delegated to the Agent by the Transaction Documents together
with all other powers reasonably incidental to those powers.
(b) The Agent will have no duties or responsibilities except those expressly
set out in the Transaction Documents.
32.2 Instructions extent of discretion
(a) In the exercise of all its rights, powers and discretions under the
Transaction Document the Agent shall act in accordance with the
instructions (if any) of the Majority Participants or (where so
specified) of all Participants.
(b) In the absence of those instructions, the Agent need not act but may act
as it sees fit in the best interests of the Participants.
(c) Any action taken by the Agent in accordance with the Transaction
Documents binds all the Participants.
(d) Except where this Agreement otherwise expressly provides, the Agent
shall not be obliged to consult with the Participants before giving any
consent, approval or agreement or making any determination under the
Transaction Documents.
32.3 No obligation to Investigate authority
(a) The Borrower need not enquire whether any instructions have been given
to the Agent by all Participants, or the Majority Participants or as to
the terms of those instructions.
(b) As between the Borrower on the one hand and the Agent and the
Participants on the other, all action taken by the Agent under the
Transaction Documents will be taken to be authorised.
32.4 Agent not a fiduciary
The Agent will not be taken to owe any fiduciary duty to any Participant, the
Borrower or any other person except as expressly provided in a Transaction
Document.
<PAGE>
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32.5 Exoneration
Neither the Agent nor any of its respective directors, officers, employees,
agents, attorneys, Affiliates or successors is responsible to the Participants
for or will be liable in respect of:
(a) any conduct relating to, or any statement, conduct, representation or
warranty contained in or relying on, any loan proposal or information
memorandum or in any Transaction Document or in any document or
agreement referred to in or received under any Transaction Document;
(b) the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any loan proposal or information memorandum, any
Transaction Document or any other document or agreement;
(c) any failure by the Borrower to perform its obligations; or
(d) any action taken or omitted to be taken by it or them under any
Transaction Document except in the case of its or their own fraud,
wilful misconduct or negligence.
None of the above paragraphs limits the generality of any other.
32.6 Delegation
The Agent may employ agents and attorneys.
32.7 Reliance on documents and experts
The Agent may rely on:
(a) any document (including any facsimile transmission, telegram or telex)
believed by it to be genuine and correct; and
(b) advice and statements of lawyers, independent accountants and other
experts selected by the Agent.
32.8 Notice of transfer
The Agent may treat each Participant as the holder of the Participant's rights
under the Transaction Documents until the Agent has received a substitution
certificate in accordance with this Agreement or a notice of assignment
satisfactory to the Agent.
32.9 Notice of default
(a) The Agent will be taken not to have knowledge of the occurrence of an
Event of Default or Potential Event of Default unless the Agent has
received notice from a
<PAGE>
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Participant or the Borrower stating that an Event of Default or
Potential Event of Default has occurred and describing it.
(b) If the Agent receives notice or the officers of the Agent having day to
day responsibility for the transaction become aware that an Event of
Default has occurred, the Agent shall notify the Participants, subject
to Clause 32.14(c).
32.10 Agent as Participant and banker
(a) The Agent in its capacity as a Participant has the same rights and
powers under the Transaction Documents as any other Participant it may
exercise them as if it were not acting as the Agent.
(b) The Agent may engage in any kind of business with any Relevant Company
as if it were not the Agent. It may receive consideration for services
in connection with any Transaction Document and otherwise without having
to account to the Participants.
32.11 Indemnity to Agent
(a) Each Participant shall indemnify the Agent on demand (to the extent not
reimbursed by the Borrower under any Transaction Document) ratably in
accordance with their respective Loan Commitments against any loss,
cost, liability, expense or damage the Agent may sustain or incur
directly or indirectly under or in relation to the Transaction
Documents.
(b) No Participant is liable under this sub-clause for any of the above to
the extent that they arise from the Agent's fraud, wilful misconduct or
negligence.
