SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 12, 1996
USMX, INC.
(Exact name of registrant as
specified in its charter)
Delaware 0-9370 84-1076625
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
Incorporation) No.)
141 Union Boulevard
Suite 100 (303) 985-4665 80228
Lakewood, Colorado (Registrant's (Zip Code)
(Address of telephone number,
principal executive including area code)
offices)
USMX, INC.
Item 5. Other Events
USMX, Inc.'s principal focus during 1996 has been the development
efforts at its Illinois Creek Project in Alaska. It was the Company's
goal to achieve gold production at Illinois Creek by the end of 1996.
However, due principally to the high costs that would be incurred in
order to complete the necessary hydrologic test of the leach pad liner
and to commence the leaching operation during the winter months, the
Company has decided to defer commencement of gold production. In
connection with the decision to defer production at Illinois creek and
the Company's efforts to reduce administrative expenses, the Company
terminated 14 employees in November 1996.
The Company needs additional financing in order to commence gold
production at Illinois Creek. The company filed a preliminary
prospectus with the Ontario Securities Commission in Canada on
November 1, 1996 and a Registration Statement with Securities and
Exchange Commission in the United States relating to a proposed public
offering of its common stock. The offering will be made only by means
of a prospectus. Subject to obtaining additional adequate financing
and the successful test of the liner, the Company forecasts commencing
start-up activities in the spring of 1997.
In July 1996, the Company entered into Credit Agreements with N M
Rothschild & Sons Limited ("Rothschild") for a $22,000,000 facility to
partially finance the development of the Project. Among other things,
the Company agreed to make a $1,500,000 equity contribution by
September 30, 1996 to its subsidiary which is the owner of the
Project. The Company was unable to comply with this requirement. The
Company also agreed in its Credit Agreements with Rothschild that it
would not permit its (a) current ratio to be less than 2.0 to 1.0; (b)
consolidated tangible shareholders' equity to be less than
$17,500,000; and (c) total consolidated liabilities to exceed 175% of
its consolidated tangible shareholders' equity. Rothschild has agreed
with the Company to waive these conditions and to not take any actions
until December 31, 1996 due to the Company's inability to meet these
requirements, conditioned upon the Company's agreements to, among
other things, file a prospectus by November 1, 1996 with appropriate
securities regulatory authorities in Canada and complete an offering
in which the Company receives net proceeds of no less than $9,000,000
by December 31, 1996, adjust the price which Rothschild may elect to
convert its $2,500,000 loan into the Company's common stock to the
price of which the shares are sold in the public offering (or in an
earlier private placement) and to pay to Rothschild a fee of $100,000
which fee is payable from the proceeds of the public offering. In
addition, the Company agreed that of the $7,500,000 then on deposit in
a special Proceeds Account for use on Project expenditures,
approximately $2,400,000 would be distributed to pay accounts payable,
approximately $4,500,000 would be transferred back to Rothschild and
available to be advanced in accordance with the Credit Agreements and
approximately $600,000 would remain in the Proceeds Account and
available for disbursement in accordance with the Credit Agreements.
As of the date of this Report, the $2,400,000 has been distributed to
<PAGE>
pay accounts payable and approximately $3.8 million of the $4,500,000
has been disbursed in connection with the Project. The Company also
greed that it would establish an additional proceeds account with its
presently available cash and disburse these funds in accordance with a
budget agreed to by Rothschild. The Company also agreed to establish
arrangements for the monitoring by Rothschild of completion of the
Project and payment of associated costs. The Company and Rothschild
have agreed that an amended development plan for the Project will be
submitted by the Company for Rothschild's approval by December 2,
1996.