(c) The Borrower shall indemnify each Participant on demand against any
amount paid under paragraph (a). This does not limit its liability under
any other provision.
32.12 Independent Investigation of credit
Each Participant confirms that it has made and will continue to make,
independently and without reliance on the Agent or any other Participant, and
based on the documents, agreements and information which it regards
appropriate:
(a) its own investigations into the affairs of the Borrower; and
(b) its own analyses and decisions whether to take or not take action under
any Transaction Document.
<PAGE>
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32.13 No monitoring
The Agent is not required to keep itself informed as to the compliance by the
Borrower with any Transaction Document or any other document or agreement or
to inspect any property or book of the Borrower.
32.14 Information
(a) The Agent shall provide to each Participant a copy of each notice,
report and other document which is provided to the Agent and which is
deemed material by the Agent in sufficient copies for the Participants
under the Transaction Documents.
(b) The Borrower authorises the Agent to provide any Participant with any
information concerning the affairs, financial condition or business of
the Borrower which may come into the possession of the Agent. The Agent
is not obliged to do so.
(c) The Agent is not obliged to disclose any information relating to the
Borrower where in the opinion of the Agent (on the basis of the advice
of its legal advisers) disclosure would or might breach a law or a duty
of secrecy or confidence.
32.15 Replacement of Agent
(a) Subject to the appointment of a successor Agent as provided in this
Clause:
(i) the Agent may resign at any time if the Majority Participants have
given their prior consent and if the Agent gives the Borrower a
copy of its request for consent; and
(ii) the Majority Participants may remove the Agent from office by
giving not less than 30 days notice to the Borrower and the Agent.
(b) Upon request for consent to resignation or upon removal the Majority
Participants have the right to appoint a successor Agent approved by the
Borrower and who accepts the appointment.
(c) If the Majority Participants consent to the resignation of the Agent but
no successor Agent is appointed within 30 days after request for
consent, the retiring Agent may on behalf of the Participants appoint a
successor Agent who accepts the appointment, subject to the consent of
the Borrower which shall not be unreasonably withheld.
(d) The Participants shall not unreasonably withhold their consent to any
request for consent to resignation and shall respond to that request as
soon as practicable.
<PAGE>
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(e) On its appointment the successor Agent will have all the rights, powers
and obligations of the retiring Agent. The retiring Agent will be
discharged from its rights, powers and obligations.
(f) Subject to the Security Trust Deed, the retiring Agent shall execute and
deliver all documents or agreements which are necessary or in its
opinion (on the basis of the advice of its legal advisers) desirable to
transfer to the successor Agent each Security Interest and Guarantee
held by the retiring Agent in relation to the Secured Moneys or to
effect the appointment of the successor Agent.
(g) After any retiring Agent's resignation or removal, this Clause will
continue in effect in respect of anything done or omitted to be done by
it while it was acting as Agent.
(h) The Borrower shall not unreasonably withhold its approval of any
proposed successor Agent and shall respond as soon as practicable to any
request for approval.
(i) Notwithstanding any other provision of any Transaction Document, the
Borrower need not pay the cost to any person of the appointment of a
successor Agent under this Clause.
(j) Where the Agent resigns the retiring Agent shall reimburse the Borrower
and each Indemnified Party for its legal costs and expenses incurred in
the appointment of a successor Agent.
32.16 Amendment of Transaction Documents
Each Participant authorises the Agent to agree with the other parties to any
Transaction Document to amend any Transaction Document if:
(a) the amendment will not increase the Loan Commitments or other
obligations of the Participants, change the dates or amounts of payment
of any of the Secured Moneys, release any of the Mortgaged Property or
amend this sub-clause or any provision under which the agreement or
instructions of all Participants or the Majority Participants are
required; and
(b) (i) the Agent is satisfied that the amendment is made to correct a
manifest error or an error of a minor nature or that the amendment
is of a formal or technical nature only; or
(ii) the Majority Participants have, upon request by the Agent,
notified the Agent of their agreement to the amendment.
Each Participant will be bound by any amendment so agreed to by the
Agent as if it were party to the relevant amendment agreement.
<PAGE>
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33. PROPORTIONATE SHARING
33.1 Sharing
Whenever any Participant receives or recovers any money in respect of any sum
due from the Borrower under a Transaction Document in any way (including
without limitation by set-off but excluding recovery from a substitute
Participant by reason and to the extent of a substitution under Clause 31.3)
except through distribution by the Agent under this Agreement:
(a) the Participant shall immediately notify the Agent;
(b) the Participant shall immediately pay that money to the Agent (unless
the Agent otherwise directs);
(c) the Agent shall treat the payment as if it were a payment by the
Borrower on account of all moneys then payable to the Indemnified
Parties, and
(d) (i) the payment or recovery will be taken to have been a payment for
the account of the Agent and not to the Participant for its own
account and to that extent the liability of the Borrower to the
Participant will not be reduced by the recovery or payment, other
than to the extent of any distribution received by the Participant
under paragraph (c); and
(ii) (without limiting sub-paragraph (i)) immediately on the
Participant making or becoming liable to make a payment under
paragraph (b), the Borrower shall indemnify the Participant
against the payment to the extent that (notwithstanding
sub-paragraph (i)) its liability has been discharged by the
recovery or payment.
If all or a portion of the relevant recovery or payment by or to the
Participant is subsequently rescinded or must otherwise be restored to the
Borrower the Participants shall repay to the Agent for the account of the
Participant the amount which is necessary to ensure that all the Participants
share ratably in the amount of the recovery or payment retained. Paragraphs
(c) and (d) above apply only to the retained amount.
33.2 Refusal to join In action
A Participant who does not accept an invitation to join an action against the
Borrower or does not share in the costs of the action (in each case having
been given a reasonable opportunity to do so) is not entitled to share in any
amount so recovered.
34. AGENT DEALINGS
Except where otherwise expressly provided:
<PAGE>
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(a) all correspondence under or in relation to the Transaction Documents
between a Participant on the one hand, and the Borrower on the other,
will be addressed to the Agent; and
(b) the Participants and Borrower agree to deal with and through the Agent
in accordance with this Agreement.
35. CONFIDENTIALITY
35.1 Confidentiality
Subject to the following sub-clause, no Indemnified Party shall disclose any
information or documents supplied by the Borrower in connection with the
Transaction Documents which are specifically indicated by the Borrower to be
confidential and which are not in the public domain.
35.2 Permitted disclosure
An Indemnified Party may disclose any confidential information or documents:
(a) in enforcing a Transaction Document or in a proceeding arising out of or
in connection with a Transaction Document or to the extent that
disclosure is reasonably regarded by the Indemnified Party as necessary
to protect its interests;
(b) if required under a binding order of a Governmental Agency or any
procedure for discovery in any proceedings;
(c) if required under any law or any administrative guideline, directive,
request or policy whether or not having the force of law and, if not
having the force of law, the observance of which is in accordance with
the practice of responsible bankers or financial institutions similarly
situated;
(d) as required or permitted by any Transaction Document;
(e) to its legal advisers and its consultants; or
(f) with the prior written consent of the Borrower which shall not be
unreasonably withheld in relation to any actual or prospective
Participant or other person who agrees to accept a credit risk in
relation to any of the Transaction Documents, provided that the Borrower
is deemed to consent to the banking and credit departments of N M
Rothschild & Sons Ltd, or the banking and credit departments of the
Agent's Affiliates.
35.3 Survival of obligation
This Clause survives the termination of this Agreement.