If the Company is unable to meet the conditions in its amended
Credit Agreements with Rothschild or to otherwise maintain compliance
with its credit obligations to Rothschild, it risks a possible
foreclosure of Rothschild's security interest in the Project and legal
action for monetary damages against the Company. The Company does not
presently have capital resources available to satisfy its obligations
to Rothschild. Accordingly, if the Company's proposed public offering
is unsuccessful, the Company would need to obtain other financing or
attempt to merge or engage in another form of business combination
with an entity with available cash resources. The Company has made no
such arrangements and there can be no assurance that the Company would
be successful in obtaining any such arrangements.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
10(a) First Amendment to USMX, INC. Credit Agreement,
dated as of November 15, 1996, by and between USMX, INC.
and N M Rothschild & Sons Limited
10(b) First Amendment to credit Agreement, dated as of
November 15, 1996, between USMX OF ALASKA, INC. and N M
Rothschild & Sons Limited
10(c) Guarantor's Acknowledgment of First Amendment to
USMX OF ALASKA, INC. Credit Agreement dated November 15,
1996
<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.
USMX, INC.
(Registrant)
Date: November 20, 1996 By:/s/ Donald E. Nilson
--------------------------------
Donald E. Nilson, Vice President
Finance, Chief Financial Officer
and Secretary
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "USMX
Amendment") is made and entered into as of November __, 1996, by
and between N M ROTHSCHILD & SONS LIMITED, a company organized
and existing under the laws of England with an address at New
Court, St. Swithin's Lane, London EC4P 4DU ("Lender"), and USMX,
INC., a company organized and existing under the laws of Delaware
with an address at 141 Union Blvd., Suite 100, Lakewood, Colorado
80228 ("USMX") pursuant to Section 11.1 of that certain Credit
Agreement dated as of July 11, 1996, between Lender and USMX (the
"USMX Credit Agreement").
R E C I T A L S
I. Pursuant to the USMX Credit Agreement, Lender
agreed, under certain terms and conditions, to loan to USMX
$2,500,000 to be used to finance the construction and initial
operation of the Illinois Creek, Alaska gold mining facility.
II. USMX OF ALASKA, INC., a Alaska corporation and
wholly-owned subsidiary of USMX ("USMXAK"), entered into a
separate Credit Agreement dated as of July 11, 1996, between
Lender and USMXAK (the "AK Credit Agreement") pursuant to which
Lender has agreed, under certain terms and conditions, to loan to
USMXAK up to $19,500,000.
III. USMX has executed a Guaranty, dated as of July
11, 1996 (the "Guaranty"), in favor of Lender pursuant to which
USMX guarantees the obligations of USMXAK to Lender under the AK
Credit Agreement and the other Loan Documents.
IV. The following Events of Default are known to
Lender to be currently outstanding under the AK Credit Agreement
and the USMX Credit Agreement and under the other Loan Documents:
A. USMX has failed to make an additional equity
contribution of $1,500,000 to USMXAK as required by
Section 10 of the Guaranty; and
B. USMX is not in compliance with the financial
covenants set forth in Section 11 of the Guaranty.
V. Lender, USMX and USMXAK have entered into that
certain Letter Agreement, dated October 29, 1996 (the "Letter
Agreement") pursuant to which Lender has agreed to waive until
December 31, 1996 the defaults listed in (A) and (B) of Recital
IV above (the "Waived Defaults") in exchange for certain actions,
agreements and undertakings by USMX and USMXAK, including the
execution and delivery to Lender of this USMX Amendment and the
First Amendment to the AK Credit Agreement, dated the date
hereof, by and between USMXAK and Lender, and the documents and
agreements contemplated by those two amendments (together, the
"Waiver Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual
provisions set forth below, the parties agree as follows:
A. Definitions. Capitalized terms used herein but
not otherwise defined shall have the meanings given thereto in
the USMX Credit Agreement.
B. Status of Loan Documents. USMX reaffirms its
liability for all of the obligations evidenced or secured by the
Loan Documents, and acknowledges that USMX has no defenses to
enforcement of the Loan Documents in accordance with their
respective terms and no basis for asserting any offset or other
claim against Lender.