<PAGE>
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36. NOTICES
All notices, requests, demands, consents, approvals, agreements or other
communications to or by a party to this Agreement:
(a) must be in writing;
(b) must be signed by an Authorised Officer of the sender; and
(c) will be deemed to be duly given or made:
(i) (in the case of delivery in person or by post) when delivered,
received or left at the address of the recipient shown in
subclause (d) below or to any other address which it may have
notified the sender; or
(ii) (in the case of facsimile transmission) on receipt by the sender
of an error free transmission report,
but if delivery or receipt is on a day on which business is not
generally carried on in the place to which the communication is sent or
is later than 4 pm (local time), it will be taken to have been duly
given or made at the commencement of business on the next day on which
business is generally carried on in that place.
(d) The address for service of notices are initially:
The Agent and Security Trustee:
Rothschild Australia Limited
Level 15
1 O'Connell Street
SYDNEY NSW 2000
Facsimile: 612 323 2305
Attention: Banking Department
The Borrower:
Coeur D'Alene Mines Corporation
400 Coeur d'Alene Mines Building
505 Front Avenue
Post Office Box 1
Coeur d'Alene
Idaho 83814
United States of America
Facsimile: 208 667 2213
Attention: Chief Executive Officer
<PAGE>
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The Participants:
As set out in Schedule 1.
37. SERVICE OF PROCESS
Service of process in any legal action or proceeding which may may be brought
by the Agent, Security Trustee or Participants at any time with respect to any
Transaction Document may be effected at the office of the Borrower's agent in
Australia as registered under the Corporations Law.
38. AUTHORISED OFFICERS
The Borrower irrevocably authorises each Indemnified Party to rely an a
certificate by any person purporting to be its director or secretary as to the
identity and signatures of its Authorised Officers. The Borrower warrants that
those persons have been authorised to give notices and communications under or
in connection with the Transaction Documents.
39. GOVERNING LAW AND JURISDICTION
This Agreement is governed by the laws of New South Wales, Australia and the
Borrower submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there.
40. COUNTERPARTS
This Agreement may be executed in any number of counterparts and all
counterparts together will be taken to constitute one instrument.
41. ATTORNEY
Each attorney executing this Agreement states that the Attorney has no notice
of revocation or suspension of the power of attorney under which it is
executed.
<PAGE>
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SCHEDULE 1
PARTICIPANTS
<TABLE>
<CAPTION>
Participant Loan Commitment Address for Correspondence
<S> <C> <C>
Rothschild Australia Limited US$50,000,000 Level 15
1 O'Connell Street
SYDNEY NSW 2000
Attention:Banking Department
Facsimile: (612) 323 2305
</TABLE>
<PAGE>
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SCHEDULE 2
DRAWDOWN NOTICE
To: [Agent]
COEUR D'ALENE MINES CORPORATION - DRAWDOWN NOTICE NO.
We refer to the Syndicated Facility Agreement between Coeur D'Alene Mines
Corporation ("the Borrower"), Rothschild Australia Limited ("the Agent" and
"the Security Trustee') and the Participants (as therein defined) dated 6 June
1996 (the "Facility Agreement").
Under Clause 6 of the Facility Agreement:
(1) we give you irrevocable notice that we wish to draw under the Loan
Facility on 19 (the "Drawdown Date");
[NOTE: Date is to be a Business Day.]
(2) particulars of the Advance requested and initial Interest Period
selected are as follows:
Advance denomination and Amount Interest Period
A$ [30/60/90/180] days
US$ [1/2/3/6] month(s)
[NOTE: 1,000,000 or multiples of 1,000,000 required]
(3) We request that the proceeds of the drawing be remitted as follows:
(a) A$ to be remitted to account at
account number ; and
(b) US$ to be remitted to account at
account number .
<PAGE>
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(4) we represent and warrant that:
(a) (Unless specified below) the representations and warranties in the
Facility Agreement are true as though they had been made at the
date of this Drawdown Notice and the Drawdown Date specified above
in respect of the facts and circumstances then subsisting;
(b) (Unless specified below) no Event of Default or Potential Event of
Default is subsisting or will result from the Advance;
Specified exceptions (if any):
[Not applicable]
[NOTE: Inclusion of specified exceptions to (a) and (b) shall not
prejudice the Conditions Precedent in the agreement.]