C. Amendment of Credit Agreement. The USMX Credit
Agreement is hereby amended as follows:
1. The list of Exhibits on page iv is hereby
amended by the addition, in alphabetical order, of the
following:
Exhibit J Form of Escrow Agreement
Exhibit K Escrow Account Disbursement Schedule
2. The list of Schedules on page iv is hereby
amended by the addition, in numerical order, of the
following:
Schedule 7.13 Escrow Account Disbursement Schedule
3. Section 1.1 is hereby amended by the
addition, in alphabetical order, of the following
terms:
"Canadian Offering" shall have the meaning
specified in Section 7.12.
"Escrow Account" shall have the meaning specified
in Section 7.13.
"Escrow Agreement" shall have the meaning
specified in Section 7.13.
"First Amendment Fee" shall have the meaning
specified in Section 2.3(c).
4. The definition of "Conversion Price" in
Section 1.1 is hereby amended and restated to read in
its entirety as follows:
"Conversion Price" means (i) the U.S. dollar
equivalent price per share at which shares of common
stock of USMX are sold to the public in the Canadian
Offering (or any other sale of USMX's shares deemed by
Lender to satisfy USMX's obligations under Section
7.12), or (ii) in the absence of sales satisfying part
(i) hereof, at the average closing market price of
USMX's common stock quoted by NASDAQ for the ten (10)
Trading Days preceding December 31, 1996.
5. A new Section 2.3(c) is hereby added to read
in its entirety as follows:
(c) First Amendment Fee. In
consideration of Lender agreeing to enter into the
First Amendment to this Agreement and the other
documents and agreements executed and delivered by
Lender related to such First Amendment, USMX,
jointly and severally with AK, agrees to pay
Lender a fee in the amount of $100,000 (the "First
Amendment Fee"), which fee shall be payable on the
first to occur of (i) the offer and sale of equity
interests of USMX required by Section 7.12(a)
hereof; (ii) April 15, 1997; or (iii) such other
time as the First Amendment Fee can be paid by
either AK or USMX without reducing working capital
available to AK to an amount less than required by
AK for its continued operations, in the reasonable
judgement of Lender. The First Amendment Fee is
in addition to all other fees, expenses and
reimbursements paid or required to be paid by AK
or USMX to Lender.
6. Section 3.3(b) is hereby amended and restated
in its entirety to read as follows:
(b) Interest Periods. USMX may select
an interest period with respect to the Loan
("Interest Period") of 30, 90 or 180 days, or of
such other period of days as may be agreed to by
Lender in its sole discretion, on a 360-day year
basis. USMX will select Interest Periods by
giving notice to Lender in the Request for Advance
and thereafter at least three Business Days prior
to the expiration of the Interest Period then in
effect by an Interest Period Notice. If at any
time USMX fails to give timely notice of its
Interest Period selection, then USMX shall be
deemed to have selected an Interest Period of
30 days. No Interest Period shall end after the
Scheduled Maturity Date. Interest will be payable
in full at the end of each Interest Period,
provided that accrued interest will be payable
every ninety (90) days for Interest Periods
greater than 90 days.
7. A new Section 7.12 is hereby added to read in
its entirety as follows:
7.12 Public Offering. USMX shall
accomplish the following with respect to the offer
and sale of shares of its common stock:
(a) Not later than November
1, 1996, USMX will have prepared and have
filed with the appropriate securities
authorities in Canada an offering prospectus
for a public offering in Canada of its common
stock (the "Canadian Offering"), designed to
result in net proceeds (consisting of gross
proceeds received by USMX from the Canadian
Offering, less all costs, expenses and fees
payable by USMX associated with the Canadian
Offering) to USMX of not less than
U.S.$9,000,000;
(b) Not later than November
1, 1996, USMX will cause the lead underwriter
of the Canadian Offering to provide to Lender
a comfort letter addressed to Lender stating
that such lead underwriter believes that the
Canadian Offering as described in clause (a)
above can be successfully completed by
December 31, 1996;
(c) Not later than December
31, 1996, USMX shall complete the Canadian
Offering and immediately thereafter shall
take the following actions:
(i) Contribute
U.S.$1,500,000 to AK and cause AK to
immediately deposit such amount in the
AK Proceeds Account;
(ii) Pay, or cause
AK to pay, the First Amendment Fee, if
not previously paid;
(iii) Contribute
sufficient funds to AK to: (1) enable AK
to achieve Completion in the manner and
time frame envisioned by the Development
Plan, (2) permit AK to satisfy all of
the financial covenants and ratios
required by the Loan Documents, and (3)
provide AK with sufficient working
capital to operate the mine in the
manner contemplated by the Development
Plan;
(d) In the event USMX sells
any equity securities other than pursuant to
the Canadian Offering, or sells any material
portion of its assets (other than its
interest in the Montana Tunnels Mine) other
than in the ordinary course of its business,
USMX shall contribute fifty percent (50%) of
the first $1,000,000 of the net proceeds of
such sale, and all of the net proceeds of
such sale in excess of $1,000,000, to AK and
shall cause AK to deposit such proceeds in
the Proceeds Account, until a total of
$1,500,000 has been deposited thereto by AK.
8. A new Section 7.13 is hereby added to read in
its entirety as follows:
7.13 Escrow Account. Concurrently
herewith, USMX will (i) establish an escrow
account (the "Escrow Account") and execute and
deliver an Escrow Agreement related thereto in the
form of Exhibit J; and (ii) deposit $925,000 to
such account. Distributions from the Escrow
Account shall be made pursuant to the Escrow
Account Disbursement Schedule and as otherwise
provided in the Escrow Agreement.
9. Section 11.4 is hereby amended by changing
each use of the word "Agreement" to read "Agreement
(and any amendment to this Agreement)".
D. Reaffirmation. USMX hereby reaffirms each
representation, warranty, and covenant contained in the USMX
Credit Agreement with the same force and effect as if each were
separately stated herein and made as of the date hereof, except
(i) for such made as of a certain date, which are hereby
reaffirmed as of such date, and (ii) to the extent of any
variance therefrom disclosed on Exhibit A to the Omnibus
Certificate supplied to Lender pursuant to Paragraph H.3 hereof.
E. Title Matters. USMX represents and warrants to
Lender that, except as previously disclosed to Lender, it is the
sole owner of the AK Shares free and clear of all material
defects of title or Liens except as have previously been
permitted by Lender.
F. Default Under Loan Documents. USMX acknowledges
and agrees that any Default by USMX under this USMX Amendment
shall constitute a Default under each of the Loan Documents,
entitling Lender to exercise any or all rights and remedies
provided for in the Loan Documents. Lender's execution and
delivery of this USMX Amendment shall not be construed as a
waiver of any presently-existing Default under any of the Loan
Documents, whether or not such Default is known to Lender, except
that compliance by USMX with the Waived Defaults is hereby waived
by Lender until December 31, 1996.
G. Ratification of Credit Agreement. As modified by
this USMX Amendment, the USMX Credit Agreement is in all respects
ratified, approved and confirmed, and as so amended, shall remain
in full force and effect. From and after the date hereof, all
references to the Credit Agreement in any Loan Document or in any
Waiver Document shall be references to the USMX Credit Agreement
as amended by this USMX Amendment.
H. Conditions Precedent. The obligations of the
Lender under this USMX Amendment or the other Wavier Documents,
including specifically the waiver until December 31, 1996 of the
Waived Defaults, are, in addition to the conditions precedent
specified in Section 5.1 of the USMX Credit Agreement, subject to
the following conditions precedent, wherein each document to be
delivered to the Lender will be in form and substance
satisfactory to the Lender:
1. Closing. The execution and delivery of each
the Waiver Documents shall have occurred on or before
November 15, 1996, or such later date as agreed to by
Lender in its sole discretion.
2. Escrow Account. The Escrow Account required
by Section 7.13 of the USMX Credit Agreement shall have
been established and $925,000 shall have been deposited
into that account by USMX.