(5) The Advance(s) requested is (are) to be applied for the following
purposes:
Amount Purpose Details
[NOTE: Such amounts and purposes to comply with Clause 4].
Definitions in the Facility Agreement apply when used in this Drawdown Notice.
SIGNED for and on behalf of )
COEUR D'ALENE MINES CORPORATION )
in the presence of: )
...............................
Signature of Authorised Officer
..................................... ...............................
Signature of Witness Name of Authorised Officer
.....................................
Name of Witness (Print Name)
DATED 19 .
<PAGE>
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SCHEDULE 3
SUBSTITUTION CERTIFICATE
Relating to the Syndicated Facility Agreement (the "Facility Agreement") dated
6 June 1996 between Coeur D'Alene Mines Corporation (as Borrower), Rothschild
Australia Limited (as "Agent" and "Security Trustee") and the Participants (as
defined in the Facility Agreement).
BETWEEN:
1. (the "Substitute Participant");
[name]
2. (the "Retiring Participant"); and
[name]
3. (the "Agent") for itself and on behalf of the
other parties to the Facility Agreement.
IT IS AGREED as follows.
1. DEFINITIONS
1.1 In this Certificate terms defined in the Facility Agreement have the
same meanings and the following terms shall have the following meanings
unless the context otherwise requires.
"Substituted Participation" means the Loan Commitment of the Retiring
Participant and the participation in the Principal Outstanding drawn
utilising that Loan Commitment [in respect of the following
accommodation]:
[NOTE: To be inserted if only part of participation is being
substituted]
"Substitution Date" means the date of countersignature of this
Certificate by the Agent [or whichever is the later].
[NOTE: Insert any other date of dates as appropriate.]
<PAGE>
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1.2 Clause 1.2 of the Facility Agreement applies to this Certificate.
2. SUBSTITUTION
2.1 Release of Retiring Participant
The Retiring Participant shall cease to be entitled to and bound by its rights
and obligations as a Participant under the Transaction Documents [relating to
the Substituted Participation].
[NOTE: Insert if only part of commitment assumed]
with effect from and including the Substitution Date but shall remain entitled
to and bound by rights and obligations which accrue up to the Substitution
Date.
2.2 Assumption by Substitute Participant
With effect from and including the Substitution Date:
(a) the Substitute Participant and each of the parties to the Facility
Agreement shall assume obligations towards each other and acquire
rights against each other which are identical to the rights and
obligations which cease under Clause 2.1, except insofar as the
obligations so assumed and rights so acquired relate to the
identity of or location of the Substitute Participant and not to
the identity of or location of the Retiring Participant; and
(b) the Substitute Participant shall be deemed a party to the Facility
Agreement as a Participant with a Loan Commitment [and
participation in the Principal Outstanding] equal to the
Substituted Participation.
3. INDEPENDENT ASSESSMENT BY SUBSTITUTE PARTICIPANT
Without limiting the generality of Clause 2 the Substitute Participant agrees
as specified in Clause 32.5 (Exoneration) and Clause 32.12 (Independent
investigation of credit) of the Facility Agreement (which applies, subject to
any agreement to the contrary, as if references in that Clause to the Agent
included the Retiring Participant and as if references to any Transaction
Document included this Certificate.
4. PAYMENTS
From and including the Substitution Date the Agent shall make all payments due
under the Transaction Documents in relation to the Substituted Participation
to the Substitute Participant. The Retiring Participant and the Substitute
Participant will make directly between themselves those payments and
adjustments which they agree with respect to accrued interest, fees, costs and
other amounts attributable to the Substituted Participation prior to the
Substitution Date.