3. Omnibus Certificate. Lender shall have
received a certificate, signed by the chief executive
officer of the USMX, in the form attached hereto as
Attachment 1.
4. Opinion of USMX's Counsel. Lender shall have
received the opinion of counsel to USMX and USMXAK in
the form attached hereto as Attachment 2.
5. Waivers and Consents. USMX shall have
obtained all waivers and consents necessary or
desirable to enable it to enter into this USMX
Amendment and the other Waiver Documents.
6. Other Conditions. All conditions precedent
under each of the other Waiver Documents shall be
satisfied as determined by Lender in its sole
discretion.
I. Successors and Assigns. Nothing in this USMX
Amendment shall be construed as waiving or modifying any
provision of the AK Credit Agreement prohibiting transfer of the
Mining Properties without the prior written consent of Lender, or
making any such transfer a Default under the AK Credit Agreement.
Subject to the preceding sentence, this USMX Amendment shall bind
and benefit the parties and their respective heirs, personal
representatives, successors and assigns.
J. Governing Law; Severability; Merger. This USMX
Amendment shall be governed by and construed in accordance with
the laws of the State of Colorado. Wherever possible, each
provision of the Loan Documents is to be interpreted so as to be
effective and valid under applicable law. If any provision of
any Loan Document is for any reason and to any extent, invalid or
unenforceable, then neither the remainder of the Loan Document in
which such provision appears, nor any other Loan Document, nor
the application of the provisions to other persons or entities or
in other circumstances, shall be affected by such invalidity or
unenforceability. The USMX Credit Agreement, together with the
other Loan Documents, all as amended and modified by the Waiver
Documents, represent the final agreement between the parties
pertaining to the subject matter thereof.
K. Execution in Counterparts. This USMX Amendment
may be executed in two or more counterparts, all of which shall,
upon execution of identical counterparts by all parties,
constitute a single agreement. Lender and its attorneys are
authorized to remove and reattach signature and acknowledgement
pages of various counterparts in order to avoid unnecessary
recording and copying expense and to provide fully-executed
counterparts to each party.
Signed and delivered as of the date first mentioned
above.
USMX
USMX, INC.
By:
Donald P. Bellum
President
LENDER
PER PRO
N M ROTHSCHILD & SONS LIMITED
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "AK
Amendment") is made and entered into as of November __, 1996, by and
between N M ROTHSCHILD & SONS LIMITED, a company organized and
existing under the laws of England with an address at New Court, St.
Swithin's Lane, London EC4P 4DU ("Lender"), and USMX OF ALASKA, INC.,
a company organized and existing under the laws of Alaska with an
address at 141 Union Blvd., Suite 100, Lakewood, Colorado 80228
("Borrower") pursuant to Section 11.1 of that certain Credit Agreement
dated as of July 11, 1996, between Lender and Borrower (the "AK Credit
Agreement").
R E C I T A L S
I. Pursuant to the AK Credit Agreement, Lender agreed,
under certain terms and conditions, to loan to Borrower up to
$19,500,000 to be used to finance the construction and initial
operation of the Illinois Creek, Alaska gold mining facility.
II. USMX, INC., a Delaware corporation and sole shareholder
of Borrower ("USMX"), has (i) executed a Guaranty, dated as of July
11, 1996 (the "Guaranty"), in favor of Lender pursuant to which USMX
guarantees the obligations of Borrower to Lender under the AK Credit
Agreement and the other Loan Documents; and (ii) entered into a
separate Credit Agreement, dated as of July 11, 1996, between Lender
and USMX (the "USMX Credit Agreement") pursuant to which Lender has
agreed, under certain terms and conditions, to loan to USMX
$2,500,000.
III. The following Events of Default are known to Lender to
be currently outstanding under the AK Credit Agreement, the Guaranty
and the USMX Credit Agreement and under the other Loan Documents:
(1) USMX has failed to make an additional equity
contribution of $1,500,000 to Borrower as required by
Section 10 of the Guaranty; and
(2) USMX is not in compliance with the financial covenants
set forth in Section 11 of the Guaranty.