<PAGE>
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5. NOTICES
For the purpose of the Facility Agreement, the address for correspondence of
the Substitute Participant is the address set out below.
Name:
Address:
Facsimile:
Attention:
6. LAW
This Certificate is governed by the laws of New South Wales.
Signed by the authorised representatives of the parties in[ ].
THE RETIRING PARTICIPANT
[Name]
by: ____________________________
Authorised Officer
THE SUBSTITUTE PARTICIPANT
[Name]
by: ____________________________
Authorised Officer
Countersigned by an authorised representative of the Agent for itself and for
the other parties to the Facility Agreement.
THE AGENT
[Name]
by: ____________________________
DATED 19 .
<PAGE>
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SCHEDULE 4
EXHIBIT E
OMNIBUS CERTIFICATE
OF
Coeur D'Alene Mines Corporation
I, the undersigned, Secretary of Coeur D'Alene Mines Corporation (the
"Company") in my capacity as Secretary of the Company and not in my personal
capacity, DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to that certain Syndicated
Facility Agreement dated as of 1996 (the "Credit Agreement"), between
Coeur D'Alene Mines Corporation (as "Borrower") and Rothschild Australia
Limited (as "Agent", "Security Trustee" and initial "Participant").
Unless otherwise defined herein, capitalised terms used in this
Certificate have the meanings assigned to such terms in the Credit
Agreement.
2. Attached hereto as Attachment I is a true, correct and complete copy of
the Certificate of Incorporation of the Company, as amended.
3. Attached hereto as Attachment II is a true, correct and complete copy of
the Bylaws of the Company as in effect on the date hereof.
4. Attached hereto as Attachment III is a true, correct and complete copy
of consent resolutions of the directors of the Company dated 1996, which
consent resolutions have not been revoked, modified, amended or
rescinded and are still in full force and effect, and the Credit
Agreement is in substantially the form of that document submitted to and
approved by the Board of Directors of the Company in such resolutions.
5. The persons named in Attachment IV attached hereto have been duly
elected, have duly qualified as and at all times material to and
including the date hereof have been officers and/or directors of the
Company holding the respective offices set forth therein opposite their
names, and the signatures set forth therein opposite their names and
their genuine signatures.
6. The following persons having the offices indicated have been appointed
Authorised Officers of the Company under the Credit Agreement.
Name Office Held
<PAGE>
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7. I know of no proceeding for the dissolution or liquidation of the
Company or threatening its existence.
8. No Event of Default or Potential Event of Default exists under the
Credit Agreement.
9. The representations and warranties of the Company set forth in the
Credit Agreement are true and correct.
10. The Company is in compliance with all applicable laws and with rules and
regulations of applicable securities exchanges pertaining to disclosure
of the transaction contemplated by the Credit Agreement and performance
by the Company of its obligations thereunder.
WITNESS my hand and the seal of the Company this day of 1996.
..............................................
Name:
Secretary
[Affix Corporate Seal]
I, the undersigned, President of the Company, DO HEREBY CERTIFY that:
is the duly elected and qualified Secretary of the Company,
and the signature above is his genuine signature.
WITNESS my hand on this day of 1996.
..............................................
Name:
President
<PAGE>
-69-
ATTACHMENT I TO CERTIFICATE OF Coeur D'Alene Mines Corporation
[Copy of the certificate of incorporation, and all amendments thereto]
<PAGE>
-70-
ATTACHMENT II TO CERTIFICATE OF Coeur D'Alene Mines Corporation
[Copy of the By-laws]
<PAGE>
-71-
ATTACHMENT III TO CERTIFICATE OF Coeur D'Alene Mines Corporation
Coeur D'Alene Mines Corporation
CONSENT RESOLUTIONS OF DIRECTORS
The following resolutions have been consented to in writing by all of the
directors of Coeur D'Alene Mines Corporation (the "Company") shall, pursuant
to the Articles of the Company, be deemed to have the same force and effect as
if passed at a meeting of directors duly called and properly constituted for
the transaction of business:
WHEREAS, presented to the directors of the Company was a draft form of the
Syndicated Facility Agreement (draft of 1996) between Coeur D'Alene Mines
Corporation (the "Borrower") and Rothschild Australia Limited (as "Agent",
"Security Trustee" and initial "Participant") (the "Credit Agreement") with
respect to a credit facility provided by the Lender in favour of Coeur D'Alene
Mines Corporation, which credit facility provides for a loan of up to
US$50,000,000 (to be drawn in US$ or A$) to Coeur D'Alene Mines Corporation.