IV. Lender, Borrower and USMX have entered into that
certain Letter Agreement, dated October 29, 1996 (the "Letter
Agreement"), pursuant to which Lender has agreed to waive until
December 31, 1996 the Defaults listed in (1) and (2) of Recital III
(the "Waived Defaults") in exchange for certain actions, agreements
and undertakings by Borrower and USMX, including the execution and
delivery to Lender of this AK Amendment and the First Amendment to
USMX Credit Agreement, dated the date hereof, by and between USMX and
Lender, and the documents and agreements contemplated by those two
amendments (together, the "Waiver Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual provisions
set forth below, the parties agree as follows:
A. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings given thereto in the AK
Credit Agreement.
B. Status of Loan Documents. Borrower reaffirms its
liability for all of the obligations evidenced or secured by the Loan
Documents, and acknowledges that Borrower has no defenses to
enforcement of the Loan Documents in accordance with their respective
terms and no basis for asserting any offset or other claim against
Lender.
C. Amendment of Credit Agreement. The AK Credit Agreement
is hereby amended as follows:
1. A new Section 2.3(d) is hereby added to read in
its entirety as follows:
(d) First Amendment Fee. In consideration
of Lender agreeing to enter into the First Amendment to
this Agreement and the other documents and agreements
executed and delivered by Lender related to such First
Amendment, Borrower, jointly and severally with USMX,
agrees to pay Lender a fee in the amount of $100,000
(the "First Amendment Fee"), which fee shall be payable
on the first to occur of (i) the offer and sale of
equity interests of USMX required by Section 7.12(a) of
the USMX Credit Agreement; (ii) April 15, 1997; or
(iii) such other time as the First Amendment Fee can be
paid by either Borrower or USMX without reducing
working capital available to Borrower to an amount less
than required by Borrower for its continued operations,
in the reasonable judgement of Lender. The First
Amendment Fee is in addition to all other fees,
expenses and reimbursements paid or required to be paid
by Borrower or USMX to Lender.
2. Section 3.5(b) is hereby amended and restated in
its entirety as follows:
(b) Interest Periods. Borrower may
select an interest period with respect to each
Advance ("Interest Period") of 30, 90 or 180 days,
or of such other period of days as may be agreed
to by Lender in its sole discretion, on a 360-day
year basis; provided that in no event may more
than three (3) different Interest Periods be in
effect hereunder at any one time. Borrower will
select Interest Periods by giving notice to Lender
in the Request for Advance and thereafter at least
three (3) Business Days prior to the expiration of
the Interest Period then in effect by a
Conversion/Interest Period Notice. If at any time
Borrower fails to give timely notice of its
Interest Period selection, then Borrower shall be
deemed to have selected an Interest Period of
thirty (30) days. No Interest Period shall end
after the Scheduled Maturity Date. Interest will
be payable in full at the end of each Interest
Period, provided that accrued interest will be
payable every ninety (90) days for Interest
Periods greater than 90 days.
3. A new Section 3.14(d) is hereby added to read in
its entirety as follows:
(d) In the event that, with the prior
consent of Lender (which may be given or withheld in
Lender's sole discretion), Borrower sells any royalty
or other interest in or to the Mining Properties or
assets related thereto or production of valuable
minerals therefrom (other than sales of assets or
minerals in the ordinary course of Borrower's
business), Borrower shall deposit in the Proceeds
Account the proceeds from such sale or sales
immediately upon their receipt.
4. Section 8.11 is hereby amended by appending the
following two sentences to the end of that
section:
No later than December 2, 1996, Borrower shall
have submitted to Lender a draft of an amended
Development Plan reflecting the results of operations
through that date and, no later than December 11, 1996,
Borrower shall make such changes therein as are
necessary in order to obtain the approval of Lender
required by this Agreement of such amended Development
Plan. Provided that such amended Development Plan
meets with Lender's approval as provided by this
Agreement, Lender shall grant its approval hereunder no
later than December 16, 1996.