NOW THEREFORE BE IT RESOLVED that the President and Secretary or the President
and any one other officer of the Company be, and each hereby is, authorised to
execute for and on behalf of the Company, and deliver a credit agreement
substantially in the form of the Credit Agreement presented to the directors
of the Company, except for such changes, additions and deletions as to any or
all of the terms and provisions thereof as the officer executing the Credit
Agreement on behalf of this Corporation shall deem proper, such execution by
such officer of the Credit Agreement to be conclusive evidence that such
officer deems all of the terms and provisions thereof to be proper; and that
the following persons be appointed Authorised Officers of the Company under
the Credit Agreement:
Name Office Held
FURTHER RESOLVED that each and every officer of the Company be, and hereby is,
authorised in the name and on behalf of the Company from time to time to take
such actions and to execute and deliver such certificates, instruments,
notices and documents as may be required or as such officer may deem
necessary, advisable or proper in order to carry out and perform the
obligations of the Company under the Credit Agreement, executed by the Company
pursuant to these resolutions, or under any other instrument or document
executed pursuant to or in connection with the Credit Agreement including a
Mortgage or Pledge of all shares held or to be held by the Company in Gasgoyne
Gold Mines N L and certain shares or other securities held or
<PAGE>
-72-
to be held by the Company in Orion Resources N L; all such actions to be
performed in such manner, and all such certificates, instruments, notices and
documents to be executed and delivered in such form, as the officer performing
or executing the same shall approve, the performance or execution thereof by
such officer to be conclusive evidence of the approval thereof by such officer
and by the Board of Directors.
Dated as the day of 1996
................................ ................................
Name Name
................................ ................................
Name Name
<PAGE>
-73-
ATTACHMENT IV TO CERTIFICATE OF Coeur D'Alene Mines Corporation
Name of Officer Office Signature
...................... President ......................
...................... Vice President ......................
...................... Secretary ......................
<PAGE>
-74-
SCHEDULE 5
Details of Employee Benefit Plans - Clause 15.1(q)
1. 1989 Long-Term Incentive Plan adopted by the Borrower's Board of
Directors on 30 March 1989;
2. 1993 Annual Incentive Plan effective 1 January 1993;
3. 1993 Long-Term Performance Share Plan effective 1 January 1993;
4. Supplemental Retirement and Deferred Compensation Plan effective 1
January 1993;
and as referred to in Note K - Employee Benefit Plans forming part of the
Financial Statements and Financial Statement Schedules of the Borrower
contained in Annexure B, Form 10-K for year ended 31 December 1995 annexed as
Annexure B to the Offer and Part A Statement referred to in the definition of
"Takeover" in Clause 1.1.
<PAGE>
EXECUTED as a Deed.
EXECUTED BY COEUR )
D'ALENE MINES CORPORATION )
in Coeur d'Alene, Idaho USA )
BY: ) ................................
Senior Vice President
- Chief Financial Officer
................................ ................................
Attesting Witness Print Name
................................ ................................
Print Name Secretary
................................
Print Name
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
ROTHSCHILD AUSTRALIA LIMITED )
in Canberra, ACT Australia )
by its attorney pursuant to Power )
of Attorney dated 22 May 1996 )
in the presence of: ) ................................
Signature of Attorney
................................ ................................
Attesting Witness Print Name
................................ ................................