5. A new Section 8.14 is hereby added to read in its
entirety as follows:
8.14 Project Monitoring. In addition to any
reporting and other obligations of Borrower pursuant to
this Article VIII, Borrower shall consult with Lender
and its agents regarding management of the Project
through Completion, with such consultations to include:
(a) Instituting arrangements for
monitoring by Lender and its agents of
construction of the Project and initial mining
through Completion, including the management
thereof, and the payment of costs and expenses
associated therewith;
(b) Review of and, to the extent
deemed necessary or desirable by Lender and its
agents in Lenders sole judgement, modification of
the mining, construction and other working plans
related to the Project, and any budgets associated
therewith, including review and modification of
approved vendors, suppliers and creditors to the
Project through Completion; and
(c) Final decision regarding the
date on which construction of the Project and
mining will be suspended for the 1996-97 winter
season.
6. Section 11.4 is hereby amended by changing each
use of the word "Agreement" to read "Agreement (and any
amendment to this Agreement)".
D. Reaffirmation. Borrower hereby reaffirms each
representation, warranty, and covenant contained in the AK Credit
Agreement with the same force and effect as if each were separately
stated herein and made as of the date hereof, except (i) for such made
as of a certain date, which are hereby reaffirmed as of such date, and
(ii) to the extent of any variance therefrom disclosed on Exhibit A to
the Omnibus Certificate supplied to Lender pursuant to Paragraph H.3
hereof.
E. Title Matters. Borrower represents and warrants to
Lender that, except as previously disclosed to Lender, it is the sole
owner of the Mining Properties, and that the Mining Properties are
free and clear of all material defects of title or Liens except as
have previously been permitted by Lender.
F. Default Under Loan Documents. Borrower acknowledges
and agrees that any Default by Borrower under this AK Amendment shall
constitute a Default under each of the Loan Documents, entitling
Lender to exercise any or all rights and remedies provided for in the
Loan Documents. Lender's execution and delivery of this AK Amendment
shall not be construed as a waiver of any presently-existing Default
under any of the Loan Documents, whether or not such Default is known
to Lender, except that compliance by Borrower with the Waived Defaults
is hereby waived by Lender until December 31, 1996.
G. Ratification of Credit Agreement. As modified by this
AK Amendment, the AK Credit Agreement is in all respects ratified,
approved and confirmed, and as so amended, shall remain in full force
and effect. From and after the date hereof, all references to the
Credit Agreement in any Loan Document or in any Waiver Document shall
be references to the AK Credit Agreement as amended by this AK
Amendment.
H. Conditions Precedent. The obligations of the Lender
under this AK Amendment or the other Wavier Documents, including
specifically the waiver until December 31, 1996 of the Waived
Defaults, are, in addition to the conditions precedent specified in
Section 6.2 of the AK Credit Agreement, subject to the following
conditions precedent, wherein each document to be delivered to the
Lender will be in form and substance satisfactory to the Lender:
1. Closing. The execution and delivery of each of
the Waiver Documents shall have occurred on or before
November 15, 1996, or such later date as agreed to by Lender
in its sole discretion.
2. Proceeds Account. $4,500,000 shall have been
transferred from the Proceeds Account to Lender, provided
that (i) Lender shall have given such consent as is required
for such a disbursement by the Proceeds Account Agreement;
(ii) notwithstanding the second sentence of Section 3.6(a),
such $4,500,000 shall be available for Advance to Borrower
after the date hereof under the terms and conditions of the
AK Credit Agreement, (iii) such $4,500,000 shall be subject
after the date of such transfer to Lender to the Commitment
Fee in the same manner as other funds subject to the
Commitment that have not been Advanced to Borrower; and (iv)
nothing contained herein will relieve Borrower from its
obligation to pay interest as required by the terms of the
AK Credit Agreement accrued on such $4,500,000 prior to its
payment to Lender.