Signature of Witness Name of Attorney
................................
Name of Witness
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
EXHIBIT 11
<TABLE>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Three Months Ended Six Months Ended
March 31, June 30
--------------------------- ---------------------------
1996 1995 1996 1995
-------- -------- -------- --------
INCOME (In thousands except for per share data)
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 21,620 15,614 21,043 15,597
========= ========= ========= =========
Income (Loss) from
continuing operations $(56,881) $ 1,238 $(56,748) $ (2,128)
Income from discontinued
operations 2,169 2,360
--------- --------- --------- ---------
Net income (Loss) (56,881) 3,407 (56,748) 232
========= ========= ========= =========
Per share amounts:
Income (loss) from
continuing operations $ (2.63) $ .08 $ (2.70) $ (.14)
Income from discontinued
operations .14 .15
--------- --------- --------- ---------
Net income (loss)
per share $ (2.63) $ .22 $ (2.70) $ (.01)
========= ========= ========= =========
Net income (loss) $(56,881) $ 3,407 $(56,748) $ 232
Less Preferred Dividends 2,632 3,130
--------- --------- --------- ---------
Net income (loss)
attributable to
common shareholders $(59,513) $ 3,407 $(59,878) $ 232
========= ========= ========= =========
Per share amounts
attributable to common
shareholders:
Net income (loss) from
continuing operations $ (2.75) $ .08 $ (2.85) $ (.14)
Income from discontinued
operations .14 .15
--------- --------- --------- ---------
Net income (loss) per
share attributable to
common shareholders $ (2.75) $ .22 $ (2.85) $ .01
========= ========= ========= =========
</TABLE>
<PAGE>
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
EXHIBIT 11
<TABLE>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(continued)
<CAPTION>
Three Months Ended Six Months Ended
March 31, June 30
--------------------------- ---------------------------
1996 1995 1996 1995
-------- -------- -------- --------
INCOME (In thousands except for per share data)
<S> <C> <C> <C> <C>
Fully diluted earnings per share:
Average shares outstanding 15,598
Net effect of dilutive
stock options-based on the
treasury stock method using
average market price 16
Assumed conversion of 6%
convertible bonds 1,923
Assumed conversion of 7%
convertible bonds 4,783
Assumed conversion of 6 3/8%
convertible bonds 3,817
---------
26,137
---------
Net income $ 1,239
Add 6% convertible bond
interest net of federal
income tax effect 514
Add 7% convertible bond
interest net of federal
income tax effect 911
Add 6 3/8% convertible bond
interest net of federal
income tax effect 1,104
Less adjustment for capitalized
interest (913)
---------
Income from continuing operations 2,855
Income from discontinued operations 2,169
---------
Net income $ 5,024
=========
Per share amounts:
Earnings from continuing operations $ .11
Earnings from discontinued operations .08
---------
Earnings per share $ .19
=========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000215466
<NAME> COEUR D'ALENE MINES CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 46,373
<SECURITIES> 131,128
<RECEIVABLES> 19,050
<ALLOWANCES> 0
<INVENTORY> 29,891
<CURRENT-ASSETS> 226,442
<PP&E> 364,353
<DEPRECIATION> 86,825
<TOTAL-ASSETS> 579,215
<CURRENT-LIABILITIES> 42,272
<BONDS> 149,840
7,078
0
<COMMON> 22,950
<OTHER-SE> 320,152
<TOTAL-LIABILITY-AND-EQUITY> 579,215
<SALES> 41,361
<TOTAL-REVENUES> 45,515
<CGS> 38,142
<TOTAL-COSTS> 38,142
<OTHER-EXPENSES> 63,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,460
<INCOME-PRETAX> (57,262)
<INCOME-TAX> (514)
<INCOME-CONTINUING> (56,748)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (56,748)
<EPS-PRIMARY> (2.70)
<EPS-DILUTED> (2.70)
</TABLE>