3. Omnibus Certificate. Lender shall have received a
certificate, signed by the chief executive officer of the
Borrower, in the form attached hereto as Attachment 1.
4. Opinion of Borrower's Counsel. Lender shall have
received the opinion of counsel to Borrower and USMX in the
form attached hereto as Attachment 2.
5. Acknowledgement from Guarantor. Lender shall have
received the Guarantor's Acknowledgement, executed and
delivered by USMX, in the form attached hereto as Attachment
3.
6. Waivers and Consents. Borrower shall have
obtained all waivers and consents necessary or desirable to
enable it to enter into this AK Amendment and the other
Waiver Documents.
7. Other Conditions. All conditions precedent under
each of the other Waiver Documents shall be satisfied as
determined by Lender in its sole discretion.
I. Successors and Assigns. Nothing in this AK Amendment
shall be construed as waiving or modifying any provision of the AK
Credit Agreement prohibiting transfer of the Mining Properties without
the prior written consent of Lender, or making any such transfer a
Default under the AK Credit Agreement. Subject to the preceding
sentence, this AK Amendment shall bind and benefit the parties and
their respective heirs, personal representatives, successors and
assigns.
J. Governing Law; Severability; Merger. This AK Amendment
shall be governed by and construed in accordance with the laws of the
State of Colorado. Wherever possible, each provision of the Loan
Documents is to be interpreted so as to be effective and valid under
applicable law. If any provision of any Loan Document is for any
reason and to any extent, invalid or unenforceable, then neither the
remainder of the Loan Document in which such provision appears, nor
any other Loan Document, nor the application of the provisions to
other persons or entities or in other circumstances, shall be affected
by such invalidity or unenforceability. The AK Credit Agreement,
together with the other Loan Documents, all as amended and modified by
the Waiver Documents, represent the final agreement between the
parties pertaining to the subject matter thereof.
K. Execution in Counterparts. This AK Amendment may be
executed in two or more counterparts, all of which shall, upon
execution of identical counterparts by all parties, constitute a
single agreement. Lender and its attorneys are authorized to remove
and reattach signature and acknowledgement pages of various
counterparts in order to avoid unnecessary recording and copying
expense and to provide fully-executed counterparts to each party.
Signed and delivered as of the date first mentioned above.
BORROWER
USMX OF ALASKA, INC.
By:
Name:
Title:
LENDER
PER PRO
N M ROTHSCHILD & SONS LIMITED
GUARANTOR'S ACKNOWLEDGEMENT
OF
FIRST AMENDMENT TO USMX OF ALASKA, INC.
CREDIT AGREEMENT
USMX, INC, a Delaware corporation ("USMX") and
Guarantor pursuant to that certain Guaranty (the "Guaranty") by
USMX for the benefit of N M ROTHSCHILD & SONS LIMITED, a company
organized and existing under the laws of England ("Lender"),
Guarantor of the obligations of USMX OF ALASKA, INC., a company
organized and existing under the laws of Alaska ("AK"), under
that certain Credit Agreement dated as of July 11, 1996, between
Lender and AK (the "AK Credit Agreement"), hereby acknowledges
the FIRST AMENDMENT TO CREDIT AGREEMENT made and entered into as
of November 15, 1996, by and between Lender and AK (the "AK
Amendment") and ratifies and confirms the Guaranty, which shall
remain in full force and effect. USMX hereby further agrees
that, as provided by the Guaranty, USMX's liabilities and
obligations relative to the Guaranteed Obligations (as defined in
the Guaranty and as such obligations shall be modified from time
to time by agreement of Lender and AK) shall not be limited,
diminished, released, discharged or reduced in any way by the AK
Amendment, and USMX remains fully bound under the Guaranty for
the Guaranteed Obligations.
Signed and delivered as of this 15th day of November,
1996.
USMX
USMX, INC.
By:
Name:
Title:
